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Question 188 - IIA-CIA-Part2 discussion

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An internal auditor is asked to determine why the production line for a large manufacturing organization has been experiencing shutdowns due to unavailable pacts 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?

A.
Compare purchase orders generated from test data input into the LAN with purchase orders generated from production data for the most recent period
Answers
A.
Compare purchase orders generated from test data input into the LAN with purchase orders generated from production data for the most recent period
B.
Develop a report of excess inventory and compare the inventory with current production volume
Answers
B.
Develop a report of excess inventory and compare the inventory with current production volume
C.
Compare the pans 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
Answers
C.
Compare the pans 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
D.
Select a sample of production estimates and MRPs for several periods and trace them into the system to determine that input is accurate
Answers
D.
Select a sample of production estimates and MRPs for several periods and trace them into the system to determine that input is accurate
Suggested answer: C

Explanation:

To test the theory that shutdowns are occurring due to outdated purchasing requirements that have not been updated for changes in production techniques, the auditor should compare the parts needed based on the most current production estimates and the revised materials requirements plan (MRP) with the purchase orders generated from the system. This comparison will help identify discrepancies between what is needed and what is being ordered, highlighting whether the system is failing to update purchasing requirements correctly. This method directly addresses the suspected cause of the shutdowns and provides clear evidence for or against the auditor's theory.

Reference:

Institute of Internal Auditors (IIA), International Standards for the Professional Practice of Internal Auditing (Standards), Standard 2310 -- Identifying Information.

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asked 18/09/2024
Euwing Mendoza
44 questions
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