CIA Part 3 Exam Materials, Free Certified Internal Auditor Practice Test

Question #1

Which of the following terms best describes the type of control practice evidenced by a segregation of duties between computer programmers and computer operators?

A. ystems development control

B. ardware control

C. pplications control

D. rganizational control

View answer

Correct Answer: D

Question #2

An entity plans to tighten its credit policy. The new policy will decrease the average number of days in collection from 75 to 50 days and will reduce the ratio of credit sales to total revenue from 70% to 60%. The entity estimates that projected sales will be 5% less if the proposed new credit policy is implemented. If projected sales for the coming year are US $50 million, calculate the dollar impact on accounts receivable of this proposed change in credit policy. Assume a 360-day year.

A. S $3,817,445 decrease

B. S $6,500,000 decrease

C. S $3,333,334 decrease

D. S $18,749,778 increase

View answer

Correct Answer: C

Question #3

A file-oriented approach to data storage requires a primary record key for each file.Which of the following is a primary record key?

A. he vendor number in an accounts payable master file

B. he vendor number in a closed purchase order transaction file

C. he vendor number in an open purchase order master file

D. ll of the answers are correct

View answer

Correct Answer: A

Question #4

Which implemented control would best assist in meeting the control objective that a system have the capability to hold users accountable for functions performed?

A. rogrammed cutoff

B. edundant hardware

C. ctivity

D. ransaction error logging

View answer

Correct Answer: C

Question #5

A control for ensuring that the source code and the executable code for a program match is:

A. erifying that the program move request is authorized

B. equiring program, system, and parallel testing of the code

C. uthorizing programmer access to test libraries only

D. ecompiling source code into the production load library

View answer

Correct Answer: D

Question #6

The bullwhip, or whiplash, effect on inventories begins when retailers face uncertain demand from consumers caused by randomness in buying habits. It can be avoided by:

A. he need to purchase or manufacture goods in cost-efficient batches

B. hanges in price that may encourage purchases in anticipation of future increases

C. hortages that may lead to rationing by suppliers or manufacturers and hoarding by manufacturers or retailers

D. haring of information and coordination among the organizations in the supply chain

View answer

Correct Answer: D

Question #7

To avoid invalid data input, a bank added an extra number at the end of each account number and subjected the new number to an algorithm. This technique is known as:

A. equence check

B. check digit

C. ross-footing

D. ield check

View answer

Correct Answer: B

Question #8

What language interface would a database administrator use to establish the structure of database tables?

A. ata definition language

B. ata control language

C. ata manipulation language

D. ata query language

View answer

Correct Answer: A

Question #9

The process of making sure that the model measures what it is supposed to measure is called:

A. tatistical inference

B. ypothesis testing

C. onfidence coefficient analysis

D. alidation

View answer

Correct Answer: D

Question #10

Your company (Company Y) has decided to enter the European market with one of its products and is now considering three advertising strategies. This market currently belongs to Company X. Company X is aware that your company is entering the market and is itself considering steps to protect its market. An analyst for your company has identified three strategies Company X might develop and has shown the payoffs for each in the tables below.The analyst has formulated this problem as a:

A. ero-sum game

B. ooperative game

C. risoner's dilemma

D. ame against nature

View answer

Correct Answer: A

Question #11

A chief executive officer CEO) believes that a major competitor may be planning a new campaign. The CEO sends a questionnaire to key personnel asking for original thinking concerning what the new campaign may be. The CEO selects the best possibilities then sends another questionnaire asking for the most likely option. The process employed by the CEO is called the

A. east squares technique

B. elphi technique

C. aximum likelihood technique

D. ptimizing of expected payoffs

View answer

Correct Answer: B

Question #12

An accounts payable program posted a payable to a vendor not included in the online vendor master file. A control that would prevent this error is a:

A. alidity check

B. ange check

C. easonableness test

D. arity check

View answer

Correct Answer: A

Question #13

When using PERT (Program Evaluation Review Technique), the expected time for an activity when given an optimistic time (a), a pessimistic time (b),andamostlikelytime(m) is calculated by which one of the following formulas?

