It Would Be Appropriate for an Internal Audit Activity to Use

question 303

Multiple Choice

It would be appropriate for an internal audit activity to use consultants with expertise in health-care benefits when the internal audit activity is:

• A) Conducting an audit of the organization's estimate of its liability for post retirement benefits, which include health care benefits. II. Comparing the cost of the organization's health care program with that of other programs offered in the industry. III. Training its staff to conduct an audit of health care costs in a major division of the organization.
• B) I only
• C) I and III only
• D) II and III only
• E) I, II, and III.

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Definitions:

Job-Order Costing System

A cost accounting system in which costs are assigned to specific jobs or orders, used in industries where goods or services are produced to order.

Machine-Hours

A measure of production time which quantifies the number of hours a machine is in operation.

Overhead Applied

The portion of overhead costs that are allocated to products or cost objects based on a predetermined overhead rate.

Customizing Department

A segment within a manufacturing or service company dedicated to modifying products or services to meet specific customer requests or needs.