EMT Practice Test

1. Question Content...

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Question1: The activity that involves a trial run of a product in a typical segment of the market before proceeding to a national launch is referred to as:

Question2: Which of the following are appropriate reasons for internal auditors to document processes as part of an audit engagement?
1. To determine areas of primary concern.
2. To establish a standard format for process mapping.
3. To define areas of responsibility within the organization.
4. To assess the performance of employees.

Question3: Which of the following statements is true regarding the relationship between an individual's average tax rate and marginal tax rate?

Question4: 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?

Question5: Preferred stock is less risky for investors than is common stock because:

Question6: Which of the following phases of a business cycle are marked by an underuse of resources?
1. The trough.
2. The peak.
3. The recovery.
4. The recession.

Question7: Which of the following are typical audit considerations for a review of authentication?
1. Authentication policies and evaluation of controls transactions.
2. Management of passwords, independent reconciliation, and audit trail.
3. Control self-assessment tools used by management.
4. Independent verification of data integrity and accuracy.

Question8: Which of the following statements best describes the frameworks set forth by the International Standards Organization?

Question9: Which is the least effective form of risk management?

Question10: Which of the following statements is true regarding outsourced business processes?

Question11: Which of the following must be adjusted to index a progressive tax system to inflation?

Question12: Which of the following engagement observations would provide the least motivation for management to amend or replace an existing cost accounting system?

Question13: Which of the following is not a common feature of cumulative preferred stock?

Question14: In an analysis of alternative credit-management policies, which of the following components will cause the net present value of receivables on credit sales to increase, if everything else remains constant?

Question15: Which of the following techniques is the most relevant when an internal auditor conducts a valuation of an organization's physical assets?

Question16: Which of the following is the primary benefit of including end users in the system development process?

Question17: All of the following are true with regard to the first-in, first-out inventory valuation method except:

Question18: Senior management has decided to implement the Three Lines of Defense model for risk management.
Which of the following best describes senior management's duties with regard to this model?

Question19: According to IIA guidance, which of the following is a typical risk associated with the tender process and contracting stage of an organization's IT outsourcing life cycle?

Question20: Which of the following statements is true regarding the use of public key encryption to secure data while it is being transmitted across a network?

Question21: Which of the following statements is correct regarding risk analysis?

Question22: Which mindset promotes the most comprehensive risk management strategy?

Question23: In mergers and acquisitions, which of the following is an example of a horizontal combination?

Question24: An organization facing rapid growth decides to employ a third party service provider to manage its customer relationship management function. Which of the following is true regarding the supporting application software used by that provider compared to an in-house developed system?
1. Updating documentation is always a priority.
2. System availability is usually more reliable.
3. Data security risks are lower.
4. Overall system costs are lower.

Question25: Which of the following factors is considered a disadvantage of vertical integration?

Question26: Which of the following is not a potential area of concern when an internal auditor places reliance on spreadsheets developed by users?

Question27: Which of the following most accurately describes the purpose of application authentication controls?

Question28: Which of the following conditions could lead an organization to enter into a new business through internal development rather than through acquisition?

Question29: Which of the following are typical responsibilities for operational management within a risk management program?
1. Implementing corrective actions to address process deficiencies.
2. Identifying shifts in the organization's risk management environment.
3. Providing guidance and training on risk management processes.
4. Assessing the impact of mitigation strategies and activities.

Question30: When granting third parties temporary access to an entity's computer systems, which of the following is the most effective control?

Question31: Which of the following is an example of a nonfinancial internal failure quality cost?

Question32: A software that translates hypertext markup language (HTML) documents and allows a user to view a remote web page is called:

Question33: Which of the following is not a barrier to effective communication?

Question34: Multinational organizations generally spend more time and effort to identify and evaluate:

Question35: An internal auditor is reviewing physical and environmental controls for an IT organization. Which control activity should not be part of this review?