A. b - a) + 2

B. a + b) + 2

C. a + 4m+b) + 6

D. 4abm) + 6

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Correct Answer: C

Question #14

A tax is regressive if:

A. ndividuals with higher incomes pay a higher percentage of their income in tax

B. he burden for payment falls disproportionately on lower-income persons

C. ndividuals pay a constant percentage in taxes, regardless of income level

D. ndividuals with lower incomes pay a lower percentage of their income in tax

View answer

Correct Answer: B

Question #15

Buyer-based pricing involves:

A. dding a standard markup to the cost of the product

B. etermining the price at which the product will earn a target profit

C. asing prices on the product's perceived value

D. asing prices on competitors' prices

View answer

Correct Answer: C

Question #16

In reviewing an organization's IT infrastructure risks, which of the following controls is to be tested aspart of reviewing workstations?

A. nput controls

B. egregation of duties

C. hysical controls

D. ntegrity controls

View answer

Correct Answer: D

Question #17

Given an acid-test ratio of 2.0, current assets of US $5,000, and inventory of US $2,000, the value of current liabilities is:

A. S $1,500

B. S $2,500

C. S $3,500

D. S $6,000

View answer

Correct Answer: A

Question #18

The sales manager for a builder of custom yachts developed the following conditional table for annual production and sales.According to the table, how many yachts should be built?

A. 0

B. 0

C. 0

D. 0

View answer

Correct Answer: C

Question #19

In the output or "expenditures" approach to measuring a country's gross domestic product, which of the following calculations is used?

A. onsumption + Investment + Government purchases + Expenditures by foreigners

B. onsumption + Investment + Government purchases - Expenditures by foreigners

C. onsumption+ Investment - Government purchases - Expenditures by foreigners

D. onsumption + Investment - Government purchases - Expenditures by foreigners

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Correct Answer: A

Question #20

Application control objectives do not normally include assurance that:

A. uthorized transactions are completely processed once and only once

B. ransaction data are complete and accurate

C. eview and approval procedures for new systems are set by policy and adhered to

D. rocessing results are received by the intended user

View answer

Correct Answer: C

Question #21

The College Honor Society sells hot pretzels at the home football games. The pretzels are sold for $1.00 each, and the cost per pretzel is $.30. Any unsold pretzels are discarded because they will be stale before the next home game.The frequency distribution of the demand for pretzels per game is presented as follows:Unit Sales VolumeProbability2.000 pretzels.103,000 pretzels.154.000 pretzels.205.000 pretzels.356.000 pretzels.20The estimated demand for pretzels at the next home football game using an expect

A.

B.

C. ,000 pretzels

D. one of the answers are correct

View answer

Correct Answer: B

Question #22

Dale has 20 days to complete production of an order for an important customer. The customer wants 96 units of product that may be painted either red or white. The red units can be produced at a rate of 4 per day. The white units, because of a different quality of paint, can be produced at a rate of 7 per day. The materials for the red units cost US $80 each, while the white units cost US $120 each. Dale wants to keep costs at a minimum.What is the constraint that expresses the number of units to be produced

A. R + 7W = 20

B. 4) + W = 7) <20

C. + W = 20

D. R + 7W = 96

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Correct Answer: B

Question #23

The carrying costs associated with inventory management include:

A. nsurance costs, shipping costs, storage costs, and obsolescence

B. torage costs, handling costs, capital invested, and obsolescence

C. urchasing costs, shipping costs, setup costs, and quantity discounts lost

D. bsolescence, setup costs, capital invested, and purchasing costs

View answer

Correct Answer: B

Question #24

Quality control circles are now used all over the world. The circles typically consist of a group of five to ten employees who meet regularly. The primary goal of these circles is to:

