Question 1

Which of the following would most likely be found in an organization that uses a decentralized organizational structure?

Accepted Answer

A)  There is a higher reliance on organizational culture. 
B)  There are clear expectations set for employees. 
C)  There are electronic monitoring techniques employed. 
D)  There is a defined code for employee behavior. 
A)  There is a higher reliance on organizational culture. 
B)  There are clear expectations set for employees. 
C)  There are electronic monitoring techniques employed. 
D)  There is a defined code for employee behavior.

Question 2

During the last year, an organization had an opening inventory of $300,000, purchases of $980,000, sales of $1,850,000, and a gross margin of 40 percent. What is the closing inventory if the periodic inventory system is used?

Accepted Answer

A)  $170,000 
B)  $280,000 
C)  $300,000 
D)  $540,000 
A)  $170,000 
B)  $280,000 
C)  $300,000 
D)  $540,000

Question 3

In an organization where enterprise risk management practices are mature, which of the following is a core internal audit role?

Accepted Answer

A)  Giving assurance that risks are evaluated correctly. 
B)  Developing the risk management strategy for the board's approval. 
C)  Facilitating the identification and evaluation of risks. 
D)  Coaching management in responding to risk. 
A)  Giving assurance that risks are evaluated correctly. 
B)  Developing the risk management strategy for the board's approval. 
C)  Facilitating the identification and evaluation of risks. 
D)  Coaching management in responding to risk.

Question 4

A large retail customer made an offer to buy 10,000 units at a special price of $7 per unit. The manufacturer usually sells each unit for $10. Variable manufacturing costs are $5 per unit and fixed manufacturing costs are $3 per unit. For the manufacturer to accept the offer, which of the following assumptions needs to be true?

Accepted Answer

A)  Fixed and variable manufacturing costs are less than the special offer selling price. 
B)  The manufacturer can fulfill the order without expanding the capacities of the production facilities. 
C)  Costs related to accepting this offer can be absorbed through the sale of other products. 
D)  The manufacturer's production facilities are currently operating at full capacity. 
A)  Fixed and variable manufacturing costs are less than the special offer selling price. 
B)  The manufacturer can fulfill the order without expanding the capacities of the production facilities. 
C)  Costs related to accepting this offer can be absorbed through the sale of other products. 
D)  The manufacturer's production facilities are currently operating at full capacity.

Question 5

The main reason to establish internal controls in an organization is to:

Accepted Answer

A)  Encourage compliance with policies and procedures. 
B)  Safeguard the resources of the organization. 
C)  Ensure the accuracy, reliability, and timeliness of information. 
D)  Provide reasonable assurance on the achievement of objectives. 
A)  Encourage compliance with policies and procedures. 
B)  Safeguard the resources of the organization. 
C)  Ensure the accuracy, reliability, and timeliness of information. 
D)  Provide reasonable assurance on the achievement of objectives.

Question 6

A department purchased one copy of a software program for internal use. The manager of the department installed the program on an office computer and then made two complete copies of the original software. Copy 1 was solely for backup purposes. Copy 2 was for use by another member of the department. In terms of software licenses and copyright law, which of the following is correct?

Accepted Answer

A)  Both copies are legal. 
B)  Only copy 1 is legal. 
C)  Only copy 2 is legal. 
D)  Neither copy is legal. 
A)  Both copies are legal. 
B)  Only copy 1 is legal. 
C)  Only copy 2 is legal. 
D)  Neither copy is legal.

Question 7

Which of the following conflict resolution methods should be applied when the intention of the parties is to solve the problem by clarifying differences and attaining everyone's objectives?

Accepted Answer

A)  Accommodating. 
B)  Compromising. 
C)  Collaborating. 
D)  Competing. 
A)  Accommodating. 
B)  Compromising. 
C)  Collaborating. 
D)  Competing.

Question 8

International marketing activities often begin with:

Accepted Answer

A)  Standardization. 
B)  Global marketing. 
C)  Limited exporting. 
D)  Domestic marketing. 
A)  Standardization. 
B)  Global marketing. 
C)  Limited exporting. 
D)  Domestic marketing.

