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When forming an opinion on the adequacy of management's systems of internal control, which of the following findings would provide the most reliable assurance to the chief audit executive?
* During an audit of the hiring process in a law firm, it was discovered that potential employees' credentials were not always confirmed sufficiently. This process remained unchanged at the following audit.
* During an audit of the accounts payable department, auditors calculated that two percent of accounts were paid past due. This condition persisted at a follow up audit.
* During an audit of the vehicle fleet of a rental agency, it was determined that at any given time, eight percent of the vehicles were not operational. During the next audit, this figure had increased.
* During an audit of the cash handling process in a casino, internal audit discovered control deficiencies in the transfer process between the slot machines and the cash counting are
a. It was corrected immediately.
Suggested Answer: A
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38 comments · newest first
IR
Iraida
10 months ago
Surprised that 8% of rental vehicles were out of service!
RE
Reta
11 months ago
2 is just a small percentage, not that concerning.
AL
Albert
11 months ago
Wait, how can 2 and 4 be reliable if they had issues too?
CO
Cory
11 months ago
Totally agree, those are major red flags!
JI
Jina
11 months ago
1 and 3 show persistent issues.
DO
Dorothy
12 months ago
I’m leaning towards option 2 and 4, but I’m not confident. The accounts payable issue seems serious, and the cash handling deficiencies could lead to big losses.
WI
Wilda
12 months ago
I feel like we practiced a similar question where we had to identify the most significant risks. I think option 1 might be less severe since it’s just about hiring.
AL
Aleta
12 months ago
I'm not entirely sure, but I think the cash handling process in the casino is critical. If they found deficiencies, wouldn't that be a red flag?
AN
Antonio
1 year ago
I remember we discussed how persistent issues in audits indicate weak internal controls, so maybe options 2 and 3 are more concerning?
DA
Daniel
1 year ago
I'm a little unsure about this. I'll need to carefully weigh the different findings and think about which ones would provide the most reliable assurance to the chief audit executive.
IV
Ivory
1 year ago
I'm feeling pretty confident about this one. The control deficiencies that were not corrected, like the issues with the vehicle fleet and the accounts payable, seem like the most reliable indicators of the adequacy of the internal controls.
CI
Ciara
1 year ago
Hmm, I'm a bit confused by the wording of the question. I'll need to re-read it a few times to make sure I understand what they're asking.
LI
Linette
1 year ago
This seems like a tricky question. I'll need to carefully consider the different findings and how they relate to the reliability of the internal controls.
KA
Kattie
1 year ago
Okay, I think I've got a handle on this. The key is to identify which findings show persistent control issues that weren't addressed, as that would provide the most reliable assurance to the chief audit executive.
HE
Heike
1 year ago
Okay, I've got this. Validation rules are the way to go here - they allow you to define specific criteria for valid data and prevent invalid entries from being saved.
JA
Janae
1 year ago
Okay, I think I've got it. The issue is that Paul didn't properly assign Adam the necessary permissions to test Bea's updates.
LO
Louann
1 year ago
I'm feeling pretty confident about this one. The 'oam vprn-ping' command with the correct source and destination IPs should be the way to go.
RA
Raul
1 year ago
This seems like a straightforward allocation question, but I want to make sure I understand the details before jumping in.
CA
Carla
1 year ago
Sounds like the management needs to 'rent' some better internal controls in that vehicle fleet audit.
RI
Rikki
1 year ago
Agreed, those findings would provide the most reliable assurance to the chief audit executive.
RI
Rikki
1 year ago
The hiring process and cash handling process are key areas to focus on for reliable assurance.
RI
Rikki
1 year ago
B) 1 and 4 only
KR
Krissy
1 year ago
The casino's cash handling issues must be wild. I bet the auditors had a real 'high stakes' job on their hands.
DE
Dean
1 year ago
Wait, so the auditors found problems with the hiring process, accounts payable, vehicle fleet, and cash handling, and none of them were fully corrected? Sounds like a hot mess to me!
LO
Loreta
1 year ago
D) 2 and 4 only
AN
Annett
1 year ago
C) 2 and 3 only
KR
Kristel
1 year ago
B) 1 and 4 only
AL
Aleta
1 year ago
A) 1 and 3 only
ES
Estrella
1 year ago
I'm leaning towards option D. Persistent issues in accounts payable and the vehicle fleet suggest deeper problems that need to be addressed.
CE
Cecilia
1 year ago
User 2
AL
Alline
1 year ago
User 1
VI
Vicki
1 year ago
B) 1 and 4 only
FA
Fannie
1 year ago
D) 2 and 4 only
GE
Gerri
1 year ago
The cash handling process in the casino sounds like the most critical area. If they can get that right, the other findings seem less severe in comparison.
MI
Mitsue
2 years ago
Hmm, I think the most reliable assurance would be if the control deficiencies were corrected immediately. That shows the management is taking the issues seriously and making changes to strengthen the internal controls.
DA
Dante
2 years ago
So, the answer would be option D, right?
JO
Josphine
2 years ago
I agree, that would provide the most reliable assurance to the chief audit executive.
DA
Dante
2 years ago
I think finding control deficiencies in the cash handling process is crucial.