A. mprove the quality of leadership in the organization

B. ap the creative problem-solving potential of every employee

C. mprove communications between employees and managers by providing a formal communication channel

D. llow for the emergence of team leaders who can be targeted for further leadership development

View answer

Correct Answer: B

Question #25

If the average age of inventory is 60 days, the average age of the accounts payable is 30 days, and the average age of accounts receivable is 45 days, the number of days in the cash flow cycle is:

A. 35 days

B. 0 days

C. 5 days

D. 05 days

View answer

Correct Answer: C

Question #26

When an entity increases its degree of financial leverage DFL), the:

A. quity beta of the entity falls

B. ystematic risk of the entity falls

C. ystematic risk of the entity rises

D. tandard deviation of returns on the equity of the entity rises

View answer

Correct Answer: D

Question #27

Which of the following quality costs are nonconformance costs?

A. ystems development costs

B. osts of inspecting in-process items

C. nvironmental costs

D. osts of quality circles

View answer

Correct Answer: C

Question #28

Computer program libraries should be kept secure by:

A. nstalling a logging system or program access

B. onitoring physical access to program library media

C. estricting physical and logical access

D. enying remote access via terminals

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Correct Answer: C

Question #29

On a balanced scorecard, which is more of an internal process measure than an external based measure?

A. ycle time

B. rofitability

C. ustomer satisfaction

D. arket share

View answer

Correct Answer: A

Question #30

Quality control circles are now used all over the world. The circles typically consist of a group of five to ten employees who meet regularly. The primary goal of these circles is to:

A. mprove the quality of leadership in the organization

B. ap the creative problem-solving potential of every employee

C. mprove communications between employees and managers by providing a formal communication channel

D. llow for the emergence of team leaders who can be targeted for further leadership development

View answer

Correct Answer: B

Question #31

Which of the following statements is true concerning internal control in an electronic data interchange (EDI) system?

A. reventive controls generally are more important than detective controls in EDI systems

B. ontrol objectives for EDI systems generally are different from the objectives for other information systems

C. nternal controls in EDI systems rarely permit control risk to be assessed at below the maximum

D. nternal controls related to the segregation of duties generally are the most important controls in EDI systems

View answer

Correct Answer: A

Question #32

In its first year of operations, an entity had US $50,000 of fixed operating costs. It sold 10,000 units at a US $10 unit price and incurred variable costs of US $4 per unit. If all pnc es and costs will be the same in the second year and sales are projected to rise to 25,000 units, what will the degree of operating leverage the extent to which fixed costs are used in the entity's operations) be in the second yc _u?

A. 25

B. 50

C.

D.

View answer

Correct Answer: B

Question #33

Price skimming involves:

A. etting a low introductory price

B. etting a high introductory price

C. etting different freight charges for customers in different zones

D. sing markups tied closely to the price paid for a product

View answer

Correct Answer: B

Question #34

What coefficient of correlation results from the following data?

A.

B. xad1

C. 1

D. annot be determined from the data given

View answer

Correct Answer: B

Question #35

An entity sells to retail stores on credit terms of 2/10 net 30. Daily sales average 150 units at a price of US $300 each. Assuming that all sales are on credit and 60% of customers take the discount and pay on day 10 while the rest of the customers pay on day 30, what is the amount of the entity's accounts receivable?

A. S $135,000

B. S $990,000

C. S $900,000

D. S $81,000

View answer

Correct Answer: D

Question #36

An Internet firewall is designed to provide adequate protection against which of the following?

A. computer virus

B. nauthenticated logins from outside users

C. nsider leaking of confidential information

D. Trojan horse application

View answer

Correct Answer: B

Question #37

Which of the following controls most likely could prevent computer personnel from modifying programs to bypass programmed controls?

A. eriodic management review of computer utilization reports and systems documentation

B. egregation of duties within computer for computer programming and computer operations

C. articipation of user department personnel in designing and approving new systems

D. hysical security of computer facilities in limiting access to computer equipment

View answer

Correct Answer: B

Question #38

To keep costs at a minimum and decrease the completion time by 1-1/2 days, Networks, Inc.should crash activity(ies):

A. D and AB

B. E

C. D

D. B and CE

View answer

Correct Answer: A

Question #39

Which of the following is a false statement about a database management system application environment?

