CIA Review: Internal Audit Skills

CIA Review: Internal Audit Skills

by Irvin N. Gleim

Paperback(9TH)

$24.95

Product Details

ISBN-13: 9781581941203
Publisher: Gleim Publications, Inc.
Publication date: 01/28/2001
Edition description: 9TH
Pages: 337

Read an Excerpt

Example Gleim question- "Analytical procedures enable the auditor to predict the balance or quantity of an item under audit. Information to develop this estimate can be obtained from all of the following except

A. Tracing transactions through the system to determine whether procedures are being applied as prescribed.
B. Comparison of financial data with data for comparable prior periods, anticipated results (e.g., budgets and forecasts), and similar data for the industry in which the entity operates.
C. Study of the relationships of elements of financial data that would be expected to conform to a predictable pattern based upon the entity's experience.
D. Study of the relationships of financial data with relevant nonfinancial data.

The correct answer is (A)

REQUIRED: The procedure not a source of information for analytical procedures.

DISCUSSION: Tracing transactions through the system is a test of controls directed toward the operating effective-ness of internal control, not an analytical procedure.

Answer (B) is incorrect because the basic premise of analytical procedures is that plausible relationships among data may be reasonably expected to exist and continue in the absence of known conditions to the contrary. Well-drafted budgets and forecasts prepared at the beginning of the year should therefore be compared with actual results, and client information should be compared with data for the industry in which the client operates. Answer (C) is incorrect because the auditor should expect financial ratios and relationships to exist and to remain relatively stable in the absence of reasons for variation. Answer (D) is incorrect because financial information is related to nonfinancial information; e.g., salary expense should be related to the number of hours worked.

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