Question36: Which of the following roles would be least appropriate for the internal audit activity to undertake with regard to an organization's corporate social responsibility (CSR) program?

Question37: 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?

Question38: 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?

Question39: Where complex problems need to be addressed, which of the following communication networks would be most appropriate?

Question40: According to Porter's model of competitive strategy, which of the following is a generic strategy?
1. Differentiation.
2. Competitive advantage.
3. Focused differentiation.
4. Cost focus.

Question41: An internal auditor has been asked to conduct an investigation involving allegations of independent contractor fraud. Which of the following controls would be least effective in detecting any potential fraudulent activity?

Question42: An organization engages in questionable financial reporting practices due to pressure to meet unrealistic performance targets. Which internal control component is most negatively affected?

Question43: Organizational activities that complement each other and create a competitive advantage are called a:

Question44: When writing a business memorandum, the writer should choose a writing style that achieves all of the following except:

Question45: Which of the following describes the free trade zone in an e-commerce environment?

Question46: 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.

Question47: 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?

Question48: Which of the following are likely indicators of ineffective change management?
1. IT management is unable to predict how a change will impact interdependent systems or business processes.
2. There have been significant increases in trouble calls or in support hours logged by programmers.
3. There is a lack of turnover in the systems support and business analyst development groups.
4. Emergency changes that bypass the normal control process frequently are deemed necessary.

Question49: Which of the following would best prevent unauthorized external changes to an organization's data?

Question50: A capital investment project will have a higher net present value, everything else being equal, if it has:

Question51: Which of the following does not provide operational assurance that a computer system is operating properly?

Question52: When developing an effective risk-based plan to determine audit priorities, an internal audit activity should start by:

Question53: Which of the following strategies is most appropriate for an industry that is in decline?

Question54: Which of the following statements regarding program change management is not correct?

Question55: Unsecured loans are loans:

Question56: Which of the following statements about matrix organizations is false?

Question57: Which of the following factors would reduce dissatisfaction for a management trainee but would not particularly motivate the trainee?

Question58: In order to provide useful information for an organization's risk management decisions, which of the following factors is least important to assess?

Question59: An organization uses a database management system (DBMS) as a repository for data. The DBMS, in turn, supports a number of end-user developed applications which were created using fourth-generation programming languages. Some of the applications update the database. Which of the following is the most important control related to the integrity of the data in the database?

Question60: In creating a risk-based plan, which of the following best describes a top-down approach to understanding business processes?

Question61: The economic order quantity for inventory is higher for an organization that has:

Question62: A manager has difficulty motivating staff to improve productivity, despite establishing a lucrative individual reward system. Which of the following is most likely the cause of the difficulty?

Question63: Which of the following actions is most likely to gain support for process change?

Question64: A supervisor receives a complaint from an employee who is frustrated about having to learn a new software program. The supervisor responds that the new software will enable the employee to work more efficiently and with greater accuracy. This response is an example of:

Question65: The main reason to establish internal controls in an organization is to:

Question66: The percentage of sales method, rather than the percentage of receivables method, would be used to estimate uncollectible accounts if an organization seeks to:

Question67: According to the International Professional Practices Framework, which of the following statements is true regarding a corporate social responsibility (CSR) program?
1. Every employee generally has a responsibility for ensuring the success of CSR objectives.
2. The board has overall responsibility for the effectiveness of internal control processes associated with CSR.
3. Public reporting on the CSR governance process is expected.
4. Organizations generally have flexibility regarding what is included in a CSR program.

Question68: Which of the following is false with regard to Internet connection firewalls?

Question69: Which of the following application software features is the least effective control to protect passwords?

Question70: According to the Standards, which of the following is based on the assertion that the quality of an organization's risk management process should improve with time?

Question71: Listening effectiveness is best increased by:

Question72: According to the International Professional Practices Framework, internal auditors who are assessing the adequacy of organizational risk management processes should not:

Question73: 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?

