Learn about the most effective audit testing methods, including physical observation and testimonial evidence, for evaluating risks in an oil dispatch process. Prepare for the IIA CIA Part 2 Exam with this sample question and detailed answer explanation.
Table of Contents
Question
An internal auditor was assigned to assess the risks related to the oil dispatch process. The auditor visited the oil dispatch facilities, met the manager responsible for oil sales, saw oil being loaded onto railway carriers, and talked to employees involved in the process. Which of the following best describes these audit testing methods?
A. Obtaining documentary evidence and performing questioning.
B. Conducting interviews and performing analytical procedures.
C. Performing onsite inspection and obtaining physical evidence.
D. Conducting physical observation and obtaining testimonial evidence.
Answer
D. Conducting physical observation and obtaining testimonial evidence.
Explanation
The internal auditor in this scenario employed two key audit testing methods to assess the risks related to the oil dispatch process:
- Physical Observation: The auditor visited the oil dispatch facilities in person and directly observed the process of oil being loaded onto railway carriers. Physical observation provides firsthand knowledge and understanding of how a process actually works in practice. It allows the auditor to identify potential risks or control weaknesses that may not be apparent from documentation alone.
- Testimonial Evidence: The auditor met with the manager responsible for oil sales and talked to employees involved in the oil dispatch process. This allowed the auditor to obtain testimonial evidence – verbal statements, explanations and opinions directly from personnel with knowledge of the process. Testimonial evidence helps provide insights into the process, associated risks, and how controls are actually implemented by staff.
The other answer choices are not the best fit:
A. Obtaining documentary evidence and questioning are audit methods, but documentary evidence was not mentioned in the scenario. The auditor obtained testimonial evidence through interviews/conversations rather than structured questioning.
B. The auditor conducted interviews which provided testimonial evidence, but did not perform analytical procedures, which involve analyzing data to identify trends, anomalies or risks.
C. The auditor performed an onsite inspection to observe the process, but did not obtain physical evidence, which refers to tangible items like documents or assets.
Therefore, conducting physical observation and obtaining testimonial evidence best summarize the key audit testing methods applied by the internal auditor to assess risks in the oil dispatch process.
IIA-CIA-Part2 certification exam assessment practice question and answer (Q&A) dump including multiple choice questions (MCQ) and objective type questions, with detail explanation and reference available free, helpful to pass the IIA-CIA-Part2 exam and earn IIA-CIA-Part2 certification.