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

IIA IIA-CIA-PART3 Online Questions & Answers

• Question 1331:

  Strategic management includes developing the organization's grand strategy. This strategy is based on:

  A. Existing strategic business units (SBUs).
  B. A SWOT analysis.
  C. Portfolio management of the organization's businesses.
  D. Strategic planning.
  B. A SWOT analysis.

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  Explanation

  Strategic management is a process that includes development of a grand strategy that describes how the organization's mission is to be achieved. This strategy is based on a situational analysis that considers organizational strengths and weaknesses (a capability profile) and their interactions with environmental opportunities and threats. Such an evaluation is also called a SWOT analysis. Strengths and weaknesses (the internal environment) are usually identified by considering the firm's capabilities and resources. What the firm does particularly well or has in greater abundance are known as core competencies. Opportunities and threats (the external environment) are identified by considering macroenvironment factors (economic, demographic, political, legal, social, cultural, and technical) and microenvironment factors (suppliers, customers, distributors, competitors, and other competitive factors in the industry).

• Question 1332:

  Which of the following is an arrangement that involves partial integration and implies the ability to fully support an efficient subunit?

  A. Quasi-integration.
  B. Tapered integration.
  C. Upstream integration.
  D. Contract integration.
  B. Tapered integration.

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  Explanation

  Tapered (partial) integration implies that the firm can fully support an efficient subunit but has additional needs to be met in the market. If the in-house subunit will not be efficient, that inefficiency must be weighed against the benefits of tapering. Tapering resultsin lower fixed costs than full integration. Furthermore, the strategy may allow the firm's subunit(s) to maintain constant production rates while external parties bear the risk of fluctuations. Another use of tapering is to protect against operational imbalances among the subunits. A risk of tapering is selling to, or buying from, competitors. Another is greater coordination cost. Advantages of tapering are avoidance of locked-in relationships, some access to external expertise, increased managerial incentives, offering a credible threat of full integration to suppliers or customers, and obtaining knowledge of the adjacent business and an emergency supply source.

• Question 1333:

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

  A. Standards, framework, and process.
  B. Standards, assessments, and process.
  C. Principles, framework, and process.
  D. Principles, practices, and process.
  C. Principles, framework, and process.

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  Explanation

• Question 1334:

  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:

  A. $100
  B. $200
  C. $300
  D. $500
  A. $100

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  Explanation

• Question 1335:

  A competitive factor that may lead to overbuilding in an industry is:

  A. The need of large customers to know that capacity exists to meet their long-term requirements.
  B. The lack of a credible market leader.
  C. The advantage held by the capacity leader.
  D. The existence of high entry barriers.
  B. The lack of a credible market leader.

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  Explanation

  The lack of a credible market leader makes for a less orderly expansion. A stronger leader can retaliate effectively against inappropriate expansion by others. The following are other such factors:

  (1) many firms with the ability to add capacity are seeking to improve market share; (2) new entrants, possibly encouraged by low entry barriers and favorable economic conditions, may cause or intensify overcapacity; and (3) first mover advantages may be significant; thus, shorter lead times for ordering equipment, lower costs, and the ability to exploit an excess of demand over supply may encourage too many firms to expand.

• Question 1336:

  Which of the following statements is true regarding cybersecurity risk?

  A. Cybersecurity risks are identical across all organizations regardless of industry
  B. Installation of antivirus and malware software prevents cybersecurity risks
  C. Deployment of proper cybersecurity measures assures business success
  D. Information value extends the emergence of cybersecurity risks
  C. Deployment of proper cybersecurity measures assures business success

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  Explanation

• Question 1337:

  When evaluating communication, the accountant should be aware that nonverbal communication

  A. Is independent of a person's cultural background.
  B. Is often imprecise.
  C. Always conveys a more truthful response.
  D. Always conveys less information than verbal communication.
  B. Is often imprecise.

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  Explanation

  Nonverbal communication body language) consists of facial expressions, vocal intonations, posture, gestures, and appearance, and physical distance. Thus, by its nature, nonverbal communication is much less precise than verbal communication.

• Question 1338:

  A claimed advantage of decentralizing is:

  A. Concentration of authority.
  B. Manager development.
  C. Elimination of duplication of effort.
  D. Departmentalization.
  B. Manager development.

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  Explanation

  When an organization changes from a centralized to a decentralized structure, top management is delegating more authority to middle and lower levels. Thus, managers at these lower levels are usually hired and developed more rigorously than under the centralized structure.

• Question 1339:

  Rivalry among existing firms in an industry is more likely to be strong when:

  A. The industry is in the rapid growth stage.
  B. Investment intensity is low.
  C. A few firms are dominant.
  D. Capacity must be expanded in large increments.
  D. Capacity must be expanded in large increments.

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  Explanation

  The intensity of rivalry and the threat of entry may vary with the extent of capacity expansion dictated by the need to achieve economics of scale. If it must be made in large increments to achieve economics of scale, competition will be more intense. The need for large-scale expansion to achieve production efficiency may result in an excess of industry capacity over demand. However, if capacity may be expanded in small increments, industry capacity is less likely to be excessive, the supply-demand balance is less likely to be upset, and price cutting is less likely to be necessary.

• Question 1340:

  The board of directors wants to implement an incentive program for senior management that is specifically tied to the long-term health of the organization.

  Which of the following methods of compensation would be best to achieve this goal?

  A. Commissions.
  B. Stock options.
  C. Gain-sharing bonuses.
  D. Allowances.
  C. Gain-sharing bonuses.

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  Explanation