Question74: Which of the following best describes a market signal?

Question75: An organization's balance sheet indicates that the total asset amount and the total capital stock amount remained unchanged from one year to the next, and no dividends were declared or paid. However, the organization reported a loss of $200,000. Which of the following describes the most likely year-over-year change to the organization's total liabilities and total stockholder equity?

Question76: Maintenance cost at a hospital was observed to increase as activity level increased. The following data was gathered:
Activity Level -
Maintenance Cost
Month
Patient Days
Incurred
January
5,600
$7,900
February
7,100
$8,500
March
5,000
$7,400
April
6,500
$8,200
May
7,300
$9,100
June
8,000
$9,800
If the cost of maintenance is expressed in an equation, what is the independent variable for this data?

Question77: When assessing the adequacy of a risk mitigation strategy, an internal auditor should consider which of the following?
1. Management's tolerance for specific risks.
2. The cost versus benefit of implementing a control.
3. Whether a control can mitigate multiple risks.
4. The ability to test the effectiveness of the control.

Question78: Which of the following local area network physical layouts is subject to the greatest risk of failure if one device fails?

Question79: According to the Standards, the internal audit activity must evaluate risk exposures relating to which of the following when examining an organization's risk management process?
1. Organizational governance.
2. Organizational operations.
3. Organizational information systems.
4. Organizational structure.

Question80: 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?

Question81: Which of the following COSO internal control framework components encompasses establishing structures, reporting lines, authorities, and responsibilities?

Question82: The decision to implement enhanced failure detection and back-up systems to improve data integrity is an example of which risk response?

Question83: The cost to enter a foreign market would be highest in which of the following methods of global expansion?

Question84: According to IIA guidance, which of the following corporate social responsibility (CSR) evaluation activities may be performed by the internal audit activity?
1. Consult on CSR program design and implementation.
2. Serve as an advisor on CSR governance and risk management.
3. Review third parties for contractual compliance with CSR terms.
4. Identify and mitigate risks to help meet the CSR program objectives.

Question85: Which of the following is the most likely reason an organization may decide to undertake a stock split?

Question86: Refer to the exhibit.

The figure below shows the network diagram for the activities of a large project. What is the shortest number of days in which the project can be completed?

Question87: Which of the following would provide the most relevant assurance that the application under development will provide maximum value to the organization?

Question88: Which of the following professional organizations sets standards for quality and environmental audits?

Question89: Which of the following statements about COBIT is not true?

Question90: In terms of international business strategy, which of the following is true regarding a multi-domestic strategy?

Question91: Which of the following is an element of effective negotiating?

Question92: 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?

Question93: All of the following are possible explanations for a significant unfavorable material efficiency variance except:

Question94: In an organization where enterprise risk management practices are mature, which of the following is a core internal audit role?

Question95: Which of the following is true regarding the COSO enterprise risk management framework?

Question96: Which of the following statements about slack time and milestones are true?
1. Slack time represents the amount of time a task may be delayed without delaying the entire project.
2. A milestone is a moment in time that marks the completion of the project's major deliverables.
3. Slack time allows the project manager to move resources from one task to another to ensure that the project is finished on time.
4. A milestone requires resource allocation and needs time to be completed.

Question97: Which of the following stages of group development is associated with accepting team responsibilities?

Question98: International marketing activities often begin with:

Question99: Which of the following is a key characteristic of a zero-based budget?

Question100: According to IIA guidance, which of the following would be a primary reason for an internal auditor to test the organization's IT contingency plan?

Question101: Which of the following is not included in the process of user authentication?

Question102: Which of the following is a strategy that organizations can use to stimulate innovation?
1. Source from the most advanced suppliers.
2. Establish employee programs that reward initiative.
3. Identify best practice competitors as motivators.
4. Ensure that performance targets are always achieved.

Question103: 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?

Question104: Capacity overbuilding is most likely to occur when management is focused on which of the following?