A. ata are used concurrently by multiple users

B. ata are shared by passing files between programs or systems

C. he physical structure of the data is independent of user needs

D. ata definition is independent of any one program

View answer

Correct Answer: B

Question #40

One of the main reasons that implementation of a total quality management program works better through the use of teams is:

A. eams are more efficient and help an organization reduce its staffing

B. mployee motivation is always higher for team members than for individual contributors

C. eams are a natural vehicle for sharing ideas, which leads to process improvement

D. he use of teams eliminates the need for supervision, thereby allowing a company to reduce staffing

View answer

Correct Answer: C

Question #41

Which of the following statements is false regarding the efficient and economical achievement of the organization's objectives?

A. conomical performance accomplishes objectives with minimal use of resources with no regard to risk exposure

B. fficient performance accomplishes objectives in a timely manner

C. conomical performance accomplishes objectives with minimal use of resources commensurate with the risk exposure

D. fficient performance accomplishes objectives in an accurate and economical manner

View answer

Correct Answer: A

Question #42

Which of the following statements is not true regarding ISO 9000 standards?

A. ompliance with the standards is voluntary

B. he ISO 9000 standards are revised every 5 years to account for technical and market developments

C. he objective of ISO 9000 standards is to ensure high quality products and services

D. SO 9000 is a set of generic standards for establishing and maintaining a quality system within an entity

View answer

Correct Answer: C

Question #43

Inefficient use of excess computer equipment can be controlled by

A. ontingency planning

B. ystem feasibility studies

C. apacity planning

D. xception reporting

View answer

Correct Answer: C

Question #44

A company is deciding whether to purchase an automated machine to manufacture one of its products. Expected net cash flows from this decision depend on several factors, interactions among those factors, and the probabilities associated with different levels of those factors. The method that the company should use to evaluate the distribution of net cash flows from this decision and changes in net cash flows resulting from changes in levels of various factors is:

A. imulation and sensitivity analysis

B. inear programming

C. orrelation analysis

D. ifferential analysis

View answer

Correct Answer: A

Question #45

The Plan-Do-Check-Act PDC}A) cycle is a quality tool devised by\ALE. Denning. How isPDC A best described

A. "management by fact" approach to continuous improvement

B. n ongoing evaluation of the practices of best-in-class organizations

C. he translation of customer requirements into design requirements

D. he responsibility of every employee, work group, department, or supplier to inspect the work

View answer

Correct Answer: A

Question #46

Which of the following control frameworks was acknowledged by the U.S. Securities and Exchange Commission as an appropriate model for designing internal controls under the requirements of the Sarbanes-Oxley Act of 2002?

A. OSO

B. SAC

C. OBIT

D. TAG

View answer

Correct Answer: A

Question #47

Which of the following is not true about simu-lation models that use Monte Carlo processes?

A. hey are deterministic in nature

B. hey may involve sampling

C. hey mathematically estimate what actual performance would be

D. hey emulate stochastic systems

View answer

Correct Answer: A

Question #48

The difference between the required rate of return on a given risky investment and that of a risk- free investment with the same expected return is the:

A. isk premium

B. oefficient of variation

C. tandard error of measurement

D. eta coefficient

View answer

Correct Answer: A

Question #49

Company J produces two components: A-1 and A-2. The unit throughput contribution margins for A-1 and A-2 are US $150 and US $300, respectively. Each component must proceed through two processes: Operation 1 and Operation 2. The capacity of Operation 1 is 180 machine hours, with A-1 and A-2 requiring 1 hour and 3 hours, respectively.Furthermore, Company J can sell only 45 units of A-1 and 100 units of A-2. However,Company J is considering expanding Operation 1's capacity by 90 machine hours at a cost of US $

A. ption A

B. ption C

C. ption C

D. ption D

View answer

Correct Answer: C

Question #50

A learning curve of 80% assumes that the incremental unit time is reduced by 20% for each doubling of output. Also, direct labor cost is proportionate to time worked.What is the incremental direct labor cost of the 16th unit produced as an approximate percentage of the first unit produced?

