46. Question ID: CIA 596 1.10 (Topic: D. Determine Engagement Procedures and Pre
- This topic has 2 replies, 2 voices, and was last updated 2 years, 3 months ago by Armindo Comar.
Answer I. is wrong???
Key: Actual versus budget => resulting 1) variance and 2) greater than 10% variance should be followed by explanation and approval.
Answer I has “over budget explanation and approval.” But, still wrong???
46. Question ID: CIA 596 1.10 (Topic: D. Determine Engagement Procedures and Prepare Work Program)
An electric utility company records capital and maintenance expenditures through the use of a computerized project tracking system. Labor, material, and overhead are charged to the applicable project number. Monthly reports are produced which detail individual charges to each project, and expenditure totals are provided for the current month, fiscal year, and project life to date.
Monthly project reports compare actual costs to original budget estimates and compute variances. Project variations greater than 10 percent of budget require subsequent explanation and approval by the supervisor.
Which of the following audit test(s) would the internal auditor use to determine whether the required procedure is being followed?
I. Select a sample of over-budget explanations and test for subsequent approvals.
II. Trace over-budget explanations to supporting monthly project reports.
III. Use audit software to recompute monthly project report variances and totals.
IV. Compare a sample of project variances to documented approvals and explanations.
A. III and IV.
B. I, II and III.
C. IV only.
D. I and II only.
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