Question 1

Under a value-added taxing system:

Accepted Answer

Under a value-added tax (VAT) system, the tax is added at each stage of production and distribution, but the final consumer ultimately bears the cost as it is included in the purchase price of goods and services.

Question 2

Which of the following would provide the most relevant assurance that the application under development will provide maximum value to the organization?

Accepted Answer

End-user involvement ensures that the application meets the actual needs and requirements of those who will use it, thereby maximizing its value to the organization.

Question 3

Which of the following statements regarding database management systems is not correct?

Accepted Answer

Database management systems allow authorized users and applications to manipulate data, not just the administrator.

Question 4

A holding company set up a centralized group technology department, using a local area network with a mainframe computer to process accounting information for all companies within the group. An internal auditor would expect to find all of the following controls within the technology department except:

Accepted Answer

The answer of A holding company set up a centralized...

Question 5

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

Copy 1 is legal as it is made for backup purposes, which is generally allowed under software licenses. Copy 2 is illegal as it violates the license agreement by installing the software on more computers than the license permits.

Question 6

Which of the following are the most appropriate measures for evaluating the change in an organization's liquidity position?

Accepted Answer

Accounts receivable turnover, inventory turnover in days, and the current ratio are direct measures of liquidity, reflecting how quickly assets can be converted to cash and the ability to meet short-term obligations.

Question 7

An organization has recorded the following profit and expenses: Profit before interest and tax $200,000 Sales $2,300,000 Purchases of materials $700,000 Interest expenses $30,000 If the value-added tax (VAT) rate is 20 percent and the corporate tax rate is 30 percent, which of the following is the amount of VAT that the organization has to pay?

Accepted Answer

The answer of An organization has recorded the following profit...

Question 8

Which of the following statements is in accordance with COBIT? 1. Pervasive controls are general while detailed controls are specific. 2. Application controls are a subset of pervasive controls. 3. Implementation of software is a type of pervasive control. 4. Disaster recovery planning is a type of detailed control.

Accepted Answer

Pervasive controls are indeed general controls that apply broadly across an organization, while detailed controls are specific to particular processes or systems. Disaster recovery planning is a detailed control as it pertains to specific procedures for recovery. Application controls are not a subset of pervasive controls, and implementation of software is not considered a pervasive control.

Question 9

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

Import quotas are a type of political barrier as they are government-imposed limits on the quantity of goods that can be imported, affecting trade policies and international business operations.

Question 10

An internationally recognized brand name is an entrance barrier to new competitors because new competitors would:

Accepted Answer

New competitors would face increased marketing costs to establish brand recognition and compete with an already established and recognized brand.

Question 11

An internal auditor discovered that several unauthorized modifications were made to the production version of an organization's accounting application. Which of the following best describes this deficiency?

Accepted Answer

Unauthorized modifications to the production version of an application indicate a deficiency in change controls, which are designed to ensure that all changes are properly authorized and documented before being implemented.

Question 12

An organization is considering mirroring the customer data for one regional center at another center. A disadvantage of such an arrangement would be:

Accepted Answer

Mirroring data at another center increases network traffic as data needs to be continuously synchronized, leading to higher costs and complexity in managing the network.

Question 13

Technological uncertainty, subsidy, and spin-offs are usually characteristics of:

Accepted Answer

Emerging industries are characterized by technological uncertainty, subsidies to support growth, and spin-offs as new companies form to capitalize on innovative technologies.

Question 14

When granting third parties temporary access to an entity's computer systems, which of the following is the most effective control?

Accepted Answer

User accounts with specified expiration dates ensure that access is automatically revoked after the necessary period, reducing the risk of unauthorized access.

Question 15

Organizational activities that complement each other and create a competitive advantage are called a:

Accepted Answer

Strategic fit refers to the alignment and complementarity of organizational activities that create a competitive advantage.

Question 16

Unsecured loans are loans

Accepted Answer

Unsecured loans are granted based on the borrower's creditworthiness without requiring collateral.

Question 17

Which stage of group development is characterized by a decrease in conflict and hostility among group members and an increase in cohesiveness?

Accepted Answer

The Norming stage is characterized by a decrease in conflict and hostility among group members and an increase in cohesiveness as members start to work more collaboratively.

Question 18

Which of the following is an element of effective negotiating?

Accepted Answer

Focusing on interests rather than positions helps in finding mutually beneficial solutions and is a key principle of effective negotiation.

Question 19

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

Evaluating previous incidents and transparency in reporting are crucial for assessing an organization's social and environmental impact.

Question 20

In terms of international business strategy, which of the following is true regarding a multi-domestic strategy?

Accepted Answer

A multi-domestic strategy is effective when there are significant differences between countries, as it allows for customization of products and services to meet local needs and preferences.

Exam 5: Business Analysis and Information Technology