A. 1%

B. 1%

C. 1%

D. 4%

View answer

Correct Answer: A

Question #51

Two countries have flexible e change rate systems and an active trading relationship. If incomes in country 1, everything else being equal, then the currency of country 1 will tend to relative to the currency of country 2.

A. ption A

B. ption B

C. ption C

D. ption D

View answer

Correct Answer: C

Question #52

A corporation had profit for the year of US $101,504 and a simple capital structure consisting of the following ordinary shares outstanding:What was the corporation's basic earnings per share rounded to the nearest cent)?

A. S $2

B. S $3

C. S $3

D. S $3

View answer

Correct Answer: B

Question #53

The type of option that does not have the backing of stock is called a(n):

A. overed option

B. nsecured option

C. aked option

D. ut option

View answer

Correct Answer: C

Question #54

The best evidence that contingency planning is effective is to have:

A. omprehensive documentation of the plan

B. ignoff on the plan by the internal audit activity

C. uccessful testing of the plan

View answer

Correct Answer: C

Question #55

As part of a risk analysis, an auditor wishes to forecast the percentage growth in next month's sales for a particular plant using the past 30 months' sales results. Significant changes in the organization affecting sales volumes were made within the last 9 months. The most effective analysis technique to use would be

A. nweighted moving average

B. xponential smoothing

C. ueuing theory

D. inear regression analysis

View answer

Correct Answer: B

Question #56

A value-added tax is collected on the basis of:

A. he difference between the value of an entity's sales and the value of its purchases from other domestic entities

B. he difference between the selling price of a real estate property and the amount the entity originally paid for it

C. he value of an entity's sales to related companies

D. he profit earned on an entity's sales

View answer

Correct Answer: A

Question #57

Which of the following statements regarding benchmarking is false?

A. enchmarking involves continuously evaluating the practices of best-in-class organization and adapting company processes to incorporate the best of these practices

B. enchmarking, in practice, usually involves a company's formation of benchmarking teams

C. enchmarking is an ongoing process that entails quantitative and qualitative measurement of the difference between the company's performance of an activity and the performance by the best in the world or the best in the industry

D. he benchmarking organization against which a firm is comparing itself must be a direct competitor

View answer

Correct Answer: D

Question #58

What is the overall audit objective when auditing an e-commerce activity?

A. o ensure that all e-commerce processes have efficient internal controls

B. o ensure that all e-commerce processes have effective internal controls

C. o ensure that all e-commerce processes are adequate to fulfill their intended objectives

D. o ensure that all e-commerce processes meet the functionality requirements of the end users

View answer

Correct Answer: B

Question #59

A manufacturer uses a materials requirements planning 1RP) system to track inventory, orders, and raw material requirements. A preliminary audit assessment indicates that the organization's inventory is understated. Using audit software, what conditions should the auditor search for in the MRP database to support this hypothesis?I). Item cost set at zero.II). Negative quantities on hand.III). Order quantity exceeding requirements.IV). Inventory lead times exceeding delivery schedule.

A. and II only

B. and I only

C. I and I only

D. II and I only

View answer

Correct Answer: A

Question #60

The funds-needed line does not pass through the origin unless the entity has a:

A. ne-hundred percent dividend payout policy

B. ero percent dividend payout policy

C. ne-hundred percent sales growth rate

D. ero percent sales growth rate

View answer

Correct Answer: A

Question #61

Philip Enterprises, distributor of compact disks (CDs), is developing its budgeted cost of goods sold. Philip has developed the following range of sales estimates and associated probabilities for the year:Philip's cost of goods sold averages 80% of sales.What is the expected value of Philip's budgeted cost of goods sold?

