The Following Portion of the Test Includes Several Case Studies

question 25

Multiple Choice

The following portion of the test includes several Case Studies. Each Case Study includes introductory information about a specific company or audit situation, followed immediately by a set of questions related to the situation described and various audit-related documents, identified by company name. All of the audit-related documents for these Case Studies are presented in a separate booklet labeled: CONFIDENTIAL Audit Documents These documents were drawn from actual companies and are designed to be examples of genuine audit materials. Their format and contents have not been altered, and they are intended to represent working documents from everyday situations. Although the documents for the Case Studies are presented separately, the test will be scored as a whole, on a total of 150 questions. You may go back and check your work on any part of the examination until time is called at the end of the testing period. Two auditors are conducting an internal audit of the Quality Electronics and Elements Co. (QEE) system procedures. During the first day of the audit, the following observations were made. An outbound carton with obvious damage was examined by the auditor on the shipping dock. A shipment of six (6) boxes to Allied Supply was returned because the customer-required certifications did not accompany the product. Unsigned product verification documents were found on stored products. Of three (3) cartons found in the accepted materials station, only two of the cartons had labels indicating their contents. When the auditor pointed this out, a customer service representative immediately affixed the proper label to the one unlabeled carton. The auditor also found that "Accepted Material Traveler Cards" were not attached to any of the cartons in the accepted materials station. During the second day of the audit, another unlabeled product container was delivered to the accepted materials station. When the auditor noted the lack of label, the auditee immediately filled out a label and affixed it to the container. In this situation, the auditor should do which of the following?

• A) Write an observation that the auditee identified the container properly.
• B) Write a finding because an improperly identified container could be shipped.
• C) Write a finding against the Receiving department.
• D) Write a finding to encourage a root cause analysis.

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Definitions:

Intra-entity Transfers

Transactions involving assets, services, or funds between divisions, departments, or units within the same organization.

Voting Stock

Shares of stock that grant the shareholder the right to vote on corporate matters.

Inventory

The total amount of goods and materials held by a company for the purpose of resale or production.