,UNIVERSITY EXAMINATIONS
May/June 2024
AUI3701
The Internal Audit Process: Planning the Engagement
Total:100 marks
Duration: 2 hours
This paper consists of 17 pages.
, Question Main topic Marks
1 Multiple choice questions 15
2 Engagement planning 30
3 Human resources and payroll cycle 15
4 Revenue and receipt cycles 15
5 Fraud 25
100
Please note:
Although the primary purpose of the examination is to test your knowledge and application of
the subject matter, your ability to organise and present such knowledge in written language,
of an acceptable standard, will be taken into consideration by the examiners.
, QUESTION 1 15 MARKS REQUIRED 15 Marks
Select the correct option (1½ marks each).
1. During the preliminary risk assessment of an audit engagement involving a customer
service hotline, an internal auditor noticed an unusually high number of customers
complaining that payments were not timely reflected in their accounts. Which of the
following should most likely be the reason for the high volume of customer complaints?
A. Accounts receivable employees tampering with customer accounts.
B. An ineffective invoicing function.
C. Late payment by customers
D. Poor internal control on allocating payments received from customers.
2. During an interview with an employee responsible for approving insurance claims, the
internal auditor noticed the employee becoming nervous when the internal auditor
raised certain types of claims.
When documenting the interview, the internal auditor should:
A. Disregard the interview entirely because the employee might have felt intimidated.
B. Document the employee’s responses and note the nature of the nonverbal
communication.
C. Conclude that the employee’s nervousness was an indication that fraud had
occurred.
D. Document the employee’s responses only and disregard the nonverbal
communication.
3. When drafting an audit program, which of the following performance criteria would be
most useful when measuring the performance of the customer service department?
A. The number of customer complaints recorded per day.
May/June 2024
AUI3701
The Internal Audit Process: Planning the Engagement
Total:100 marks
Duration: 2 hours
This paper consists of 17 pages.
, Question Main topic Marks
1 Multiple choice questions 15
2 Engagement planning 30
3 Human resources and payroll cycle 15
4 Revenue and receipt cycles 15
5 Fraud 25
100
Please note:
Although the primary purpose of the examination is to test your knowledge and application of
the subject matter, your ability to organise and present such knowledge in written language,
of an acceptable standard, will be taken into consideration by the examiners.
, QUESTION 1 15 MARKS REQUIRED 15 Marks
Select the correct option (1½ marks each).
1. During the preliminary risk assessment of an audit engagement involving a customer
service hotline, an internal auditor noticed an unusually high number of customers
complaining that payments were not timely reflected in their accounts. Which of the
following should most likely be the reason for the high volume of customer complaints?
A. Accounts receivable employees tampering with customer accounts.
B. An ineffective invoicing function.
C. Late payment by customers
D. Poor internal control on allocating payments received from customers.
2. During an interview with an employee responsible for approving insurance claims, the
internal auditor noticed the employee becoming nervous when the internal auditor
raised certain types of claims.
When documenting the interview, the internal auditor should:
A. Disregard the interview entirely because the employee might have felt intimidated.
B. Document the employee’s responses and note the nature of the nonverbal
communication.
C. Conclude that the employee’s nervousness was an indication that fraud had
occurred.
D. Document the employee’s responses only and disregard the nonverbal
communication.
3. When drafting an audit program, which of the following performance criteria would be
most useful when measuring the performance of the customer service department?
A. The number of customer complaints recorded per day.