A. S$85,000

B. S$84,000

C. S$68,000

D. S$67,200

View answer

Correct Answer: D

Question #62

A small client recently put its cash disbursements system on a server. About which of the following internal control features would an auditor most likely be concerned?

A. rogramming of the applications are in Visual Basic rather than Java

B. he server is operated by employees who have cash custody responsibilities

C. nly one employee has the password to gain access to the cash disbursement system

D. here are restrictions on the amount of data that can be stored and on the length of time that data can be stored

View answer

Correct Answer: B

Question #63

A global firm establishes a cost-based price for its product in each country. The most likely negative outcome is that this pricing strategy will:

A. et too high a price in countries where the firm's costs are high

B. verprice the product in some markets and underprice it in others

C. reate a gray market

D. esult in dumping

View answer

Correct Answer: A

Question #64

An advantage of using bar codes rather than other means of identification of parts used by a manufacturer is that:

A. he movement of all parts is controlled

B. he movement of parts is easily and quickly recorded

C. endors can use the same part numbers

D. endors use the same identification methods

View answer

Correct Answer: B

Question #65

Which one of the following would not be included as a reason for the company to use EFT with the EDI system?

A. o take advantage of the time lag associated with negotiable instruments

B. o allow the company to negotiate discounts with EDI vendors based upon prompt payment

C. o improve its cash management program

D. o reduce input time and input errors

View answer

Correct Answer: A

Question #66

An entity borrows funds from its bank for a one-year period. The bank charges interest at a nominal rate of 15% per annum, on a discount basis, and requires a 10% compensating balance.The effective annual interest rate on the loan is:

A. 6

B. 7

C. 0

D. 5

View answer

Correct Answer: C

Question #67

For control purposes, which of the following should be organizationally segregated from the computer operations function?

A. ata conversion

B. urveillance of screen display messages

C. ystems development

D. inor maintenance according to a schedule

View answer

Correct Answer: C

Question #68

The networking capital is:

A. S $160

B. S $210

C. S $350

D. S $490

View answer

Correct Answer: B

Question #69

How is the letter x in the standard regression equation best described?

A. ndependent Variable

B. ependent Variable

C. onstant coefficient

D. oefficient of determination

View answer

Correct Answer: A

Question #70

An employee in the receiving department keyed in a shipment to the accounts payable system and inadvertently omitted the purchase order number. The best systems control to detect this error is:

A. ompleteness test

B. equence check

C. easonableness test

D. ompatibility test

View answer

Correct Answer: A

Question #71

Which line segment represents the length of time to consume the total quantity of materials ordered?

A. E

B. C

C.

D. E

View answer

Correct Answer: C

Question #72

Companies that adapt just-in-time purchasing systems often experience

A. n increase in carrying costs

B. reduction in the number of suppliers

C. greater need for inspection of goods as the goods arrive

D. ess need for linkage with a vendor's computerized order entry system

View answer

Correct Answer: B

Question #73

Based on the balance sheet shown in Exhibit A, the debt ratio is:

A. 0%

B. 0%

C. 0%

D. 00%

View answer

Correct Answer: C

Question #74

A plumbing company, a wholesale distributor, supplies plumbing contractors and retailers throughout the Northeast on a next-day delivery. basis. The company has a centrally located warehouse to accept receipts of plumbing supplies. The warehouse has a single dock to accept and unload railroad freight cars during the night. It takes 5 hours to unload each freight car. The company's prior records indicate that the number of freight cars that arrive in the course of a night range from zero to five or mare, wit

A. nteger programming

B. inear programming

C. onte Carlo simulation

D. egression analysis

View answer

Correct Answer: C

Question #75

Without prejudice to your answer to any other question, assume that cost of goods sold for the current year ended December 31 is 2,000,000. Inventory turnover on total inventory for the entity would be:

A.

B.

C.

D.

