CIA Exam Part 1: Study Unit 5 Exam Questions and
Answers
Engagement information is usually considered relevant when it is
A. Derived through valid statistical sampling.
B. Objective and unbiased.
C. Factual, adequate, and convincing.
D. Consistent with the engagement objectives. - ✔✔Answer (D) is correct.
Relevant information supports engagement observations and recommendations and is
consistent with the objectives for the engagement (Inter. Std. 2310).
To determine the sufficiency of information regarding interpretation of a contract, an internal
auditor uses
A. The best obtainable information.
B. Subjective judgments.
C. Objective evaluations.
D. Logical relationships between information and issues. - ✔✔Answer (C) is correct.
Sufficient information is factual, adequate, and convincing so that a prudent, informed person
would reach the same conclusions as the auditor (Inter. Std. 2310). Because the internal auditor
must avoid distortion by personal feelings, prejudices, or interpretations, this judgment must be
objective.
In an operational audit, the internal auditors discovered an increase in absenteeism.
Accordingly, the chief audit executive decided to identify information about workforce morale.
To achieve this engagement objective, the internal auditors must understand that
,A. Morale cannot be reliably analyzed.
B. Only outcomes that are directly quantifiable can be reliably analyzed.
C. Reliable information may be obtained about morale factors such as job satisfaction.
D. Morale is always proportional to compensation. - ✔✔Answer (C) is correct.
Reliable information is the best information attainable through the use of appropriate
engagement techniques (Inter. Std. 2310). Such information need not consist only of
quantifiable outcomes, such as rates of workforce turnover and absenteeism. Reliable
information may be identified about such difficult-to-measure things as attitudes toward
supervisors, other workers, and compensation. For example, surveys may produce statistically
valid information about job satisfaction.
Reliable information is
A. Supportive of the engagement observations and consistent with the engagement objectives.
B. Helpful in assisting the organization in meeting prescribed goals.
C. Factual, adequate, and convincing so that a prudent person would reach the same conclusion
as the internal auditor.
D. Competent and the best attainable through the use of appropriate engagement techniques. -
✔✔Answer (D) is correct.
Reliable information is the best attainable information through the use of appropriate
engagement techniques (Inter. Std. 2310). An original document is the prime example of such
information.
Which of the following is an essential factor in evaluating the sufficiency of information? The
information must
A. Be well documented and cross-referenced in the working papers.
B. Be based on references that are considered competent.
,C. Bear a direct relationship to the observation and include all of the elements of an
observation.
D. Be convincing enough for a prudent person to reach the same decision. - ✔✔Answer (D) is
correct.
Sufficient information is factual, adequate, and convincing so that a prudent, informed person
would reach the same conclusions as the auditor (Inter. Std. 2310).
While testing a division's compliance with company affirmative-action policies, an auditor found
that
1. 5% of the employees are from minority groups.
2.No one from a minority group has been hired in the past year.
The most appropriate conclusion for the auditor to reach is that
A. Insufficient evidence exists of compliance with affirmative-action policies.
B. The division is violating the company's policies.
C. The company's policies cannot be audited and hence cannot be enforced.
D. With 5% of its employees from minority groups, the division is effectively complying. -
✔✔Answer (A) is correct.
Sufficient information is factual, adequate, and convincing so that a prudent, informed person
would reach the same conclusions as the auditor (Inter. Std. 2310). Without knowledge of
guidelines for compliance, the auditor cannot draw a reasonable conclusion given the
insufficiency of the facts. Thus, the auditor must determine whether management has
established adequate criteria or should work with management to develop such criteria.
Reliable evidence is best defined as evidence that
, A. Is the best attainable.
B. Is obtained by observing people, property, and events.
C. Is supplementary to other evidence already gathered and tends to strengthen or confirm it.
D. Proves an intermediate fact, or group of facts, from which still other facts can be inferred. -
✔✔Answer (A) is correct.
Reliable information is the best information attainable through the use of appropriate
engagement techniques (Inter. Std. 2310). Information is reliable when the auditor's results can
be verified by others. Reliable information is also valid. It accurately represents the observed
phenomena. Information must be collected using reasonable efforts subject to such inherent
limitations as the cost-benefit constraint. Accordingly, internal auditors employ efficient
methods, e.g., statistical sampling and analytical auditing procedures.
While performing an engagement relating to an organization's cash controls, the internal
auditor observed that cash deposits are not deposited intact daily. A comparison of a sample of
cash receipts lists revealed that each cash receipt list equaled cash journal entry amounts but
not daily bank deposits amounts, and cash receipts list totals equaled bank deposit totals in the
long run. This information as support for the internal auditor's observations is
A. Sufficient but not reliable or relevant.
B. Sufficient, reliable, and relevant.
C. Not sufficient, reliable, or relevant.
D. Relevant but not sufficient or reliable - ✔✔Answer (B) is correct.
The bank deposits can be verified by examining bank statements obtained directly from the
bank. Information obtained from an independent source is usually more reliable than
information secured solely within the entity. Moreover, it is obviously relevant to the issue of
whether cash receipts are deposited intact. A reasonable internal auditor should judge that the
comparison of the organization's records with independently obtained bank statements is
persuasive of the proposition that cash receipts are not deposited intact. Thus, the information
is also sufficient.
