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During an accounts payable audit engagement, the internal auditor identified a risk that vendor invoices may be paid multiple times. Which of the following would be appropriate preventive controls to mitigate this risk?
Comprehensive and Detailed Step-by-Step Explanation:
Preventive System Controls: Identifying duplicate invoice numbers and dates is a robust preventive control, as it helps flag duplicate invoices before payment is processed.
Other Options:
Option A: Identical invoice amounts alone may not always indicate duplicates, as different invoices can share the same amount.
Option C: Manual reconciliations are detective controls, not preventive ones.
Thus, the correct answer is B.
Which of the following statements is true with regard to the adequacy of a control design?
Comprehensive and Detailed Step-by-Step Explanation:
Reference to IIA Standards:
Standard 2130 - Control: Internal auditors must assess both the adequacy of control design and the effectiveness of control operation.
Reasoning:
Option B is correct because a poorly designed control, even if operating effectively, cannot achieve its objective due to inherent flaws in its structure or implementation.
Option A incorrectly suggests that operational testing overrides design inadequacies. Evaluating control design is essential before assessing operational effectiveness.
Option C is incorrect because reliance on secondary controls to mitigate risk does not compensate for an inadequate primary control design.
Control Design Importance:
Adequate design ensures that controls are appropriately structured to address specific risks, providing a strong foundation for effective operation.
A newly hired internal auditor has been asked to examine the sales of a specific product over the last four years. Which of the following analytical review techniques should the auditor employ?
Comprehensive and Detailed Step-by-Step Explanation:
Reference to Analytical Techniques:
Trend Analysis involves examining data over a period to identify patterns, shifts, or anomalies.
This technique is appropriate for longitudinal data like sales over four years.
Reasoning:
Option B (Trend analysis) is correct as it helps the auditor analyze sales performance over time and identify patterns or deviations.
Option A (Ratio analysis) compares related metrics, such as profitability or liquidity, but does not focus on changes over time.
Option C (External benchmarking) involves comparing performance to external standards or competitors, not internal historical data.
Application in Audit:
Trend analysis allows the auditor to assess growth, seasonal patterns, or irregularities in sales data, providing actionable insights.
Which of the following is a common computer-assisted audit tool used to analyze data?
Comprehensive and Detailed Step-by-Step Explanation:
Spreadsheet Software: Tools like Microsoft Excel are commonly used for data analysis in auditing due to their powerful data manipulation, calculation, and visualization capabilities.
Example: Auditors use spreadsheets for sampling, trend analysis, and creating pivot tables.
Other Options:
Social Media: Not relevant for data analysis in auditing.
Word Processing Software: Useful for documentation but not designed for data analysis.
Thus, the correct answer is B. Spreadsheet Software.
Which of the following elements are typically included in an engagement work program?
Comprehensive and Detailed Step-by-Step Explanation:
Engagement Work Program: A structured plan detailing the steps to achieve engagement objectives. The program typically includes planning activities, objectives, and preliminary risk assessments to guide the audit.
Other Options:
Option B: Fieldwork and testing are performed during the execution phase but are not part of the program's creation.
Option C: Opinions and final communications are outputs of the audit, not components of the work program.
Thus, the correct answer is A.