View answer

Correct Answer: C

Question #76

A retail mail order entity currently uses a central collection system that requires all checks to be sent to its headquarters. An average of 6 days is required for mailed checks to be received. 3 days for the entity to process them, and 2 days for the checks to clear through the bank. A proposed lockbox system would reduce the mailing and processing time to 2 days and the check clearing time to 1 day. The entity has an average daily collection of US $150,000. How much will the average cash balance increase

A. S $1,200,000

B. S $750,000

C. S $600,000

D. S $450,000

View answer

Correct Answer: A

Question #77

What is the incremental cost of placing an order that would be used in the EOO model?

A. S $48

B. S $35

C. S $24

D. S $19

View answer

Correct Answer: D

Question #78

Batch processing:

A. s not used by most businesses because it reduces the audit trail

B. llows users to inquire about groups of information contained in the system

C. ccumulates transaction records into groups for processing against the master file on a delayed basis

D. an only be performed on a centralized basis

View answer

Correct Answer: C

Question #79

The entity has a profit margin of:

A.

B. 3

C. 4

D. 6

View answer

Correct Answer: A

Question #80

The operating condition that car-or-mot be identified by using a queuing model is the:

A. verage percentage of time that a service facility is idle

B. robability of a specified number of units in the queue

C. ctual amount of time each unit spends in the queue

D. verage number of units in the system and the mean length of the queue

View answer

Correct Answer: C

Question #81

An evaluator is rating 100 employees on a bell curve. She is instructed to label five employees "extraordinary" and five employees "unsatisfactory." The evaluator also is instructed to label 10 employees "above average" and 10 employees "below average." All of the other employees will be in the "average" category.Which of the following is the major drawback of using this method?

A. he process of using the method is too time consuming

B. n employee's evaluation will depend on who the evaluator is

C. ifferent evaluators have different standards

D. he evaluator must place some employees in the lowest and highest tails of a bell-shaped curve

View answer

Correct Answer: D

Question #82

A client installed the most sophisticated controls using biometric attributes of employees to gain access to their computer system. This technology most likely replaced which of the following controls?

A. se of security specialists

B. easonableness tests

C. asswords

D. irus protection software

View answer

Correct Answer: C

Question #83

Which of the following is a malicious program, the purpose of which is to reproduce itself throughout the network and produce a denial of service attack by excessively utilizing system resources?

A. ogic bomb

B. irus

C. orm

D. rojan horse

View answer

Correct Answer: C

Question #84

Sales representatives for a manufacturing company are reimbursed for 100 percent of their cellular telephone bills. Cellular telephone costs vary significantly from representative to representative and from month to month, complicating the budgeting and forecasting processes. Management has requested that the internal auditors develop a method for controlling these costs.Which of the following would most appropriately be included in the scope of the consulting project?

A. ontrol self-assessment involving sales representatives

B. enchmarking with other cellular telephone users

C. usiness process review of procurement and payables routines

D. erformance measurement and design of the budgeting and forecasting processes

View answer

Correct Answer: C

Question #85

Return on investment ROD is a very popular measure employed to evaluate the performance of corporate segments because it incorporates all of the major ingredients of profitability revenue, cost, investment) into a single measure. Under which one of the following combination of actions regarding a segment's revenues, costs, and investment would a segment's POI always increase?

A. ption A

B. ption B

C. ption C

D. ption D

View answer

Correct Answer: D

Question #86

Quality control circles are now used all over the world. The circles typically consist of a group of five to ten employees who meet regularly. The primary goal of these circles is:

A. o improve the quality of leadership in the organization

B. o tap the creative problem-solving potential of every employee

C. o improve communications between employees and managers by providing a formal communication channel

D. o allow for the emergence of team leaders who can be targeted for further leadership development

View answer

Correct Answer: B

Question #87

Which of the following is a key to successful total quality management?

