CIA EXAM 2 FRAUD.FINAL TEST EXAM 2026\2027.
A computer programmer fraudulently altered the accounts payable program to have
certain valid vendor checks mailed to a personal address. At this point, they were
deposited to a fraudulent account. The control to prevent this misappropriation would
be to...
Ensure that only documented, independently tested, and approved changes are made to
application programs
A director of internal auditing uncovers a significant fraudulent activity, which clearly
involves the executive vice president to whom the director reports. which of the
following best describes how the director should proceed?
Report the facts to the chief executive officer and the audit committee of the board of
directors.
After completing an investigation, internal auditing has concluded that an employee
has stolen material amount of cash receipts. A draft of the proposed report on this
finding should be reviewed by:
Legal Counsel
An accounting clerk developed a scheme to input fraudulent invoices for nonexistent
vendors. All the payments were sent to the same address. The auditor suspects a
possible fraud. The most effective computer audit technique to investigate the fraud
would be to:
Use Generalized Audit Software to compare addresses across multiple files and print out
duplicates for investigation.
In the audit example describe above, the auditor would test all of the vendor
information rather than a sample of the vendor transactions because:
The audit procedures used to compare vendor information require the reading of all
records.
An auditor finds a situation where there is some suspicion, but no evidence of
potential misstatement. The standard of due professional care would be violated if the
auditor:
Did not test for possible misstatement because the audit program had already been
approved by audit management.
, CIA EXAM 2 FRAUD.FINAL TEST EXAM 2026\2027.
An auditor is investigating the performance of a division with an unusually large
increase in sales, gross margin, and profit. which of the following indicators is least
likely to indicate the possibility of sales-related fraud in the division?
One of the division's major competitors went out of business during the year
An auditor is investigating the performance of a division with an unusually large
increase in sales, gross margin, and profit. If the auditor continued to suspect
fraudulent recording of transactions to increase reported profits, which of the
following audit procedures would be least effective?
Develop a schedule of inventory by month and investigate unusual fluctuations by reference
to the perpetual inventory records.
An auditor is investigating the performance of a division with an unusually large
increase in sales, gross margin, and profit. Assume the analysis shows unusually high
sales and gross margin during the months of November and December and the
auditor wishes to investigate further. which of the following audit procedures would
be most effective in analyzing whether or not fraudulent sales may have been
recorded?
Confirm accounts receivable with large customers
An employee of an insurance company processed a fraudulent policy loan application
for an amount less than the established level requiring supervisory review. The
employee then obtained the check and cashed it by forging the endorsement. To
prevent the loan's appearance on a subsequent policyholder statement, the loan
amount was transferred to a "suspense account". Which of the following should
expose the situation at the earliest date?
A computer report identifying unusual entries to the suspense account. Regular
reconciliation of the "suspense" account performed by an independent employee.
An internal auditor reported a suspected fraud to the director of internal auditing.
The director turned the entire case over to the security department. Security failed
to investigate or report the case to management. The perpetrator continued to
defraud the organization until being accidentally discovered by a line manager two
years later. Select the most appropriate action for the audit director:
The director should have periodically checked the status of the case with security.
A computer programmer fraudulently altered the accounts payable program to have
certain valid vendor checks mailed to a personal address. At this point, they were
deposited to a fraudulent account. The control to prevent this misappropriation would
be to...
Ensure that only documented, independently tested, and approved changes are made to
application programs
A director of internal auditing uncovers a significant fraudulent activity, which clearly
involves the executive vice president to whom the director reports. which of the
following best describes how the director should proceed?
Report the facts to the chief executive officer and the audit committee of the board of
directors.
After completing an investigation, internal auditing has concluded that an employee
has stolen material amount of cash receipts. A draft of the proposed report on this
finding should be reviewed by:
Legal Counsel
An accounting clerk developed a scheme to input fraudulent invoices for nonexistent
vendors. All the payments were sent to the same address. The auditor suspects a
possible fraud. The most effective computer audit technique to investigate the fraud
would be to:
Use Generalized Audit Software to compare addresses across multiple files and print out
duplicates for investigation.
In the audit example describe above, the auditor would test all of the vendor
information rather than a sample of the vendor transactions because:
The audit procedures used to compare vendor information require the reading of all
records.
An auditor finds a situation where there is some suspicion, but no evidence of
potential misstatement. The standard of due professional care would be violated if the
auditor:
Did not test for possible misstatement because the audit program had already been
approved by audit management.
, CIA EXAM 2 FRAUD.FINAL TEST EXAM 2026\2027.
An auditor is investigating the performance of a division with an unusually large
increase in sales, gross margin, and profit. which of the following indicators is least
likely to indicate the possibility of sales-related fraud in the division?
One of the division's major competitors went out of business during the year
An auditor is investigating the performance of a division with an unusually large
increase in sales, gross margin, and profit. If the auditor continued to suspect
fraudulent recording of transactions to increase reported profits, which of the
following audit procedures would be least effective?
Develop a schedule of inventory by month and investigate unusual fluctuations by reference
to the perpetual inventory records.
An auditor is investigating the performance of a division with an unusually large
increase in sales, gross margin, and profit. Assume the analysis shows unusually high
sales and gross margin during the months of November and December and the
auditor wishes to investigate further. which of the following audit procedures would
be most effective in analyzing whether or not fraudulent sales may have been
recorded?
Confirm accounts receivable with large customers
An employee of an insurance company processed a fraudulent policy loan application
for an amount less than the established level requiring supervisory review. The
employee then obtained the check and cashed it by forging the endorsement. To
prevent the loan's appearance on a subsequent policyholder statement, the loan
amount was transferred to a "suspense account". Which of the following should
expose the situation at the earliest date?
A computer report identifying unusual entries to the suspense account. Regular
reconciliation of the "suspense" account performed by an independent employee.
An internal auditor reported a suspected fraud to the director of internal auditing.
The director turned the entire case over to the security department. Security failed
to investigate or report the case to management. The perpetrator continued to
defraud the organization until being accidentally discovered by a line manager two
years later. Select the most appropriate action for the audit director:
The director should have periodically checked the status of the case with security.
