Question 1

Which of the following statements is true regarding managements use of judgement to design, implement, and conduct internal control

Options :

A :

The use of judgment enhances managements ability to make better decisions about internal control, but cannot guarantee perfect outcomes.

B :

introducing judgment generally diminishes managements ability to make good decisions about internal control

C :

It is inappropriate for management to exercise judgement in areas such as specifying and using suitable accounting principles.

D :

It is inappropriate for management to exercise judgement in assessing whether components are present, functioning, and operating together

Answer: A

Question 2

Which of the following statements is true regarding partnership liquidation?

Options :

A : Operations can continue after the liquidation, if all partners agree.

B : Partnership liquidation ends both the legal and economic life of an entity

C : Partnership liquidation occurs when there is capital deficiency.

D : When a partnership Is liquidated, each partner pays creditors from cash received

Answer: B

Question 3

Which of the following would be the most effective fraud prevention control?

Options :

A : Email alert sent to management for checks issued over S100.000.

B : installation of a video surveillance system in a warehouse prone to inventory loss

C : New hire training to explain fraud and employee misconduct.

D : Daily report that Identifies unsuccessful system log-in attempts

Answer: C

Question 4

Which of the following situations is most likely to heighten an internal auditors professional skepticism regarding potential fraud?

Options :

A : A procurement manager does not have the expected academic credentials for his position

B : A salesperson frequently complains about the organization-s policy on sales commissions.

C : The accounts payable supervisor has requested advances against her monthly salary on several occasions

D : A financial accountant is absent from work frequently due to regular medical procedures

Answer: A

Question 5

Which of the following is most likely the subject of a periodic report from the chief audit executive to the board

Options :

A : A complete, accurate, and comprehensive account of engagement observations and recommendations.

B : Oversight of the coordination between the internal audit activity and independent outside auditors

C : The internal audit activity-s purpose, authority, responsibility, and performance relative to plan.

D : Management-s assertions regarding the system of internal controls.

Answer: C