Which of the following is applicable to both a job order cost system and a process cost system'?

1. A. Total manufacturing costs are determined at the end of each period.
2. B. Costs are summarized in a production cost report for each department
3. C. Three manufacturing cost elements are tracked: direct materials, direct labor, and manufacturing overhead.
4. D. The unit cost can be calculated by dividing the total manufacturing costs for the period by the units produced during the period.

Correct Answer: C
Both job order cost systems and process cost systems track three manufacturing cost elements: direct materials, direct labor, and manufacturing overhead. These cost elements are essential in calculating the total production cost and determining the cost per unit.
✑ Direct Materials: The raw materials directly used in the production of goods.
✑ Direct Labor: The wages of workers who are directly involved in manufacturing the products.
✑ Manufacturing Overhead: Indirect costs associated with production, such as utilities, maintenance, and depreciation of equipment.
References:
✑ "Cost Accounting: A Managerial Emphasis," which details the tracking of manufacturing costs in different costing systems .

An internal auditor believes that the internal audit activity's independence is impaired Which of the following actions should the internal auditor take first?

1. A. Report the impairment to senior management
2. B. Discuss the impairment with the audit manager.
3. C. Ascertain the best approach to disclose the impairment.
4. D. Decide on the extent of impact of the impairment

Correct Answer: B
The board manages several key processes to ensure adequate governance within an organization, one of which is the development, approval, and execution of the strategic plan. This process is critical because it defines the organization's direction, goals, and the actions required to achieve these goals.
✑ Strategic Planning: The board plays a pivotal role in setting the organization's
strategic direction, which includes establishing long-term goals and defining the means to achieve them.
✑ Performance Measurement: While the board may establish and measure
performance objectives for the internal audit activity, this is part of a broader governance framework.
✑ Risk Management: The board also develops strategies to mitigate risks, ensuring
that the organization can achieve its objectives effectively.
Thus, the most comprehensive governance-related process managed by the board involves strategic planning

When determining the level of staff and resources to be dedicated to an assurance engagement, which of the following would be the most relevant to the chief audit executive?

1. A. The overall adequacy of the internal audit activity's resources
2. B. The availability of guest auditors for the engagement
3. C. The number of internal auditors used for the previous review of the same area.
4. D. The available resources with the specific skill set required

Correct Answer: D
When determining the level of staff and resources to dedicate to an assurance engagement, the most critical factor for the chief audit executive (CAE) is ensuring that the available resources possess the specific skill sets required for the engagement. This ensures that the internal audit team can effectively address the unique challenges and risks associated with the audit.
✑ Skill Set Relevance: The CAE must match the skills and knowledge of the audit
team to the specific requirements of the audit engagement. This includes technical expertise, industry knowledge, and any specialized skills needed for the audit.
✑ Resource Allocation: Effective allocation involves not just the number of auditors
but ensuring they have the right competencies to perform the audit tasks proficiently.
✑ Impact on Audit Quality: Allocating resources with the appropriate skill set ensures
the audit is thorough and of high quality, reducing the risk of overlooking critical issues.
References:
✑ "Managing Internal Audit Activities," which discusses the importance of aligning audit resources with the necessary skills for specific engagements .

According to IIA guidance, which of the following statements about analytical procedures is true?

1. A. Analytical procedures compare information against expectations
2. B. Analytical procedures begin after the engagements planning phase.
3. C. Analytical procedures provide internal auditors with explainable results.
4. D. Analytical procedures are computer-assisted audit techniques

Correct Answer: A
Analytical Procedures: These procedures involve evaluating financial information by studying plausible relationships among both financial and non-financial data. They help auditors form expectations about account balances or other financial data and then compare actual results to these expectations.
✑ Purpose: To identify any unusual or unexpected results that might indicate
potential misstatements.
IIA Guidance on Analytical Procedures:
✑ Comparison Against Expectations: This is the core aspect of analytical procedures. Auditors develop expectations based on their knowledge of the business, industry trends, historical data, and other relevant factors.
✑ Engagement Phases: Analytical procedures can be applied in various phases of an audit, not just after the planning phase.
Other Statements:
✑ Begin After Planning: Analytical procedures are often used during planning to understand the business and during substantive testing and review phases.
✑ Explainable Results: While they can provide insights, the primary purpose is not just to explain results but to identify discrepancies.
✑ Computer-Assisted Techniques: Analytical procedures can be performed manually or with the help of software, but they are not solely defined as computer-assisted techniques.

While reviewing the workpapers and draft report from an audit engagement, the chief audit executive (CAE) found that an Important compensating control had not been considered adequately by the audit team when it reported a major control weakness Therefore, the CAE returned the documentation to the auditor in charge for correction Based on this Information, which of the following sections of the workpapers most likely would require changes?
* 1.Effect of the control weakness.
* 2.Cause of the control weakness
* 3.Conclusion on the control weakness.
* 4.Recommendation for the control weakness.

1. A. 1, 2, and 3.
2. B. 1.2. and 4
3. C. 1,3, and 4.
4. D. 2, 3, and 4.

Correct Answer: C
✑ Introduction:
✑ Impact on Workpapers:
✑ Options Analysis:
✑ Conclusion:
:
Internal Audit Standards and Practice Guides