IIA-CIA-PART2 · Question #176
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…
The correct answer is C. Compare the pans needed based on current production estimates and the MRP for the revised. To test the theory that shutdowns are occurring due to outdated purchasing requirements that have not been updated for changes in production techniques, the auditor should compare the parts needed based on the most current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…
Question
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?
Options
- ACompare purchase orders generated from test data input into the LAN with purchase orders
- BDevelop a report of excess inventory and compare the inventory with current production volume
- CCompare the pans needed based on current production estimates and the MRP for the revised
- DSelect a sample of production estimates and MRPs for several periods and trace them into the
How the community answered
(49 responses)- A20% (10)
- B4% (2)
- C65% (32)
- D10% (5)
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To test the theory that shutdowns are occurring due to outdated purchasing requirements that have not been updated for changes in production techniques, the auditor should compare the parts needed based on the most current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.
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