Question105: Which of the following are included in ISO 31000 risk principles and guidelines?

Question106: 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:

Question107: Which audit approach should be employed to test the accuracy of information housed in a database on an un-networked computer?

Question108: Which of the following application-based controls is an example of a programmed edit check?

Question109: Which of the following costs would be incurred in an inventory stockout?

Question110: If legal or regulatory standards prohibit conformance with certain parts of The IIA's Standards, the auditor should do which of the following?

Question111: Which of the following is the best approach to overcome entry barriers into a new business?

Question112: Which of the following statements accurately describes one of the characteristics that distinguishes a multinational company from a domestic company?

Question113: Organizations use matrix management to accomplish which of the following?

Question114: Which of the following best describes the concept of relevant cost?

Question115: When applied to international economics, the theory of comparative advantage proposes that total worldwide output will be greatest when:

Question116: Which of the following best describes an objective for an audit of an environmental management system?

Question117: Which of the following statements pertaining to a market skimming pricing strategy is not true?

Question118: Which of the following is a product-oriented definition of a business rather than a market-oriented definition of a business?

Question119: Which of the following standards would be most useful in evaluating the performance of a customer- service group?

Question120: Refer to the exhibit.

If the profit margin of an organization decreases, and all else remains equal, which of the following describes how the "Funds Needed" line in the graph below will shift?

Question121: 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.

Question122: The process of scenario planning begins with which of the following steps?

Question123: In which type of business environment are price cutting strategies and franchising strategies most appropriate?

Question124: An organization is considering the outsourcing of its business processes related to payroll and information technology functions. Which of the following is the most significant area of concern for management regarding this proposed agreement?

Question125: A key advantage of developing a computer application by using the prototyping approach is that it:

Question126: According to the ISO 14001 standard, which of the following is not included in the requirements for a quality management system?

Question127: According to IIA guidance, which of the following corporate social responsibility (CSR) activities is appropriate for the internal audit activity to perform?

Question128: Which of the following should an organization consider when developing strategic objectives for its business processes?
1. Contribution to the success of the organization.
2. Reliability of operational information.
3. Behaviors and actions expected of employees.
4. How inputs combine with outputs to generate activities.

Question129: Which of the following is a characteristic of just-in-time inventory management systems?

Question130: A retail organization is considering acquiring a composite textile company. The retailer's due diligence team determined the value of the textile company to be $50 million. The financial experts forecasted net present value of future cash flows to be $60 million. Experts at the textile company determined their company's market value to be $55 million if purchased by another entity. However, the textile company could earn more than $70 million from the retail organization due to synergies. Therefore, the textile company is motivated to make the negotiation successful. Which of the following approaches is most likely to result in a successful negotiation?

Question131: Which of the following IT strategies is most effective for responding to competitive pressures created by the marketplace?

Question132: Which of the following methods, if used in conjunction with electronic data interchange (EDI), will improve the organization's cash management program, reduce transaction data input time and errors, and allow the organization to negotiate discounts with EDI vendors based on prompt payment?

Question133: A brand manager in a consumer food products organization suspected that several days of the point-of- sale data on the spreadsheet from one grocery chain were missing. The best approach for detecting missing rows in spreadsheet data would be to:

Question134: Which of the following are the most appropriate measures for evaluating the change in an organization's liquidity position?

Question135: Which stage in the industry life cycle is characterized by many different product variations?

Question136: Within an enterprise, IT governance relates to the:
1. Alignment between the enterprise's IT long term plan and the organization's objectives.
2. Organizational structures of the company that are designed to ensure that IT supports the organization's strategies and objectives.
3. Operational plans established to support the IT strategies and objectives.
4. Role of the company's leadership in ensuring IT supports the organization's strategies and objectives.

Question137: What are the objectives of governance as defined by the Standards?

Question138: An internationally recognized brand name is an entrance barrier to new competitors because new competitors would:

Question139: 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?