Question 9

According to IIA guidance, which of the following steps are most important for an internal auditor to perform when evaluating an organization's social and environmental impact on the local community? 1. Determine whether previous incidents have been reported, managed, and resolved. 2. Determine whether a business contingency plan exists. 3. Determine the extent of transparency in reporting. 4. Determine whether a cost/benefit analysis was performed for all related projects.

Accepted Answer

A)  1 and 3. 
B)  1 and 4. 
C)  2 and 3. 
D)  2 and 4. 
A)  1 and 3. 
B)  1 and 4. 
C)  2 and 3. 
D)  2 and 4.

Question 10

Which of the following factors would reduce dissatisfaction for a management trainee but would not particularly motivate the trainee?

Accepted Answer

A)  A sense of achievement. 
B)  Promotion. 
C)  Recognition. 
D)  An incremental increase in salary. 
A)  A sense of achievement. 
B)  Promotion. 
C)  Recognition. 
D)  An incremental increase in salary.

Question 11

If legal or regulatory standards prohibit conformance with certain parts of The IIA's Standards, the auditor should do which of the following?

Accepted Answer

A)  Conform with all other parts of The IIA's Standards and provide appropriate disclosures. 
B)  Conform with all other parts of The IIA's Standards; there is no need to provide appropriate disclosures. 
C)  Continue the engagement without conforming with the other parts of The IIA's Standards. 
D)  Withdraw from the engagement. 
A)  Conform with all other parts of The IIA's Standards and provide appropriate disclosures. 
B)  Conform with all other parts of The IIA's Standards; there is no need to provide appropriate disclosures. 
C)  Continue the engagement without conforming with the other parts of The IIA's Standards. 
D)  Withdraw from the engagement.

Question 12

An organization produces two products, X and Y. The materials used for the production of both products are limited to 500 kilograms (kg) per month. All other resources are unlimited and their costs are fixed. Individual product details are as follows: Product X Product Y Selling price per unit $10 $13 Materials per unit (at $1/kg) 2 kg 6 kg Monthly demand 100 units 120 units In order to maximize profit, how much of product Y should the organization produce each month?

Accepted Answer

A)  50 units. 
B)  60 units. 
C)  100 units. 
D)  120 units. 
A)  50 units. 
B)  60 units. 
C)  100 units. 
D)  120 units.

Question 13

At what point during the systems development process should an internal auditor verify that the new application's connectivity to the organization's other systems has been established correctly?

Accepted Answer

A)  Prior to testing the new application. 
B)  During testing of the new application. 
C)  During implementation of the new application. 
D)  During maintenance of the new application. 
A)  Prior to testing the new application. 
B)  During testing of the new application. 
C)  During implementation of the new application. 
D)  During maintenance of the new application.

Question 14

An organization engages in questionable financial reporting practices due to pressure to meet unrealistic performance targets. Which internal control component is most negatively affected?

Accepted Answer

A)  Monitoring. 
B)  Control activities. 
C)  Risk assessment. 
D)  Control environment. 
A)  Monitoring. 
B)  Control activities. 
C)  Risk assessment. 
D)  Control environment.

Question 15

An internal auditor found the following information while reviewing the monthly financial statements for a wholesaler of safety glasses: Opening inventory:       1,000 units at $2 per unit Purchased:                 5,000 units at $3 per unit Sold:                          3,000 units at $7 per unit The cost of goods sold was reported at $8,500. Which of the following inventory methods was used to derive this value?

Accepted Answer

A)  Average cost method. 
B)  First-in, first-out (FIFO) method. 
C)  Specific identification method. 
D)  Activity-based costing method. 
A)  Average cost method. 
B)  First-in, first-out (FIFO) method. 
C)  Specific identification method. 
D)  Activity-based costing method.

Question 16

Which of the following is a characteristic of an emerging industry?

Accepted Answer

A)  Established strategy of players. 
B)  Low number of new firms. 
C)  High unit costs. 
D)  Technical expertise. 
A)  Established strategy of players. 
B)  Low number of new firms. 
C)  High unit costs. 
D)  Technical expertise.

Question 17

Import quotas that limit the quantities of goods that a domestic subsidiary can buy from its foreign parent company represent which type of barrier to the parent company?

Accepted Answer

A)  Political. 
B)  Financial. 
C)  Social. 
D)  Tariff. 
A)  Political. 
B)  Financial. 
C)  Social. 
D)  Tariff.

