Which of the following factors is considered a disadvantage of vertical integration?
A. It may reduce the flexibility to change partners.
B. It may not reduce the bargaining power of suppliers.
C. It may limit the organization's ability to differentiate the product.
D. It may lead to limited control of proprietary knowledge.
When an organization is choosing a new external auditor, which of the following is the most appropriate role for the chief audit executive to undertake?
A. Review and acquire the external audit service.
B. Assess the appraisal and actuarial services.
C. Determine the selection criteria.
D. Identify regulatory requirements to be considered.
Which of the following purchasing scenarios would gain the greatest benefit from implementing electronic data interchange?
A. A time-sensitive just-in-time purchase environment.
B. A large volume of custom purchases.
C. A variable volume sensitive to material cost.
D. A currently inefficient purchasing process.
Which of the following statements is true regarding outsourced business processes?
A. Outsourced business processes should not be considered in the internal audit universe because the controls are owned by the external service provider.
B. Generally, independence is improved when the internal audit activity reviews outsourced business processes.
C. The key controls of outsourced business processes typically are more difficult to audit because they are designed and managed externally.
D. The system of internal controls may be better and more efficient when the business process is outsourced compared to internally sourced.
Which of the following statements about matrix organizations is false?
A. In a matrix organization, conflict between functional and product managers may arise.
B. In a matrix organization, staff under dual command is more likely to suffer stress at work.
C. Matrix organizations offer the advantage of greater flexibility.
D. Matrix organizations minimize costs and simplify communication.
Senior management has decided to implement the Three Lines of Defense model for risk management. Which of the following best describes senior management's duties with regard to this model?
A. Ensure compliance with the model.
B. Identify management functions.
C. Identify emerging issues.
D. Set goals for implementation.
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.
A. 1 and 2
B. 1 and 4
C. 2 and 3
D. 3 and 4
Which of the following COSO internal control framework components encompasses establishing structures, reporting lines, authorities, and responsibilities?
A. Control environment.
B. Control activities.
C. Information and communication.
D. Monitoring.
Which of the following roles would be least appropriate for the internal audit activity to undertake with regard to an organization's corporate social responsibility (CSR) program?
A. Consult on project design and implementation of the CSR program.
B. Serve as an advisor on internal controls related to CSR.
C. Identify and prioritize the CSR issues that are important to the organization.
D. Evaluate the effectiveness of the organization's CSR efforts.
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.
A. 1, 2, and 3
B. 1, 2, and 4
C. 1, 3, and 4
D. 2, 3, and 4
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