Question140: Which of the following corporate social responsibility strategies is likely to be most effective in minimizing confrontations with influential activists and lobbyists?

Question141: The first step in determining product price is:

Question142: 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.

Question143: According to the COSO enterprise risk management (ERM) framework, which of the following is not a typical responsibility of the chief risk officer?

Question144: For an engineering department with a total quality management program, important elements of quality management include all of the following except:

Question145: Which of the following is an example of a risk avoidance response?

Question146: Which of the following is a disadvantage of selecting a commercial software package rather than developing an application internally?

Question147: The internal audit activity completed an initial risk analysis of the organization's data storage center and found several areas of concern. Which of the following is the most appropriate next step?

Question148: According to the waterfall cycle approach to systems development, which of the following sequence of events is correct?

Question149: The first stage in the development of a crisis management program is to:

Question150: 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?

Question151: 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?

Question152: Which of the following statements are true regarding the use of heat maps as risk assessment tools?
1. They focus primarily on known risks, limiting the ability to identify new risks.
2. They rely heavily on objective assessments and related risk tolerances.
3. They are too complex to provide an easily understandable view of key risks.
4. They are helpful but limited in value in a rapidly changing environment.

Question153: Which of the following strategies would most likely prevent an organization from adjusting to evolving industry market conditions?

Question154: Which of the following statements is correct regarding corporate compensation systems and related bonuses?
1. A bonus system should be considered part of the control environment of an organization and should be considered in formulating a report on internal control.
2. Compensation systems are not part of an organization's control system and should not be reported as such.
3. An audit of an organization's compensation system should be performed independently of an audit of the control system over other functions that impact corporate bonuses.

Question155: An internal auditor is trying to assess control risk and the effectiveness of an organization's internal controls. Which of the following audit procedures would not provide assurance to the auditor on this matter?

Question156: Which stage of group development is characterized by a decrease in conflict and hostility among group members and an increase in cohesiveness?

Question157: Which of the following is a characteristic of an emerging industry?

Question158: An organization is considering mirroring the customer data for one regional center at another center. A disadvantage of such an arrangement would be:

Question159: Which of the following would not impair the objectivity of internal auditor?

Question160: 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?

Question161: Which of the following statements is true regarding the roles and responsibilities associated with a corporate social responsibility (CSR) program?

Question162: During which phase of disaster recovery planning should an organization identify the business units, assets, and systems that are critical to continuing an acceptable level of operations?

Question163: Providing knowledge, motivating organizational members, controlling and coordinating individual efforts, and expressing feelings and emotions are all functions of:

Question164: Which of the following statements about market signaling is correct?
1. The organization releases information about a new product generation.
2. The organization limits a challenger's access to the best source of raw materials or labor.
3. The organization announces that it is fighting a new process technology.
4. The organization makes exclusive arrangements with the channels.

Question165: Which of the following is the most appropriate test to assess the privacy risks associated with an organization's workstations?

Question166: If a bank's activities are categorized under such departments as community banking, institutional banking, and agricultural banking, what kind of departmentalization is being utilized?

Question167: Which of the following distinguishes the added-value negotiation method from traditional negotiating methods?

Question168: Which of the following is always true regarding the use of encryption algorithms based on public key infrastructure (PKI)?

Question169: Which of the following control techniques would minimize the risk of interception during transmission in an electronic data interchange system?
1. Encryption.
2. Traffic padding.
3. Edit checks.
4. Structured data format.

Question170: Which of the following borrowing options is an unsecured loan?

Question171: A small furniture-manufacturing firm with 100 employees is located in a two-story building and does not plan to expand. The furniture manufactured is not special-ordered or custom-made. The most likely structure for this organization would be:

Question172: An organization had three large centralized divisions: one that received customer orders for service work; one that scheduled the service work at customer locations; and one that answered customer calls about service problems. These three divisions were restructured into seven regional groups, each of which performed all three functions. One advantage of this restructuring would be:

Question173: 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?

