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IIA Business Knowledge for Internal Auditing Sample Questions (Q305-Q310):

NEW QUESTION # 305
Which of the following is not a characteristic of an effective evaluation system?

A. Unbiased.
B. Significant
C. Relevant.
D. Highly structured.

Answer: D

Explanation:
The system should be relevant, unbiased, significant, and practical. The evaluation system should be as objective, easy to use, clearly understood, and efficient as possible, but it is not necessary that it be highly structured.

NEW QUESTION # 306
Unauthorized alteration of online records can be prevented by employing:

A. Computer sequence checks.
B. Key verification.
C. Computer matching.
D. Database access controls.

Answer: D

Explanation:
Users can gain access to databases from terminals only through established recognition and authorization procedures: thus, unauthorized access is prevented.

NEW QUESTION # 307
An entity is subject to warranty claims. A reliable estimate is that between US $1 million and US $3 million will probably be paid out. No estimate of loss within this range is more likely than any other. The entity should:

A. Make no journal entry at this time.
B. Defer a provision of US $1 million to US $3 million depending on the applicable national accounting standards.
C. Disclose only a possible loss.
D. Recognize a provision of US $1 million to US $3 million depending on the applicable national accounting standards.

Answer: D

Explanation:
A provision is a liability of uncertain timing or amount. Recognition of provisions is appropriate when the entity has a legal or constructive present obligation results from a past event called an obligating event), it is probable that an outflow of economic benefits will be necessary to settle the obligation, and its amount can be reliably estimated. Thus, a provision should be recognized. Moreover, the amount recognized should be the best estimate of the expenditure required to settle the obligation. However, the amount within the reliable estimate of the range of the obligation that will be recognized will vary from country to country.

NEW QUESTION # 308
An internal auditor reviewed Finance Department records to obtain a list of current vendor addresses The auditor then compared the vendor addresses to a record of employee addresses maintained by the Payroll Department Which of the following types of data analysis did the auditor perform?

A. Joining data sources
B. Gap analysis
C. Classification
D. Duplicate testing.

Answer: C

NEW QUESTION # 309
The economic value of an entity will rise following an increase in:

A. The discount rate.
B. Net cash flow.
C. Unsystematic risk.
D. Systematic risk.

Answer: B

Explanation:
Net cash flow represents the numerator in the formula used to derive the value of the entity. Therefore, the economic value of the entity will increase as net cash flow increases. Presented below are partial year-end financial statement data for entities.

NEW QUESTION # 310
......

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