An Audit to Test the System of Controls Over the Purchase

question 222

Multiple Choice

An audit to test the system of controls over the purchase, distribution, and use of radioactive material is being conducted at a company's plants. The process is well documented, and employees in the safety department are very familiar with the department's procedures. Since the purchasing and facilities departments are involved in the process, the auditor is considering reviewing their radioactive material-handling procedures as well. The auditor should:

• A) Have confidence in the rigorous and detailed safety department procedures, since that department has the main responsibility for radiation safety, and should not use audit time to review other departments.
• B) Adjust the engagement schedule and budget, if needed, and interview the appropriate individuals in the purchasing and facilities departments to ascertain whether additional controls exist that complement those identified within the safety department.
• C) Test the controls identified within the safety department; if results are unfavorable, the auditor should consider whether to involve the other departments.
• D) Defer questions regarding purchasing, facilities, and other departments until audit projects can be scheduled for those departments.

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Definitions:

Unemployment Insurance

A government program that provides temporary financial assistance to workers who have lost their jobs through no fault of their own.

Minimum-Wage Law

Legislation that establishes the lowest hourly wage that employers can legally pay their workers.

Equilibrium Wage

The wage rate at which the quantity of labor demanded by employers equals the quantity of labor supplied by workers.

Labor Supplied

The total number of hours that workers are willing and able to work at a given wage rate.