Which of the following factors would increase the confidence level in a variables sampling plan?
I. A larger sample size.
II. A stratified sample.
III. A larger standard deviation.

A.

I and II only

B.

I and III only

C.

 II and III only

D.

I, II, and III

If an auditor is sampling to test compliance with a particular company policy, which of the following
factors should not affect the allowable level of sampling risk?

A.

The experience and knowledge of the auditor.

B.

The adverse consequences of noncompliance.

C.

The acceptable level of risk of making an incorrect audit conclusion.

Which of the following describes an internal auditor's responsibilities to include audit procedures to
detect fraud in audits of a multinational organization?

A.

International Accounting Standards require the internal auditor to include audit procedures
which would detect fraud if it would cause a material misrepresentation of the financial statements.

B.

 Internal auditors do not have any specific responsibilities with respect to including fraud-related
audit procedures.

C.

Proper audit procedures, when carried out with due professional care, will guarantee that fraud,
if present, will be detected.

D.

 If significant control weaknesses are detected, additional tests should be directed toward other
indicators of fraud.

An appliance repair company is considering relocating the center that houses its service vehicles.
An internal auditor wants to determine the potential reduction in average miles driven by the
service vehicles if the center is relocated. Which of the following statistical sampling methods
would be most appropriate for this test?

A.

Attributes sampling.

B.

Discovery sampling.

C.

Probability-proportional-to-size sampling.

D.

Mean-per-unit sampling.

Monetary-unit sampling is most useful when the internal auditor:

A.

Is testing the accounts payable balance.

B.

Cannot cumulatively arrange the population items.

C.

Expects to find several material errors in the sample.

D.

Is concerned with overstatements.

If management expects 100 percent compliance with a procedure, which of the following sampling
approaches would be most appropriate?

A.

Attributes sampling.

B.

Discovery sampling.

C.

Targeted sampling.

D.

Variables sampling.

An internal auditor is discussing an audit problem with an engagement client. While listening to the
client, the internal auditor should:

A.

Prepare a response to the client.

B.

Take mental notes on the speaker's nonverbal communication, as it is more important than
what is being said.

C.

Make sure that all details, as well as the main ideas of the client, are remembered.

D.

Integrate the incoming information from the client with information that is already known.

An auditor is using an internal control questionnaire as part of a preliminary survey. Which of the
following is the best reason for the auditor to interview management regarding the questionnaire
responses?

A.

Interviews provide the opportunity to insert questions to probe promising areas.

B.

Interviews are the most efficient way to upgrade the information to the level of objective
evidence.

C.

 Interviewing is the least costly audit technique when a large amount of information is involved.

D.

Interviewing is the only audit procedure which does not require confirmation of the information
that is obtained.

Many questionnaires are made up of a series of different questions that use the same response
categories (for example: strongly agree, agree, neither, disagree, strongly disagree). Some
designs will have different groups of respondents answer alternate versions of the questionnaire
that present the questions in different orders and reverse the orientation of the endpoints of the
scale (for example: agree on the right and disagree on the left). The purpose of such questionnaire
variations is to:

A.

Eliminate intentional misrepresentations.

B.

Reduce the effects of pattern response tendencies.

C.

Test whether respondents are reading the questionnaire.

D.

Make it possible to get information about more than one population parameter using the same
questions.

An auditor used a questionnaire during an interview to gather information about the nature of
credit sales processing. The questionnaire did not cover some pertinent information offered by the
person being interviewed, and the auditor did not document the potential problems for further
investigation.
The primary deficiency with the above process is that:

A.

The auditor failed to consider the importance of the information offered.

B.

A questionnaire was used in a situation where a structured interview should have been used.

C.

Using a questionnaire precludes the auditor from documenting other information.

D.

.The engagement program was incomplete.