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?
A. Develop a bargaining zone that lies between $50 million and $70 million and create sets of outcomes between $50 million and $70 million.
B. Adopt an added-value negotiating strategy, develop a bargaining zone between $50 million and $70 million, and create sets of outcomes between $50 million and $70 million.
C. Involve a mediator as a neutral party who can work with the textile company's management to determine a bargaining zone.
D. Develop a bargaining zone that lies between $55 million and $60 million and create sets of outcomes between $55 million and $60 million.
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?
A. Interviewing the organization's employees.
B. Observing the organization's operations.
C. Reading the board's minutes.
D. Inspecting manuals and documents.
Which of the following must be adjusted to index a progressive tax system to inflation?
A. Tax deductions, exemptions, and tax filings.
B. Tax deductions, exemptions, and tax brackets.
C. Tax brackets, tax deductions, and tax payments.
D. Tax brackets, exemptions, and nominal tax receipts.
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:
A. Access to read application logs is restricted to authorized users.
B. Account balance information is encrypted in the database.
C. The web server used to host the application is located in a physically secure area.
D. Sensitive data, such as account numbers, are submitted using encrypted communications.
Which of the following corporate social responsibility strategies is likely to be most effective in minimizing confrontations with influential activists and lobbyists?
A. Continually evaluate the needs and opinions of all stakeholder groups.
B. Ensure strict compliance with applicable laws and regulations to avoid incidents.
C. Maintain a comprehensive publicity campaign that highlights the organization's efforts.
D. Increase goodwill through philanthropic activities among stakeholder communities.
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?
A. Production controls weakness.
B. Application controls weakness.
C. Authorization controls weakness.
D. Change controls weakness.
Which of the following is the best reason for considering the acquisition of a nondomestic organization?
A. Relatively fast market entry.
B. Improved cash flow of the acquiring organization.
C. Increased diversity of corporate culture.
D. Opportunity to influence local government policy.
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.
A. 1 and 2 only
B. 1 and 3 only
C. 2 and 3 only
D. 1, 2, and 3
Which of the following is a role of the board of directors in the governance process?
A. Conduct periodic assessments of the organization's governance systems.
B. Obtain assurance concerning the effectiveness of the organization's governance systems.
C. Implement an effective system of internal controls to support the organization's governance systems.
D. Review and approve operational goals and objectives.
According to the waterfall cycle approach to systems development, which of the following sequence of events is correct?
A. Program design, system requirements, software design, analysis, coding, testing, operations.
B. System requirements, software design, analysis, program design, testing, coding, operations.
C. System requirements, software design, analysis, program design, coding, testing, operations.
D. System requirements, analysis, coding, software design, program design, testing, operations.
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