Explanation for choice c risk assessment is done in

Explanation for Choice C:
Risk assessment is done in the planning phase of the engagement, which helps to identify objectives. This has
to be done before the work program can be developed.
468
CORRECT ANSWER IS D . Its Explanation is
Internal auditors should develop work programs that achieve the engagement
objectives. An engagement work program collects, analyze, interpret, and
documents information.
INCORRECT CHOICES EXPLANATION

Section B – Planning the Engagement
MULTIPLE CHOICE QUESTION NO. 19
The internal auditor wishes to test the assertion that all claims paid by a medical insurer contain
proper authorization and documentation, including but not limited to the validity of the claim from
an approved physician and an indication that the claim complies with the claimant's policy. The
most appropriate engagement procedure is to select a sample of
A. All policyholders and examine all claims for the sampled items during the year to determine
whether they were handled properly.
B. Claims denied and determine that all claims denied were appropriate. The claims denied file is
much smaller and the internal auditor can obtain greater coverage with the sample size.
C. Claims filed and trace to documentary information about authorization and other supporting
documentation.
D. Paid claims from the claims (cash) disbursement file and trace to documentary information
about authorization and other supporting documentation.
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Section B – Planning the Engagement
ANSWER TO QUESTION NO. 19
Explanation for Choice A:
Sampling all policyholders and examining all claims would not be the most appropriate or efficient
engagement procedure.
Explanation for Choice B:
Claims denied would not provide the most useful information.
Explanation for Choice C:
The procedure would not provide information on the overall processing of claims. In addition, the
sample population should be not claims filed, but claims paid.
470
CORRECT ANSWER IS D . Its Explanation is
This would be the most useful procedure in determining whether paid claims were properly
authorized and were properly supported.
INCORRECT CHOICES EXPLANATION

Section B – Planning the Engagement
MULTIPLE CHOICE QUESTION NO. 20
Documentation required to plan an internal auditing engagement should include
information that
A. Intended engagement observations have been clearly identified.
B. Internal audit activity resources are efficiently and effectively employed.
C. Resources needed to complete the engagement were considered.
D. Planned engagement work will be completed on a timely basis.
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Section B – Planning the Engagement
ANSWER TO QUESTION NO. 20
Explanation for Choice A:
Intended engagement observations that should be identified would be determined by the scope of
work to be performed.
Explanation for Choice B:
IAA resources are efficiently and effectively employed can only be measured at the end of the
engagement.