Certified Internal Auditor (CIA) Practice Test

A set of engagement working papers contained information that an expensive item was actually on hand on a particular date. The most likely source of this information is a printout from which of the following?

1. Purchases journal.

2. Cash payments journal.

3. Perpetual inventory file.

4. Receiving report file.

The correct answer is: Perpetual inventory file.

The correct choice is a printout from the perpetual inventory file because this file continuously updates the inventory records in real-time as transactions occur, reflecting the current availability and status of items in stock. On a specific date, as queried in the question, the perpetual inventory file would show whether the expensive item was physically on hand at that time. This is essential for internal audit engagements, as the perpetual inventory system provides detailed and accurate information about inventory levels, including quantities and costs. It is an important tool for auditors to assess the reliability of inventory management and ensure the accuracy of financial reporting. In contrast, other options do not provide direct evidence of an item's physical presence at a specific date. For instance, the purchases journal records transactions related to the acquisition of goods but does not track current inventory levels or indicate what is currently on hand. Similarly, the cash payments journal focuses on payments made and does not connect to physical inventory status. The receiving report file contains documentation related to the receipt of items but may not reflect their current availability or condition after subsequent transactions. Thus, the perpetual inventory file is the most appropriate source for confirming the existence of the item on the specified date.