Auditing Principles & Procedures Flashcards
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Read the first 7 Auditing Principles & Procedures flashcards as text
During a procurement audit, the auditor discovers that a buyer consistently awarded contracts to a single vendor without soliciting competing bids. Which audit finding category best describes this situation?
Answer: Compliance violation
Bypassing the competitive bidding requirement is a compliance violation because it breaches established procurement policies and regulations.
What is the primary purpose of an exit conference at the conclusion of a procurement audit?
Answer: To present preliminary findings and obtain management's response
The exit conference allows auditors to present preliminary findings so management can clarify facts and provide initial responses before the final report is issued.
An auditor is reviewing purchase orders and notices that several POs lack an authorized signature but were still processed. This is an example of a breakdown in which internal control type?
Answer: Preventive control
Authorization requirements are preventive controls designed to stop unauthorized transactions before they occur.
Which sampling method is most appropriate when an auditor wants to estimate the total dollar error in a large population of invoices?
Answer: Monetary unit sampling
Monetary unit sampling (MUS) weights selections by dollar amount, making it ideal for estimating total dollar misstatement in a population.
A procurement auditor wants to verify that goods received match what was ordered and invoiced. Which three-way match procedure should be performed?
Answer: Match PO, receiving report, and invoice
The three-way match compares the purchase order, receiving report, and vendor invoice to confirm quantity, price, and item accuracy before payment.
When auditing a vendor selection process, which condition would most likely indicate bid rigging?
Answer: Losing bidders' prices were clustered just above the winning bid
Prices clustered just above the winner suggest competitors deliberately bid high to let a pre-selected vendor win, a classic bid rigging pattern.
Which documentation is considered the most reliable audit evidence when verifying that goods were received?
Answer: Internally prepared receiving report signed by receiving staff
An internally prepared and signed receiving report is the most reliable evidence because it is created by the organization's own staff at the point of physical receipt.