CIA-I Certification Exam Questions with AI Explanations

QUESTION: 76

Which of the following statements regarding an internal auditor's responsibility for detecting fraud is not correct?

The auditor should detect fraud if red flags are present.
The auditor should have sufficient knowledge to correctly identify indicators that fraud may have been committed.
The auditor should identify control weaknesses which could allow fraud to occur.
The auditor should evaluate the indicators of fraud sufficiently to determine if a fraud investigation should take place.

Answer(s): A

A fleet maintenance division uses a different code for each type of inventory transaction. A daily summary report lists activity by part number and transaction code. The report is reconciled by the parts room supervisor to the day's material request forms and is then forwarded to the fleet manager for approval. An auditor is considering an analytical review of transaction codes and materials used. One objective of this review might be to

Provide evidence of inventory items that are overstocked.
Reveal shortages in perpetual inventory records.
Determine whether inventory items are properly valued.
Identify possible material lost due to employee theft.

Answer(s): D

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QUESTION: 78

While analyzing substantial increases in the cost of goods sold, an auditor for a retail organization notes that payments to certain vendors appear to be unusually high. Which of the following procedures would be least effective in investigating possible kickbacks to purchasing agents?

Confirm all contract terms and specifications with vendors.
Analyze, by purchasing agent, all increases in costs of procured goods from specific vendors.
Select a statistical sample of goods purchased and compare purchase prices with those of other sources of similar goods.
Consider any changes in the lifestyles or individual consumption habits of the purchasing agents.

Answer(s): A

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QUESTION: 79

A manufacturer uses a materials requirements planning (MRP) system to track inventory, orders, and raw materials requirements. What condition should an auditor search for in the MRP database if a preliminary assessment indicated that inventory is understated?

I). Item cost set at zero.
II). Negative quantities on hand.
III). Order quantity exceeding requirements.
IV). Inventory lead times exceeding delivery schedule.

I and II only.
I and IV only.
II and IV only.
III and IV only.

Answer(s): A

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QUESTION: 80

During the preliminary survey phase of an audit of the purchasing function, an auditor determines that the procurement policy requires either quotes or formal bids, depending on the amount of the purchase. Which procedure should be performed to determine if fieldwork for policy compliance is necessary?

Develop a five-year trend analysis of the purchasing department's expenses.
Determine the volume of purchase orders processed for the audit period.
Determine the volume of contracts awarded for the audit period.
Chart the purchases made for the audit period by type and dollar amount.

Answer(s): D

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Free Financial CIA-I Real Questions (page: 16)

QUESTION: 76

QUESTION: 77

QUESTION: 78

QUESTION: 79

QUESTION: 80