CIM Inventory Auditing & Data Accuracy 5

Question 1

Which type of inventory variance is most likely to trigger a formal investigation rather than an automatic adjustment?

Accepted Answer

A variance that exceeds the dollar or percentage tolerance defined in audit policy

Answer

Audit policies define tolerance thresholds; variances exceeding those thresholds require investigation to identify root cause before an adjustment is approved.

Question 2

A perpetual inventory system maintains accuracy by:

Accepted Answer

Recording every inventory transaction in real time as items are received, moved, or shipped

Answer

A perpetual system updates records with each transaction, providing a continuously current on-hand quantity rather than a periodic snapshot.

Question 3

Which statistical technique is used in cycle counting to determine the sample size needed to achieve a desired confidence level in inventory accuracy?

Accepted Answer

Stratified random sampling

Answer

Stratified random sampling divides inventory into strata (e.g., ABC classes) and selects random samples from each to produce statistically valid accuracy estimates.

Question 4

When an inventory audit reveals consistent negative variances (system shows more than physical) in a specific product category, the investigation should first examine:

Accepted Answer

Outbound transaction processes — picking, shipping, and returns — for that category

Answer

Consistent negative variances suggest unrecorded outbound movements — unscanned picks, shipping without system updates, or improperly processed customer returns.

Question 5

An inventory audit that is conducted by an independent external party provides which primary benefit over an internal audit?

Accepted Answer

It provides an unbiased assessment free from internal conflicts of interest

Answer

External auditors are independent of management pressures and internal biases, giving their findings greater credibility for financial reporting and governance purposes.

(CIM) Certified Inventory Manager Practice Test

(CIM) Certified Inventory Manager Practice Test

CIM Inventory Auditing & Data Accuracy 5