Q1. UJK manufactures garden machinery. The company is dependent upon another manufacturer for the motors that power its products. One of the factors that is being considered in a stress test requested by UJK's Board is the possibility that the motor manufacturer increases its selling prices by 10% The motor accounts for a significant proportion of the overall manufacturing cost of UJK's products Which of the following are correct?
A.The motor manufacturer should be contacted and told that a substantial increase in selling prices would have a drastic impact on UJK
B. The possibility of an increase in selling prices due to increased costs should be noted in the stress test report
C. UJK should estimate the impact on demand of increasing selling prices to pass on the increased cost of the motors.
D. The impact of absorbing the increased cost of motors on UJK's profits should be calculated.
E. UJK should identify an alternative vendor of suitable motors as part of its stress test
Correct Answer: C, D
Q2. Y Company wishes to recruit an employee who will have responsibility for the receipt and handling of cash From the point of view of the internal auditor which THREE of the following would be most likely to provide useful information about the candidate"?
A.Confirmation that the candidate does not have a criminal record
B. The candidate's personal referees
C. The candidate's membership of a professional body
D. The candidate's academic qualifications.
E. References from previous employers of the candidate.
Correct Answer: B, C, E
Q3. C is an accounts clerKwho is supposed to sign each invoice as evidence that she has conducted checks against supporting documents Sometimes C signs invoices without making these checks D is a member of the internal audit team He has been told to conduct compliance tests on whether C is checking the invoices property Which of the following would grve D a false sense of assurance that C's checks have been in operation? Select ALL that appry
A.D reviewed a sample of invoices for purchases of plant and equipment and found that C had not signed them C explained that she believed that those were authonsed by someone else although the accounts manual indicates that it was her responsibility
B. asked C a series of open-ended questions about the operation of the purchases system She did not mention anything about detailed checks of invoices against documents
C. D examined a sample of invoices to make sure that they had been signed by C AH had been signed selected a sample of purchase invoices and compared each to the supporting documents that C is supposed to review Every one of D's invoices was supported by the related documents
D. D worked at a spare desk in the accounts department and quietly watched C without telling her She checked every invoice carefully while D was present
Correct Answer: B, C, D
Q4. Y Company wishes to recruit an employee who will have responsibility for the receipt and handling of cash From the point of view of the internal auditor which THREE of the following would be most likely to provide useful information about the candidate"?
A.Confirmation that the candidate does not have a criminal record
B. The candidate's personal referees
C. The candidate's membership of a professional body
D. The candidate's academic qualifications.
E. References from previous employers of the candidate.
Correct Answer: B, C, E
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