EMT Practice Test

1. Question Content...

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Question1: Which of the following is not a potential area of concern when an internal auditor places reliance on spreadsheets developed by users?

Question2: 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?

Question3: 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.

Question4: 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?

Question5: 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.

Question6: Which of the following describes a typical desktop workstation used by most employees in their daily work?

Question7: 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.

Question8: Which of the following must be adjusted to index a progressive tax system to inflation?

Question9: International marketing activities often begin with:

Question10: 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?

Question11: Which of the following statements is true regarding the relationship between an individual's average tax rate and marginal tax rate?

Question12: Which of the following best describes the concept of relevant cost?

Question13: 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.

Question14: Which of the following is true regarding an organization's relationship with external stakeholders?

Question15: 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:

Question16: 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?

Question17: Which of the following does not provide operational assurance that a computer system is operating properly?

Question18: In an organization where enterprise risk management practices are mature, which of the following is a core internal audit role?

Question19: Capacity overbuilding is most likely to occur when management is focused on which of the following?

Question20: Which of the following price adjustment strategies encourages prompt payment?

Question21: In which type of business environment are price cutting strategies and franchising strategies most appropriate?

Question22: Refer to the exhibit.

Presented below are partial year-end financial statement data (000 omitted from dollar amounts) for companies A and B:
If company A has a quick ratio of 2:1, then it has an accounts receivable balance of:

Question23: 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?

Question24: According to the ISO 14001 standard, which of the following is not included in the requirements for a quality management system?

Question25: Which of the following would provide the most relevant assurance that the application under development will provide maximum value to the organization?

Question26: 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?

Question27: 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?

Question28: 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.

Question29: Which of the following IT strategies is most effective for responding to competitive pressures created by the marketplace?

Question30: 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?

Question31: Under a value-added taxing system:

Question32: 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?

Question33: Which of the following is the most likely reason an organization may decide to undertake a stock split?

Question34: Refer to the exhibit.

A company's financial balance sheet is presented below:
The company has net working capital of:

Question35: Which of the following local area network physical layouts is subject to the greatest risk of failure if one device fails?

Question36: Which of the following statements regarding database management systems is not correct?

Question37: 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.

Question38: Which of the following are included in ISO 31000 risk principles and guidelines?

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

Question40: The cost to enter a foreign market would be highest in which of the following methods of global expansion?

Question41: Which of the following is a major advantage of decentralized organizations, compared to centralized organizations?

Question42: Which of the following is a role of the board of directors in the governance process?

Question43: Which of the following statements regarding organizational governance is not correct?

Question44: Which of the following best describes a market signal?

Question45: 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?

Question46: 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?

Question47: When applied to international economics, the theory of comparative advantage proposes that total worldwide output will be greatest when:

Question48: Which of the following stages of group development is associated with accepting team responsibilities?

Question49: When developing an effective risk-based plan to determine audit priorities, an internal audit activity should start by:

Question50: Which of the following statements about COBIT is not true?

Question51: Which of the following distinguishes the added-value negotiation method from traditional negotiating methods?

Question52: 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.

Question53: 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?

Question54: The economic order quantity for inventory is higher for an organization that has:

Question55: Which of the following is a product-oriented definition of a business rather than a market-oriented definition of a business?

Question56: 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?

Question57: Which of the following principles are common to both hierarchical and open organizational structures?
1. Employees at all levels should be empowered to make decisions.
2. A supervisor's span of control should not exceed seven subordinates.
3. Responsibility should be accompanied by adequate authority.
4. A superior cannot delegate the ultimate responsibility for results.

Question58: 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.

Question59: During a review of a web-based application used by customers to check the status of their bank accounts, it would be most important for the internal auditor to ensure that:

Question60: Which of the following standards would be most useful in evaluating the performance of a customer- service group?

Question61: Which of the following conditions could lead an organization to enter into a new business through internal development rather than through acquisition?

Question62: Which of the following is a characteristic of an emerging industry?

Question63: According to the COSO enterprise risk management (ERM) framework, which of the following is not a typical responsibility of the chief risk officer?

Question64: Which of the following statements about matrix organizations is false?

Question65: 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?

Question66: 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?

Question67: 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.

Question68: Countries X and Y both have freely floating exchange rate systems and an active trading relationship. If incomes [List A] in country X while all other factors remain unchanged, then the currency of country X will tend to [List B] relative to the currency of country Y.

Question69: 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.

Question70: 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.

Question71: Which of the following is not a barrier to effective communication?

Question72: Which of the following is a key characteristic of a zero-based budget?

Question73: 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?

Question74: Which of the following engagement observations would provide the least motivation for management to amend or replace an existing cost accounting system?

Question75: 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.

Question76: 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:

Question77: Which is the least effective form of risk management?