Question174: A global business organization is selecting managers to post to various international (expatriate) assignments. In the screening process, which of the following traits would be required to make a manager a successful expatriate?
1. Superior technical competence.
2. Willingness to attempt to communicate in a foreign language.
3. Ability to empathize with other people.

Question175: Which of the following steps should an internal auditor take during an audit of an organization's business continuity plans?
1. Evaluate the business continuity plans for adequacy and currency.
2. Prepare a business impact analysis regarding the loss of critical business.
3. Identify key personnel who will be required to implement the plans.
4. Identify and prioritize the resources required to support critical business processes.

Question176: Which of the following is the best reason for considering the acquisition of a nondomestic organization?

Question177: Which of the following describes a typical desktop workstation used by most employees in their daily work?

Question178: What must be monitored in order to manage risk of consumer product inventory obsolescence?
1. Inventory balances.
2. Market share forecasts.
3. Sales returns.
4. Sales trends.

Question179: Which of the following price adjustment strategies encourages prompt payment?

Question180: Which of the following is useful for forecasting the required level of inventory?
1. Statistical modeling.
2. Information about seasonal variations in demand.
3. Knowledge of the behavior of different business cycles.
4. Pricing models linked to seasonal demand.

Question181: Which of the following statements regarding organizational governance is not correct?

Question182: Which of the following is a type of network in which an organization permits specific users (such as existing customers) to have access to its internal network through the Internet by building a virtual private network?

Question183: When an organization is choosing a new external auditor, which of the following is the most appropriate role for the chief audit executive to undertake?

Question184: Which of the following budgets must be prepared first?

Question185: Which of the following is a role of the board of directors in the governance process?

Question186: Which of the following statements regarding database management systems is not correct?

Question187: The most important reason to use risk assessment in audit planning is to:

Question188: Technological uncertainty, subsidy, and spin-offs are usually characteristics of:

Question189: The market price is the most appropriate transfer price to be charged by one department to another in the same organization for a service provided when:

Question190: Which of the following statements is false regarding the internal audit approach when a set of standards other than The IIA's Standards is applicable to a specific engagement?

Question191: 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?

Question192: According to Porter, which of the following is associated with fragmented industries?

Question193: An organization accumulated the following data for the prior fiscal year:
Value of
Percentage of
Quarter
Output Produced
Cost X
1
$4,750,000
2.9
2
$4,700,000
3.0
3
$4,350,000
3.2
4
$4,000,000
3.5
Based on this data, which of the following describes the value of Cost X in relation to the value of Output Produced?

Question194: Which of the following statements accurately describes the responsibility of the internal audit activity (IAA) regarding IT governance?
1. The IAA does not have any responsibility because IT governance is the responsibility of the board and senior management of the organization.
2. The IAA must assess whether the IT governance of the organization supports the organization's strategies and objectives.
3. The IAA may assess whether the IT governance of the organization supports the organization's strategies and objectives.
4. The IAA may accept requests from management to perform advisory services regarding how the IT governance of the organization supports the organization's strategies and objectives.

Question195: Which of the following purchasing scenarios would gain the greatest benefit from implementing electronic data interchange?

Question196: 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?

Question197: Which of the following statements is true regarding the resolution of interpersonal conflict?

Question198: Under a value-added taxing system:

Question199: 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?

Question200: 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.

Question201: 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?

Question202: Which of the following is a limiting factor for capacity expansion?

Question203: When auditing an application change control process, which of the following procedures should be included in the scope of the audit?
1. Ensure system change requests are formally initiated, documented, and approved.
2. Ensure processes are in place to prevent emergency changes from taking place.
3. Ensure changes are adequately tested before being placed into the production environment.
4. Evaluate whether the procedures for program change management are adequate.

Question204: Which of the following is a major advantage of decentralized organizations, compared to centralized organizations?