IIA IIA-CIA-PART3 Online Practice Questions and Exam Preparation

IIA IIA-CIA-PART3 Online Questions & Answers

• Question 1011:

  A firm enters a new business by creating a full-fledged new entity (an internal entrant). The internal entrant is least likely to cause disruption and retaliation in a:

  A. Slow-growth industry.
  B. Fragmented industry.
  C. Commodity-producing industry.
  D. Highly-concentrated industry.
  B. Fragmented industry.

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  Explanation

  In a fragmented industry, many firms might be affected but not significantly. These firms also might have no ability to retaliate. Firms in a fragmented industry have insignificant market shares and little influence on industry outcomes.

• Question 1012:

  In which of the following situations would a narrower span of control be more appropriate?

  A. Managers do not spend a great deal of time on planning or strategic management.
  B. Managers must spend a great deal of time coordinating with other managers.
  C. Subordinates work in the same area rather than being geographically dispersed.
  D. Work performed by subordinates is substantially identical.
  B. Managers must spend a great deal of time coordinating with other managers.

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  Explanation

  If substantial coordination is required, a manager benefits from reduced supervision requirements. In addition, increased coordination implies that the work done by subordinates is not standardized. As spans of control move from wider to narrower, the work done becomes less similar and more complex.

• Question 1013:

  Of the following entities, a matrix organization would be most appropriate for:

  A. A company operating a set of geographically dispersed telephone call centers that provide technical support.
  B. A company which starts several complex, multidisciplinary engineering and construction projects each year.
  C. A retail company, which sells to customers through multiple stores, located in shopping malls, as well as through a website and mailed catalogs.
  D. A company that provides temporary staffing help to a wide variety of commercial and governmental agencies.
  B. A company which starts several complex, multidisciplinary engineering and construction projects each year.

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  Explanation

  A matrix organization consists of a project team of people from various functional areas within the organization. These specialists report simultaneously to the project manager and themanagers of their functional departments. At the end of the project, the team is disbanded.Accordingly, a matrix organization that assigns specialists as needed to various projects is appropriate for such a company.

• Question 1014:

  Which of the following should be included m a company's year-end inventory valuation?

  A. Company goods that were sold during the year free on board shipping point that have been shipped but not yet received by the customer
  B. Goods purchased by the company free on board destination mat have not yet been received
  C. Goods on consignment, which the company is trying to sell for its customers
  D. Company goods tor sale on consignment at a consignment shop
  A. Company goods that were sold during the year free on board shipping point that have been shipped but not yet received by the customer

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  Explanation

• Question 1015:

  Which of the following statements is true regarding a bring-your-own-device (BYOD) environment?

  A. There is a greater need for organizations to rely on users to comply with policies and procedures.
  B. With fewer devices owned by the organization, there is reduced need to maintain documented policies and procedures.
  C. Incident response times are less critical in the BYOD environment, compared to a traditional environment.
  D. There is greater sharing of operational risk in a BYOD environment.
  A. There is a greater need for organizations to rely on users to comply with policies and procedures.

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  Explanation

• Question 1016:

  Intentional stimulation of conflict can be triggered by:

  A. Making changes to the organizational structure II. Hiring new employees with different values, attitudes, and backgrounds III. Assigning an employee the role of devil's advocate to oppose the majority views
  B. I only.
  C. I, II, and Ill.
  D. I and Ill only.
  E. II only.
  B. I only.

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  Explanation

  Intentional stimulation of conflict is triggered by making changes in the organizational structure, hiring new employees with different values, attitudes, backgrounds, and assigning an employee to be devil's advocate to oppose the majority views of the group.

• Question 1017:

  A firm's capacity expansion decision should be based on the understanding that:

  A. Overcapacity in a profitable industry is a short-term problem.
  B. Under capacity in a profitable industry is a long-term problem.
  C. A key forecasting problem is behavior of competitors.
  D. Prices and cash flows must be estimated to predict market shares and industry capacity.
  C. A key forecasting problem is behavior of competitors.

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  Explanation

  Whether to expand capacity is a major strategic decision because of the capital required, the difficulty of forming accurate expectations, and the long time frame of the lead times and the commitment. The key forecasting problems are longterm demand and behavior of competitors. The key strategic issue is avoidance of industry overcapacity. Analysis of competitors determines when each will expand. The difficulty is that forecasting their behavior depends on knowing their expectations. Another difficulty is that each competitor's actions potentially affect all other competitors' actions, with the industry leader being most influential.

• Question 1018:

  A firm wishing to become global must consider how many national markets to enter. A firm should enter fewer national markets when

  A. Communication adaptation costs are low.
  B. The product need not be adapted.
  C. Entry costs are low.
  D. The first countries chosen are heavily populated and have high incomes.
  D. The first countries chosen are heavily populated and have high incomes.

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  Explanation

  According to Ayal and Zif, the following are factors indicating that few national markets should be entered:

  (1)

  entry costs are high;

  (2)

  market control costs are high;

  (3)

  product adaptation costs are high;

  (4)

  communication adaptation costs are high;

  (5)

  the first countries selected have large populations, high incomes, and high income growth;

  (6)

  a dominant firm can erect high entry barriers.

• Question 1019:

  An internal auditor is auditing their organization's termination process. A primary objective of this engagement is to verify that exit interviews were conducted for all terminated employees over the last two years. The auditor discovered that not

  all employees received exit interviews.

  Which of the following risks could this lead to?

  A. The risk of employee turnover.
  B. The risk of noncompliance with a local labor law.
  C. The risk of incorrect severance payments.
  D. The risk of a confidentiality breach.
  D. The risk of a confidentiality breach.

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  Explanation

• Question 1020:

  Industry structure and competition during the decline phase may result in intense and destructive competition. Which factor is most likely to contribute to this condition?

  A. Firms do not expect demand to rebound.
  B. The decline is rapid.
  C. Attractive substitutes are not available.
  D. Specialized assets used in the industry have low liquidation values.
  D. Specialized assets used in the industry have low liquidation values.

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  Explanation

  High exit barriers may restrain firms from leaving the industry even though their returns are poor. For example, specialized assets and inventory in a declining industry may have a low liquidation value. Few purchasers who wish to operate in the same industry may be available. Durable assets may have a carrying amount far greater than the liquidation value. Hence, liquidation may result in a loss that the firm may not wish to recognize. Furthermore, a low liquidation value means that the future discounted cash flows from remaining in the industry may exceed the opportunity cost of the capital invested in the declining industry. Thus, the returns from the proceeds of liquidation may be less than the returns from keeping those assets in the business.