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

IIA IIA-CIA-PART3 Online Questions & Answers

• Question 1181:

  An organization with an annual demand of 25. 000 units correctly computes its economic order quantity to be 1,000 units Its safety stock is 300 units and the lead time is two days If there are 250 production days in a year what is the reorder point1?

  A. 200 units.
  B. 300 units.
  C. 500 units.
  D. 1,000 units.
  C. 500 units.

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  Explanation

• Question 1182:

  Which of the following is false regarding transformational leadership?

  A. Transformational leadership emphasizes vision, development of the individual, empowerment of the worker, and the challenging of traditional assumptions.
  B. Transformational leaders use traditional thinking to monitor employees so that the employees adhere to standards.
  C. Transformational leaders have charisma and provide intellectual stimulation to the workers.
  D. Transformational leaders expect employees to achieve more than the employees thought was possible.
  B. Transformational leaders use traditional thinking to monitor employees so that the employees adhere to standards.

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  Explanation

  Transformational leaders have charisma and provide intellectual stimulation to the workers. In addition, they will emphasize vision, focus on development of the individual, empowerment of the worker, and the challenging of traditional assumptions. A transactional leader, on the other hand, would monitor employees to ensure that they adhered to standards.

• Question 1183:

  Noise may disrupt communication during transmission. All of the following are examples of noise except:

  A. Selective perception.
  B. Static on a telephone line.
  C. A letter lost because it was interspersed with junk mail.
  D. A participant in a conversation being called away for a meeting.
  A. Selective perception.

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  Explanation

  Noise in a communication channel is an outside disruption that impedes the flow of a message. It can vary from real noise, such as loud machines running and static on a phone line, to disruptions such as phone calls during a face-to-face conversation. Selective perception on the part of either the sender or the receiver of a message is not noise because it is not an outside disruption.

• Question 1184:

  The chief audit executive (CAE) and management of the area under review disagree over managing a significant risk item. According to IIA guidance, which of the following actions should the CAE take first?

  A. Refer the matter to the board for resolution
  B. Consult the approved audit charter on supremacy of internal auditors' decisions
  C. Record management's and the internal auditor's positions in the audit report
  D. Discuss the issue in question further with senior management
  D. Discuss the issue in question further with senior management

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  Explanation

  When disagreements occur regarding risk management or audit findings, the CAE should first escalate the matter within management levels to attempt resolution. Only if the disagreement remains unresolved after discussion with senior

  management should the CAE report the matter to the board or audit committee.

  Options B and C are premature: the charter does not grant internal audit supremacy over management's decisions, and documenting disagreement in the audit report should occur only after reasonable attempts at resolution. Option A

  (escalating immediately to the board) should occur only if discussion with management does not resolve the issue.

  IIA Standards - Standard 2600: Communicating the Acceptance of Risks.

• Question 1185:

  A firm ships its product to a foreign subsidiary and charges a price that may increase import duties but lower the income taxes paid by the subsidiary. The most likely reason for these effects is that the:

  A. Price is an arm's-length price.
  B. Price is a cost-plus price.
  C. Transfer price is too low.
  D. Transfer price is too high.
  D. Transfer price is too high.

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  Explanation

  A transfer price is the price charged by one subunit of a firm to another. When the subsidiarybuyer is in a foreign country, the higher the transfer, the higher the potential tariffs.However, the tax levied on a subsequent sale by the subsidiary will be lower because of its higher acquisition cost.

• Question 1186:

  Which of the following statements is most accurate with respect to various forms, elements, and characteristics of business contracts?

  A. A contract is a tool used by both suppliers and customers, the model and complexity of which generally remains constant
  B. Collaboration during contract negotiation encourages stakeholders to develop consensus but typically increases cycle times and the likelihood that the contract will fail
  C. Differing legal requirements affect the attitudes of contracting parties as well as the length content and language of contracts
  D. A contract is a tool used by both suppliers and customers though it offers commercial assurance of the relationship, purely from a customer perspective
  C. Differing legal requirements affect the attitudes of contracting parties as well as the length content and language of contracts

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  Explanation

• Question 1187:

  Which of the following is considered a disadvantage of electronic communication?

  A. Information overload. II. Misrepresentation of feelings and emotions. III. Reduced transmission time. IV. Lack of paper trail.
  B. I and II only.
  C. II and IV only.
  D. I, II, and Ill only.
  E. I, II, III, and IV.
  A. Information overload. II. Misrepresentation of feelings and emotions. III. Reduced transmission time. IV. Lack of paper trail.

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  Explanation

  Information overload and misrepresentation of feelings and emotions are drawbacks of electronic communication. Information overload, such as numerous email messages, may lead to lost time and inefficiencies. Also, email cannot accurately convey the feeling and tone intended by the person initiating the communication. Accordingly, it may be misinterpreted by the receiver.

• Question 1188:

  Which condition does not increase the threat of new competitor entry into the industry?

  A. Strong brand identity.
  B. Existing firms do not enjoy the cost advantages of vertical integration.
  C. Few proprietary product differences.
  D. Low capital requirements.
  A. Strong brand identity.

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  Explanation

  Strong brand identity decreases the threat that new competitors will enter an industry. New competitors have difficulty because potential customers are loyal to established firms in the industry.

• Question 1189:

  A small software development firm designs and produces custom applications for businesses. The application development team consists of employees from multiple departments who all report to a single project manager.

  Which of the following organizational structures does this situation represent?

  A. Functional departmentalization.
  B. Product departmentalization.
  C. Matrix organization.
  D. Divisional organization.
  A. Functional departmentalization.

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  Explanation

• Question 1190:

  Which of the following is least likely to be an example of synergy?

  A. A shopping mall with several businesses providing different products and performing different services.
  B. A car dealership providing warranties on automobile parts to maximize customer value.
  C. A manufacturing company hiring a new manager with technological experience lacking in the company.
  D. Military Humvees being converted into sports utility vehicles for sale to civilians.
  B. A car dealership providing warranties on automobile parts to maximize customer value.

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  Explanation

  Synergy occurs when the combination of formerly separate elements has a greater effect than the sum of their individual effects. However, a car dealership's provision of warranties reflects anoperational strategy designed to provide post-purchase services to gain a competitive advantage and maximize customer value. It does not reflect the complementary sharing of resources, technology, or competencies. In contrast, synergy arises from selling a line of carsthat share some components or abrand identification.