Which of the following is a false statement about the reliability of audit evidence?
Answers
Engagement information is usually considered relevant when it is
A. Derived through valid statistical sampling.
B. Objective and unbiased.
C. Factual, adequate, and convincing.
D. Consistent with the engagement objectives. - ✔✔Answer (D) is correct.
Relevant information supports engagement observations and recommendations and is
consistent with the objectives for the engagement (Inter. Std. 2310).
To determine the sufficiency of information regarding interpretation of a contract, an internal
auditor uses
A. The best obtainable information.
B. Subjective judgments.
C. Objective evaluations.
D. Logical relationships between information and issues. - ✔✔Answer (C) is correct.
Sufficient information is factual, adequate, and convincing so that a prudent, informed person
would reach the same conclusions as the auditor (Inter. Std. 2310). Because the internal auditor
must avoid distortion by personal feelings, prejudices, or interpretations, this judgment must be
objective.
In an operational audit, the internal auditors discovered an increase in absenteeism.
Accordingly, the chief audit executive decided to identify information about workforce morale.
To achieve this engagement objective, the internal auditors must understand that
,A. Morale cannot be reliably analyzed.
B. Only outcomes that are directly quantifiable can be reliably analyzed.
C. Reliable information may be obtained about morale factors such as job satisfaction.
D. Morale is always proportional to compensation. - ✔✔Answer (C) is correct.
Reliable information is the best information attainable through the use of appropriate
engagement techniques (Inter. Std. 2310). Such information need not consist only of
quantifiable outcomes, such as rates of workforce turnover and absenteeism. Reliable
information may be identified about such difficult-to-measure things as attitudes toward
supervisors, other workers, and compensation. For example, surveys may produce statistically
valid information about job satisfaction.
Reliable information is
A. Supportive of the engagement observations and consistent with the engagement objectives.
B. Helpful in assisting the organization in meeting prescribed goals.
C. Factual, adequate, and convincing so that a prudent person would reach the same conclusion
as the internal auditor.
D. Competent and the best attainable through the use of appropriate engagement techniques. -
✔✔Answer (D) is correct.
Reliable information is the best attainable information through the use of appropriate
engagement techniques (Inter. Std. 2310). An original document is the prime example of such
information.
Which of the following is an essential factor in evaluating the sufficiency of information? The
information must
A. Be well documented and cross-referenced in the working papers.
B. Be based on references that are considered competent.
,C. Bear a direct relationship to the observation and include all of the elements of an
observation.
D. Be convincing enough for a prudent person to reach the same decision. - ✔✔Answer (D) is
correct.
Sufficient information is factual, adequate, and convincing so that a prudent, informed person
would reach the same conclusions as the auditor (Inter. Std. 2310).
While testing a division's compliance with company affirmative-action policies, an auditor found
that
1. 5% of the employees are from minority groups.
2.No one from a minority group has been hired in the past year.
The most appropriate conclusion for the auditor to reach is that
A. Insufficient evidence exists of compliance with affirmative-action policies.
B. The division is violating the company's policies.
C. The company's policies cannot be audited and hence cannot be enforced.
D. With 5% of its employees from minority groups, the division is effectively complying. -
✔✔Answer (A) is correct.
Sufficient information is factual, adequate, and convincing so that a prudent, informed person
would reach the same conclusions as the auditor (Inter. Std. 2310). Without knowledge of
guidelines for compliance, the auditor cannot draw a reasonable conclusion given the
insufficiency of the facts. Thus, the auditor must determine whether management has
established adequate criteria or should work with management to develop such criteria.
Reliable evidence is best defined as evidence that
, A. Is the best attainable.
B. Is obtained by observing people, property, and events.
C. Is supplementary to other evidence already gathered and tends to strengthen or confirm it.
D. Proves an intermediate fact, or group of facts, from which still other facts can be inferred. -
✔✔Answer (A) is correct.
Reliable information is the best information attainable through the use of appropriate
engagement techniques (Inter. Std. 2310). Information is reliable when the auditor's results can
be verified by others. Reliable information is also valid. It accurately represents the observed
phenomena. Information must be collected using reasonable efforts subject to such inherent
limitations as the cost-benefit constraint. Accordingly, internal auditors employ efficient
methods, e.g., statistical sampling and analytical auditing procedures.
While performing an engagement relating to an organization's cash controls, the internal
auditor observed that cash deposits are not deposited intact daily. A comparison of a sample of
cash receipts lists revealed that each cash receipt list equaled cash journal entry amounts but
not daily bank deposits amounts, and cash receipts list totals equaled bank deposit totals in the
long run. This information as support for the internal auditor's observations is
A. Sufficient but not reliable or relevant.
B. Sufficient, reliable, and relevant.
C. Not sufficient, reliable, or relevant.
D. Relevant but not sufficient or reliable - ✔✔Answer (B) is correct.
The bank deposits can be verified by examining bank statements obtained directly from the
bank. Information obtained from an independent source is usually more reliable than
information secured solely within the entity. Moreover, it is obviously relevant to the issue of
whether cash receipts are deposited intact. A reasonable internal auditor should judge that the
comparison of the organization's records with independently obtained bank statements is
persuasive of the proposition that cash receipts are not deposited intact. Thus, the information
is also sufficient.
Which of the following is a false statement about the reliability of audit evidence?
