IIA Exam IIA-CHAL-QISA Topic 3 Question 8 Discussion

Actual exam question for IIA's IIA-CHAL-QISA exam

Question #: 8
Topic #: 3

An internal auditor is asked to determine why the production line for a large manufacturing organization has been experiencing shutdowns due to unavailable parts The auditor learns that production data used for generating automatic purchases via electronic interchange is collected on personal computers connected by a local area network (LAN) Purchases are made from authorized vendors based on both the production plans for the next month and an authorized materials requirements plan (MRP) that identifies the parts needed per unit of production. The auditor suspects the shutdowns are occurring because purchasing requirements have not been updated for changes in production techniques. Which of the following audit procedures should be used to test the auditor's theory?

ACompare purchase orders generated from test data Input into the LAN with purchase orders generated from production data for the most recent period.

BDevelop a report of excess inventory and compare the inventory with current production volume.

CCompare the parts needed based on current production estimates and the MRP for the revised production techniques with the purchase orders generated from the system for the same period

DSelect a sample of production estimates and MRPs for several periods and trace them into the system to determine that input is accurate

Show Suggested Answer

Suggested Answer: D

Testing Valuation: The valuation of trading securities requires comparing their carrying value with current market prices to ensure accuracy.

Market Quotations: Current market quotations provide the most reliable and up-to-date information on the fair value of securities.

Accounting Standards: This approach is consistent with accounting standards that require securities to be reported at fair value, reflecting any unrealized gains or losses.

Verification Process: Comparing the carrying value with market quotations helps verify that the securities are appropriately valued on the financial statements.

International Financial Reporting Standards (IFRS) and Generally Accepted Accounting Principles (GAAP) regarding fair value measurement.

by Rueben at Jul 17, 2024, 11:48 AM

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Hobert

5 days ago

I think option C is the way to go. Comparing the parts needed based on the new production techniques with the actual purchase orders would help identify the disconnect that's causing the shutdowns.

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