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28 Cards in this Set
- Front
- Back
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When should decisions to revise time budgets for an audit normally be made?
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immediately after the preliminary survey
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To whom should an auditee provide his feedback about auditor's actions during the audit? |
to internal auditors and senior management as management should also know if communication is poor because of some auditor behavior.
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If no written procedures in the area audited exist, what should the IA do? |
The auditor can document the procedures based on interviews and observations of employees' work and give it to the auditees for confirmation of his or her understanding prior to auditing against them.
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Whose task in an audit is it to update the permanent audit file? |
audit staff/senior auditor's task
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When IA is assigned with the responsibility of conducting an environmental audit, what should be done first? |
Provide the assigned audit staff with technical training
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What are compliance tests used for? |
to evaluate the EFFECTIVENESS of systems/controls
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As compensation systems influence behavior, of which organisational structure should it be an integral part? |
of the organisation CONTROL structure
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Which control is important in controling the processing of transactions in order to prevent the entering of sales invoices containing wrong amounts in the general ledger and the accounts receivable subsidiary ledger? |
Utilizing predetermined control totals to control posting routines. Balancing the transactions back to control totals would detect the error.
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Which department should prepare credit memos for defective goods returned by the customer? |
billing after approval of the credit memo by a responsible supervisor
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Of which department should the supervisor approving the credit memo for returned goods by customer be independent? |
Sales department
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What is the most important duty of the receiving function? |
inspection of goods received for quality
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What should goods received in the receiving department be inspected for? |
Goods should be inspected in the receiving department for quantity and quality at the time of receipt and receiving information documented at that time.
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When is the use of prenumbered receiving documents not necessary? |
when these are replaced by a required reference to the purchase order
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The matching of purchase orders with which other document does not provide evidence that goods were received? |
matching purchase order with invoice only without the receiving report
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Receiving reports sent to accounts payable must not pass through which other function first? |
purchasing
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What can top management do to prevent purchasing agents from taking kickbacks from vendors? |
establish long‐term contracts with major vendors, with the contract terms approved by top management.
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Under which business transactions circustandes does an implementation of an electronic data interchange (EDI) improve efficiency and effectiveness of the purchasing and accounts payable system? |
there is a large volume of repetitive purchases from the same vendors
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The control that would best help to correct an oversupply of expensive inventory items is the maintenance of what kind of inventory? |
perpetual inventory
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Which inventory levels does the economic order quantity model not affect? |
minimum stocking levels
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What is lead time in purchasing? |
"In purchasing, lead time is the estimated time between ordering goods and receiving the goods. For instance, if 100 units of Product X are ordered on April 11 and are expected to be received on April 25, the lead time is 14 days.
The estimated lead time is one of the factors used in calculating the reorder point of items carried in inventory. |
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What does help to ensure that unnecessary purchases of inventory are not made? |
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Predetermined stocking levels.Inventory is ordered only when supplies reach the predetermined stocking level. This helps prevent ordering unnecessary inventory. |
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Which control is the most significant in ensuring correct inventory levels? |
regular reconciliation of physical inventories to accounting records
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On what should the selection of items for cycle count be based? |
Selection of items for cycle count should be done based on the relative value of the item or the relationship of the item to total volume of transactions.
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Who should not select items for cycle count? |
stockroom personnel
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How can be ensured that out-of-stock items are promptly delivered to customers whose orders were partially filled? |
Matching the back‐order file to shipments daily would identify unfilled orders for appropriate action
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Which control does ensure best the custody of inventory in an off-site warehouse? |
Regular reconciliation of physical inventories to accounting records
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To determine that the sales of scrap material is well controlled what should be compared with each other? |
Comparing the quantities of scrap expected from the production process with the quantities sold.
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What is the most important opportunity to reduce waste in the production cycle? |
recovery of waste as a usable product
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