CPPA Model 4 Exam Questions with Correct Answers

CPPA Model 4 Exam Questions with Correct Answers What are the steps in 11 steps in the Audit Process? - Answer-1. State the Audit's Objectives 2. Define the Attributes and/or Transactions to be Tested 3. Define the Population 4. Specify Acceptance and Rejection Rates 5. Determine the Sampling Method 6. Select a Sample 7. Perform the Audit 8. Analyze Defects 9. Generalize the Sample to Population 10. Determine the Status of the Process that is Under Review 11. Issue the Report What is an internal audit? - Answer-- It is an objective and impartial review of an organization's established polices and systems. - One that is performed according to well-established rules and procedures Stating the audit's objectives, defining the attributes or transactions to be tested, defining the population, determining the sampling method, selecting the samples, and analyzing the defects often cannot be reduces to formulae; What must they be accomplished with? - Answer-With knowledge and good judgement coupled with the highest ethic standards When defects are found, what must their impact be measured against? - Answer-Their reasonableness, materiality, absolute magnitude, relative magnitude, qualitative attributes, and cause What two benefits does the Property Manager receive in a result of knowing how an audit is organized and conducted and how its results are interpreted? - Answer-1. It helps property managers to prepare for an audit 2. It provides a guidebook for the ongoing scrutiny, evaluation, and upgrading of the property system What is property audit? - Answer-A systematic, objective review and evaluation of an organization's property control system. What are the benefits of a property audit? - Answer-- Minimizing waste - Improving customer service - Safeguarding organizational assets What forms the foundation of the property control system? - Answer-Written procedures While stating the audit's objective, what must not enter into the audit in any way? - Answer-Bias which is a predisposition toward a finding or in the choice of objectives In defining the attributes and/or transactions to be tested, what is an attribute and when should it be established? - Answer-- An attribute is a characteristic of the entity being evaluated - It should be established before the test, not after What is the most critical step in the performance of a system analysis? - Answer-The selection of the population What should population be defined as? - Answer-In terms of what is being measured When should acceptance and rejection rates be determined? - Answer-Before the audit begins What are three types of generally classified sampling methods? - Answer-- Statistical - Judgement _ Purposeful What is statistical sampling? - Answer-It is a random sample which is selected from a population for analysis so that the sample is truly representative of the entire population which it was selected What is Judgement sampling? - Answer-It is sampling based on the auditor's judgement as to determine how many sample items to select and how many defects must be found before and area is classified as deficient What is purposeful sampling? - Answer-It is a random sampling taken from a population that is known to contain defects How is the appropriate sample size generally determined? - Answer-By the size of the population and the confidence level desired. What are the necessary steps to ensure are present before the audit is actually conducted? - Answer-- Some form of property control system exists - Procedures have been reviewed - Auditor has a good understanding of the processes involved - Audit's objectives have been stated - Attributes and transactions to be tested have been determined - The population and sampling unit have been defined - The acceptance and rejection rates have been specified - Sample size has been determined - Random sample has been selected What may the audit procedure entail of an extensive review of? - Answer-- Manual or automated records - Supporting documents for each transaction - Physical locations where property is stored and used - Vendors that are in possession of custom-furnished property - Disposition practices are in place to include sale and scrap procedures What must the written report be based on? - Answer-Written notes and not upon the auditor's recollection What might happen if the auditor fails to study the organization's written procedures and be aware of underlying requirements which drive those procedures? - Answer-Audit findings may be unreliable Before deficiencies found are judges to be defects and audited process is determined to be unsatisfactory, what factors must be considered? - Answer-- Reasonableness - Materiality - Magnitude in Absolute Terms - Percentage Relationship to Organization Size and Worth - Percentage Relationship to Asset Base - Qualitative Attributes - Causality If the sample was selected randomly, what might the auditor be adequately confident? - Answer-Deficiencies or defects found are generalizable to the larger population What are some of the rating systems used to label finding during an audit? - Answer-- Satisfactory - Unsatisfactory - Color-coded Scheme - Percentile Rating What is the standard procedure for issuing a final audit report to management? - Answer-- Summary of the purpose of the audit - How the audit was conducted - Any findings and observations that resulted from the audit Who should the audit report be distributed to? - Answer-- Managers of the areas that were included - Upper Management - To the individuals who directed the audit to be performed What are the three values of system analysis? - Answer-- Integrity - core value of auditor's code - Independence - indispensable for auditors