Question 1

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

Accepted Answer

A stock split is often undertaken to make shares more affordable and attractive to a broader range of investors, thereby enhancing the stock's liquidity.

Question 2

A chief audit executive (CAE) was asked to participate in the selection of an external auditor. Which of the following would not be a typical responsibility for the CAE?

Accepted Answer

The answer of A chief audit executive (CAE) was asked...

Question 3

Which of the following application-based controls is an example of a programmed edit check?

Accepted Answer

A reasonableness check is a programmed edit check that verifies whether the data entered falls within a predetermined range of acceptable values.

Question 4

Which of the following is a limiting factor for capacity expansion?

Accepted Answer

The answer of Which of the following is a limiting...

Question 5

An organization needs to borrow a large amount of cash to fund its expansion plan. Which of the following annual interest rates is least expensive?

Accepted Answer

Simple interest paid at the end of each year is the least expensive because it does not involve additional costs like a compensating balance or discounting, and it does not compound, which would increase the total interest paid.

Question 6

Which of the following is the most appropriate test to assess the privacy risks associated with an organization's workstations?

Accepted Answer

The answer of Which of the following is the most...

Question 7

An organization decided to install a motion detection system in its warehouse to protect against after-hours theft. According to the COSO enterprise risk management framework, which of the following best describes this risk management strategy?

Accepted Answer

The installation of a motion detection system is a risk reduction strategy, as it aims to decrease the likelihood or impact of theft by implementing controls to detect unauthorized access.

Question 8

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

Accepted Answer

The answer of Which of the following is always true...

Question 9

Which of the following is true regarding the COSO enterprise risk management framework?

Accepted Answer

The COSO ERM framework is designed to integrate with the internal control framework, but it is not dependent on it. It provides a comprehensive approach to risk management that complements internal controls.

Question 10

An internal auditor performed a review of IT outsourcing and found that the service provider was failing to meet the terms of the service level agreement. Which of the following approaches is most appropriate to address this concern?

Accepted Answer

Proactively monitoring performance, escalating concerns, and using penalty clauses are direct actions to address the service provider's failure to meet the service level agreement.

Question 11

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

An effective internal control system ensures compliance with laws (1) and has monitoring systems to alert management to unexpected events (4), indicating that risks are managed effectively.

Question 12

Which of the following best describes an objective for an audit of an environmental management system?

Accepted Answer

The primary objective of an audit of an environmental management system is to determine conformance with established requirements and agreements, ensuring that the system is effectively implemented and maintained.

Question 13

Which of the following techniques would be least effective in resolving the conflict created by an internal audit client's perception of the audit report as a personal attack on his management performance?

Accepted Answer

Focusing on the audit client as a person rather than the problem may not effectively resolve the conflict, as it could be perceived as personal rather than professional, potentially exacerbating the issue.

Question 14

Which of the following are appropriate functions for an IT steering committee? 1. Assess the technical adequacy of standards for systems design and programming. 2. Continually monitor of the adequacy and accuracy of software and hardware in use. 3. Assess the effects of new technology on the organization's IT operations. 4. Provide broad oversight of implementation, training, and operation of new systems.

Accepted Answer

The answer of Which of the following are appropriate functions...

Question 15

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

Consulting with legal and operational management in each country ensures that the policy is compliant with local laws and can be effectively implemented globally, while maintaining the integrity of the original policy.

Question 16

The economic order quantity can be calculated using the following formula:  Which of the following describes how the optimal order size will change if the annual demand increases by 36 percent?

Accepted Answer

The answer of The economic order quantity can be calculated...

Question 17

Organizations use matrix management to accomplish which of the following?

Accepted Answer

Matrix management is designed to increase lateral communication across different departments and functions within an organization.

Question 18

Which of the following is the primary benefit of including end users in the system development process?

Accepted Answer

The answer of Which of the following is the primary...

Question 19

Which of the following describes the result if an organization records merchandise as a purchase, but fails to include it in the closing inventory count?

Accepted Answer

The answer of Which of the following describes the result...

Question 20

Which of the following statements accurately describes one of the characteristics that distinguishes a multinational company from a domestic company?

Accepted Answer

A multinational company operates in multiple countries, not just its country of origin, which distinguishes it from a domestic company.

Exam 5: Business Analysis and Information Technology