Question 18

All of the following are possible explanations for a significant unfavorable material efficiency variance except:

Accepted Answer

A)  Cutbacks in preventive maintenance. 
B)  An inadequately trained and supervised labor force. 
C)  A large number of rush orders. 
D)  Production of more units than planned for in the master budget. 
A)  Cutbacks in preventive maintenance. 
B)  An inadequately trained and supervised labor force. 
C)  A large number of rush orders. 
D)  Production of more units than planned for in the master budget.

Question 19

How do data analysis technologies affect internal audit testing?

Accepted Answer

A)  They improve the effectiveness of spot check testing techniques. 
B)  They allow greater insight into high risk areas. 
C)  They reduce the overall scope of the audit engagement. 
D)  They increase the internal auditor's objectivity. 
A)  They improve the effectiveness of spot check testing techniques. 
B)  They allow greater insight into high risk areas. 
C)  They reduce the overall scope of the audit engagement. 
D)  They increase the internal auditor's objectivity.

Question 20

Which of the following is not included in the process of user authentication?

Accepted Answer

A)  Authorization. 
B)  Identification. 
C)  Verification. 
D)  Validation. 
A)  Authorization. 
B)  Identification. 
C)  Verification. 
D)  Validation.

Which of the following would most likely be found in an organization that uses a decentralized organizational structure?

During the last year, an organization had an opening inventory of $300,000, purchases of $980,000, sales of $1,850,000, and a gross margin of 40 percent. What is the closing inventory if the periodic inventory system is used?

In an organization where enterprise risk management practices are mature, which of the following is a core internal audit role?

The main reason to establish internal controls in an organization is to:

Which of the following conflict resolution methods should be applied when the intention of the parties is to solve the problem by clarifying differences and attaining everyone's objectives?

International marketing activities often begin with:

Which of the following factors would reduce dissatisfaction for a management trainee but would not particularly motivate the trainee?

If legal or regulatory standards prohibit conformance with certain parts of The IIA's Standards, the auditor should do which of the following?

At what point during the systems development process should an internal auditor verify that the new application's connectivity to the organization's other systems has been established correctly?

An organization engages in questionable financial reporting practices due to pressure to meet unrealistic performance targets. Which internal control component is most negatively affected?

Which of the following is a characteristic of an emerging industry?

Import quotas that limit the quantities of goods that a domestic subsidiary can buy from its foreign parent company represent which type of barrier to the parent company?

All of the following are possible explanations for a significant unfavorable material efficiency variance except:

How do data analysis technologies affect internal audit testing?

Which of the following is not included in the process of user authentication?

Certified Financial Services Auditor

Certified Government Auditing Professional

The Internal Audit Activity Role in Governance, Risk, and Control

Conducting the Internal Audit Engagement

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Exam 5: Business Analysis and Information Technology

Which of the following would most likely be found in an organization that uses a decentralized organizational structure?

During the last year, an organization had an opening inventory of $300,000, purchases of $980,000, sales of $1,850,000, and a gross margin of 40 percent. What is the closing inventory if the periodic inventory system is used?

In an organization where enterprise risk management practices are mature, which of the following is a core internal audit role?

The main reason to establish internal controls in an organization is to:

Which of the following conflict resolution methods should be applied when the intention of the parties is to solve the problem by clarifying differences and attaining everyone's objectives?

International marketing activities often begin with:

Which of the following factors would reduce dissatisfaction for a management trainee but would not particularly motivate the trainee?

If legal or regulatory standards prohibit conformance with certain parts of The IIA's Standards, the auditor should do which of the following?

At what point during the systems development process should an internal auditor verify that the new application's connectivity to the organization's other systems has been established correctly?

An organization engages in questionable financial reporting practices due to pressure to meet unrealistic performance targets. Which internal control component is most negatively affected?

Which of the following is a characteristic of an emerging industry?

Import quotas that limit the quantities of goods that a domestic subsidiary can buy from its foreign parent company represent which type of barrier to the parent company?

All of the following are possible explanations for a significant unfavorable material efficiency variance except:

How do data analysis technologies affect internal audit testing?

Which of the following is not included in the process of user authentication?

Certified Financial Services Auditor

Certified Government Auditing Professional

The Internal Audit Activity Role in Governance, Risk, and Control

Conducting the Internal Audit Engagement

Filters