Question 1

Which of the following statements is true regarding managerial accounts?

Accepted Answer

A)  They must be prepared at least on a monthly basis. 
B)  They should be verifiable by external auditors. 
C)  They should be easily understandable by all management team members. 
D)  They should exclusively meet the needs of the user.

Question 2

For a multinational organization, which of the following is a disadvantage of an ethnocentric staffing policy? 1. It significantly raises compensation and staffing costs. 2. It produces resentment among the organization's employees in host countries. 3. It limits career mobility for parent-country nationals. 4. It can lead to cultural myopia.

Accepted Answer

A)  1 and 4 only 
B)  2 and 3 only 
C)  1, 2, and 3 only 
D)  1, 2, and 4 only

Question 3

Which of the following descriptions of the internal control system are indicators that risks are managed effectively? 1. Existing controls promote compliance with applicable laws and regulations. 2. The control environment is designed to address all identified risks to the organization. 3. Key controls for significant risks to the organization remain consistent over time. 4. Monitoring systems are in place to alert management to unexpected events.

Accepted Answer

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

Question 4

Which of the following is always true regarding the use of encryption algorithms based on public key infrastructure (PKI)?

Accepted Answer

A)  PKI uses an independent administrator to manage the public key. 
B)  The public key is authenticated against reliable third-party identification. 
C)  PKI's public accessibility allows it to be used readily for e-commerce. 
D)  The private key uniquely authenticates each party to a transaction.

Question 5

Which of the following describes the most appropriate set of tests for auditing a workstation's logical access controls?

Accepted Answer

A)  Review the list of people with access badges to the room containing the workstation and a log of those who accessed the room. 
B)  Review the password length, frequency of change, and list of users for the workstation's login process. 
C)  Review the list of people who attempted to access the workstation and failed, as well as error messages. 
D)  Review the passwords of those who attempted unsuccessfully to access the workstation and the log of their activity.

Question 6

Which of the following is the most likely reason an organization may decide to undertake a stock split?

Accepted Answer

A)  To keep stock price constant. 
B)  To keep shareholders' equity constant. 
C)  To increase shareholders' equity. 
D)  To enhance the stock liquidity.

Question 7

The audit committee of a global corporation has mandated a change in the organization's business ethics policy. Which of the following approaches describes the best way to accomplish the policy's diffusion worldwide?

Accepted Answer

A)  Deploy the policy in the corporate headquarters' language, so everyone gets an unfiltered version simultaneously. 
B)  Introduce the policy region by region, using any lessons learned to change the subsequent version of the policy for the next area. 
C)  Consult with legal and operational management in each affected country to ensure the final version can be implemented globally, following audit committee approval. 
D)  Send the board-approved version of the policy to each country's senior leadership, and empower them to tailor the policy to the local language and culture.

Question 8

Which of the following data security policies is most likely to be the result of a data privacy law?

Accepted Answer

A)  Access to personally identifiable information is limited to those who need it to perform their job. 
B)  Confidential data must be backed up and recoverable within a 24-hour period. 
C)  Updates to systems containing sensitive data must be approved before being moved to production. 
D)  A record of employees with access to insider information must be maintained, and those employees may not trade company stock during blackout periods.

Question 9

Which of the following statements is true regarding the roles and responsibilities associated with a corporate social responsibility (CSR) program?

Accepted Answer

A)  The board has overall responsibility for the internal control processes associated with the CSR program. 
B)  Management has overall responsibility for the effectiveness of governance, risk management, and internal control processes associated with the CSR program. 
C)  The internal audit activity is responsible for ensuring that CSR principles are integrated into the organization's policies and procedures. 
D)  Every employee has a responsibility for ensuring the success of the organization's CSR objectives.

Question 10

Which of the following best describes a market signal?

Accepted Answer

A)  The bargaining power of buyers is forcing a drop in market prices. 
B)  There is pressure from the competitor's substitute products. 
C)  Strategic analysis by the organization indicates feasibility of expanding to new market niches. 
D)  The competitor announces a new warranty program.

Question 11

When initiating international ventures, an organization should consider cultural dimensions in order to prevent misunderstandings. Which of the following does not represent a recognized cultural dimension in a work environment?

Accepted Answer

A)  Self control. 
B)  Power distance. 
C)  Masculinity versus femininity. 
D)  Uncertainty avoidance.

Question 12

According to IIA guidance on IT, which of the following plans would pair the identification of critical business processes with recovery time objectives?

Accepted Answer

A)  The business continuity management charter. 
B)  The business continuity risk assessment plan. 
C)  The business impact analysis plan. 
D)  The business case for business continuity planning.

Question 13

Which of the following actions is most likely to gain support for process change?

Accepted Answer

A)  Set clear objectives. 
B)  Engage the various communities of practice within the organization. 
C)  Demonstrate support from senior management. 
D)  Establish key competencies.

Question 14

Which audit approach should be employed to test the accuracy of information housed in a database on an un-networked computer?

Accepted Answer

A)  Submit batches of test transactions through the current system and verify with expected results. 
B)  Use a test program to simulate the normal data entering process. 
C)  Select a sample of records from the database and ensure it matches supporting documentation. 
D)  Evaluate compliance with the organization's change management process.

Question 15

Which type of bond sells at a discount from face value, then increases in value annually until it reaches maturity and provides the owner with the total payoff?

Accepted Answer

A)  High-yield bonds. 
B)  Commodity-backed bonds. 
C)  Zero coupon bonds. 
D)  Junk bonds.

Question 16

An organization is projecting sales of 100,000 units, at a unit price of $12. Unit variable costs are $7. If fixed costs are $350,000, what is the projected total contribution margin?

Accepted Answer

A)  $350,000 
B)  $500,000 
C)  $850,000 
D)  $1,200,000

Question 17

An organization has instituted a bring-your-own-device (BYOD) work environment. Which of the following policies best addresses the increased risk to the organization's network incurred by this environment?

Accepted Answer

A)  Limit the use of the employee devices for personal use to mitigate the risk of exposure to organizational data. 
B)  Ensure that relevant access to key applications is strictly controlled through an approval and review process. 
C)  Institute detection and authentication controls for all devices used for network connectivity and data storage. 
D)  Use management software to scan and then prompt patch reminders when devices connect to the network.

Question 18

A retail organization mistakenly did not include $10,000 of inventory in the physical count at the end of the year. What was the impact to the organization's financial statements?

Accepted Answer

A)  Cost of sales and net income are understated. 
B)  Cost of sales and net income are overstated. 
C)  Cost of sales is understated and net income is overstated. 
D)  Cost of sales is overstated and net income is understated.

Question 19

According to IIA guidance on IT auditing, which of the following would not be an area examined by the internal audit activity?

Accepted Answer

A)  Access system security. 
B)  Policy development. 
C)  Change management. 
D)  Operations processes.

Question 20

Which of the following COSO internal control framework components encompasses establishing structures, reporting lines, authorities, and responsibilities?

Accepted Answer

A)  Control environment. 
B)  Control activities. 
C)  Information and communication. 
D)  Monitoring.

Exam 5: Business Analysis and Information Technology