A. raining quality inspectors

B. ocusing intensely on the customer

C. reating appropriate hierarchies to increase efficiency

D. stablishing a well-defined quality standard, then focusing on meeting it

View answer

Correct Answer: B

Question #88

A measure that describes the risk of an investment project relative to other investments in general is the:

A. oefficient of variation

B. eta coefficient

C. tandard deviation

D. xpected return

View answer

Correct Answer: B

Question #89

Which of the following are elements of risk management and mitigation?I). Threat events and cost/benefit analysisII). Safeguards, controls, and POI analysisIII). Frequency and uncertaintyIV). Safeguard and control costs

A. only

B. I only

C. and Ill only

D. I and IV only

View answer

Correct Answer: D

Question #90

Which one of the following is not a characteristic of an innovative manufacturing company?

A. mphasis on continuous improvement

B. esponsiveness to the changing manufacturing environment

C. mphasis on existing products

D. mproved customer satisfaction through product quality

View answer

Correct Answer: C

Question #91

Quality control circles are now used all over the world. The circles typically consist of a group of five to ten employees who meet regularly. The primary goal of these circles is:

A. o improve the quality of leadership in the organization

B. o tap the creative problem-solving potential of every employee

C. o improve communications between employees and managers by providing a formal communication channel

D. o allow for the emergence of team leaders who can be targeted for further leadership development

View answer

Correct Answer: B

Question #92

One of the main reasons that implementation of a total quality management (TQM) program works better through the use of teams is:

A. eams are more efficient and help an organization reduce its staffing

B. mployee motivation is always higher for team members than for individual contributors

C. eams are a natural vehicle for sharing ideas, which leads to process improvement

D. he use of teams eliminates the need for supervision, thereby allowing a company to reduce staffing

View answer

Correct Answer: C

Question #93

An entity has made the decision to finance next year's capital projects through debt rather than additional equity. The benchmark cost of capital for these projects should be the:

A. efore-tax cost of new-debt financing

B. fter-tax cost of new-debt financing

C. ost of equity financing

D. eighted-average cost of capital

View answer

Correct Answer: D

Question #94

What is the annual carrying cost, stated as a percentage of investment in inventory, that would be used in model?

A. 2%

B. 7%

C. 4%

D. 2%

View answer

Correct Answer: A

Question #95

According to IIA guidance, which of the following is a broad collection of integrated policies,standards, and procedures used to guide the planning and execution of a project?

A. roject portfolio

B. roject development

C. roject governance

D. roject management methodologies

View answer

Correct Answer: D

Question #96

When making a cost-time trade-off in PERT analysis, the first activity that should be crashed is the activity:

A. ith the largest amount of slack

B. ith the lowest unit crash cost

C. n the critical path with the maximum possible time reduction

D. n the critical path with the lowest unit crash cost

View answer

Correct Answer: D

Question #97

A decrease in inventory order costs will

A. ecrease the economic order quantity

B. ncrease the reorder point

C. ncrease the economic order quantity

D. ecrease the holding cost percentage

View answer

Correct Answer: A

Question #98

To trace data through several applies qti on programs, an auditor needs to know what programs use the data, which files contain the data, and which print-td reports display the data. If data exist only in a database system, the auditor could probably find all of this information in a

A. ata dictionary

B. atabase schema

C. ata encryptor

D. ecision table

View answer

Correct Answer: A

Question #99

The basic formula for the Black-Schools Option Pricing Model essentially refs is The difference between the expected present value of the final stock price and the present value of the exercise price.An entity wishes to price a call option written on a nondividend-paying stock using the Black- Scholes Option Pricing Model. The current stock price is US $50, the exercise price is US $48. The risk-free interest rate is 5.0%, the option expires in 1 year, and the cumulative probabilities used to calculate the

A. S $6

B. S $4

C. S $4

D. S $2

View answer

Correct Answer: A

Question #100

The most important component of quality control is:

A. nsuring goods and services conform to the design specifications

B. atisfying upper management

C. onforming with ISO-9000 specifications

D. etermining the appropriate timing of inspections

View answer

Correct Answer: A

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