IIA Certified Government Auditing Professional IIA-CGAP Questions & Answers

• Question 31:

  The final investigative report serves all of the following major purposes please choose the correct option:

  A. Management overview or a brief summary of the case and details of the people involved and recommended actions.

  B. To provide a format for recording the essential details of the integrity violation.

  C. All of the above.

  D. To recommend improved management and security policies.

  Correct Answer: BD

• Question 32:

  Investment risk refers to the likelihood of a loss. All of the following given below are types of investment risk EXCEPT.

  A. Liquidity risk -- losses resulting because invested dollars cannot be accessed. Losses may occur from penalties for early withdrawal, for example.

  B. Economic Risks ?one of the most obvious risks of investing is that the economy can go bad.

  C. Default risk -- the possibility of a loss resulting from the bankruptcy of an organization in which funds were invested.

  D. Market risk -- the possibility of a loss resulting from choosing a relatively poor investment from a large pool of investments.

  Correct Answer: B

• Question 33:

  The most common form of service delivery is via government employees. It is this approach that has created bureaucracies at the national, regional, and, in some cases, local level. There are numerous fixed and variable costs associated with this approach. All of the following are types of costs EXCEPT:

  A. Personnel compensation (salary, retirement, insurance, accident compensation, etc.).

  B. Variable cost.

  C. Administrative costs (travel, training, employee relations, etc.).

  D. Facility costs (workplace, equipment, office supplies, etc.).

  Correct Answer: B

• Question 34:

  __________ result when evidence is used incorrectly. Where as ________ result from a failure to follow the logic of a series of statements. Deductive arguments are based on a series of statements or premises. Deductive logic states that if a series of premises is true, then the conclusion must also be true.

  A. Inductive fallacies, deductive fallacies

  B. Deductive fallacies, inductive fallacies

  C. All of the above.

  D. None of the above.

  Correct Answer: A

• Question 35:

  Activity-based costing (ABC) enables managers and auditors to directly link the costs of program resources to the objects produced, whether the objects are products or services. In addition, activity-based costing can be used to obtain cost information to use in the following ways:

  A. Fee setting -- government organizations often develop fee or payment schedules for units of service.

  B. Making contracting-out decisions -- many organizations are attempting to cut costs either by outsourcing various operations or by consolidating services.

  C. All of the above.

  D. None of the above.

  Correct Answer: C

• Question 36:

  All of the following are the examples management's red flags EXCEPT:

  A. Excessive number of year-end transactions (particularly if backed out in the next period).

  B. Unexpected overdrafts or declines in cash balance.

  C. Reluctance to provide information to auditors.

  D. High employee turnover, especially in areas that are more vulnerable to fraud.

  Correct Answer: D

• Question 37:

  In testing the controls established by management, auditors should be able to identify if there are high-risk areas for integrity violations. Auditor responsibilities for detecting integrity violations include all of the following EXCEPT:

  A. Auditors should evaluate the evidence and determine the appropriate course of action. An investigation may be warranted if indicators strongly suggest that integrity violations occurred.

  B. When significant control weaknesses are found, the auditor should conduct sufficient tests to determine if these weaknesses resulted in integrity violations. The level of testing should increase as the number or significance of control weaknesses increases.

  C. Auditors must not have the knowledge and skills to adequately identify when violations occurred.

  D. Auditors should notify the proper legal authorities, if warranted.

  Correct Answer: C

• Question 38:

  All of the following are the examples Purchasing/Inventory Red Flags EXCEPT:

  A. Increase in purchasing inventory but no increase in productivity.

  B. Customer complaints that they are not receiving notices for nonpayment on account.

  C. Payments to vendors who are not on approved vendor list.

  D. Vendors without physical addresses.

  Correct Answer: B

• Question 39:

  There are two major categories of questions interviewers can ask. _______ require the subject to give a detailed reply. ________ usually call for Yes/No replies or suggest a possible answer.

  A. Open-ended questions, interrogative questions

  B. Open-ended questions, closed-ended questions

  C. Interrogative questions, closed-ended questions

  D. Closed-ended questions, open-ended questions

  Correct Answer: B

• Question 40:

  All of the following are the examples of Cash/Accounts Receivable Red Flags please choose the correct option:

  A. Employee lifestyle changes: expensive cars, jewelry, homes, clothes.

  B. Behavioral changes: may be indication of drug, alcohol, or gambling problem.

  C. None of the above.

  D. All of the above.

  Correct Answer: C