Which of the following, if observed, would not indicate the need to extend the search for other indicators of fraud in a purchasing department?

• A.The cost of goods procured seems to be excessive in comparison with previous years.
• B.The standard of living of one of the purchasing agents has increased.
• C.The purchasing agents have convinced management to adopt a policy of paying vendors on a more timely basis in order to avoid incurring penalty charges.
• D.The internal control structure has significant weaknesses.

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Which of the following would provide the best evidence of compliance with an airline's standard of having aircraft refueled and cleaned within a specified time of arrival at an airport?

• A.Vendor fuel invoices that have been reconciled to inventory records.
• B.Time cards completed by aircraft cleaning and fueling crews.
• C.Observation of selected aircraft while they are being refueled and cleaned.
• D.Comparison of the standard hourly labor costs for cleaning and fueling personnel with actual labor charges.

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The best method for assessing the relative importance of risk factors is to:

• A.Change the rating of the factors from a 1-3 scale to a 1-5 scale.
• B.Assign weights to the factors based on the comparative impact.
• C.List the risk factors in a priority order.
• D.Use data from an independent source.

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Which of the following statements is false regarding roles and responsibilities pertaining to risk management and control?

• A.Senior management is charged with overseeing the establishment risk management and control processes.
• B.The chief audit executive is responsible for overseeing the evaluation risk management and control processes.
• C.Operating managers are responsible for assessing risks and controls in their departments.
• D.Internal auditors provide assurance about risk management and control process effectiveness.

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A company has recently incurred significant cost overruns on one of its construction projects. Management suspects that these overruns were caused by the contractor improperly accounting for costs related to contract change orders. Which of the following procedures would be appropriate for testing this suspicion?
I. Verify that the contractor has not charged change orders with costs that have already been billed to the original contract.
II. Determine if the contractor has billed for original contract work that was canceled as a result of change orders.
III. Verify that the change orders were properly approved by management.

• A.I only
• B.III only
• C.I and II only
• D.I and III only

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