IIA IIA Certifications IIA-CIA-PART4 Questions & Answers

• Question 261:

  The chief audit executive is attempting to standardize the engagement procedures used throughout the organization. Many of the internal auditors are employed at distant locations. The CAE wants to select a process that will encourage input from a cross section of internal auditors, facilitate differing perspectives, and encourage acceptance of changes that might result from the standardization. The decision-making process that will most effectively achieve the CAE's goals is

  A. A decision-making model.

  B. Group-aided decision making.

  C. The contingency approach.

  D. Programmed decision making.

  Correct Answer: B

  The advantages of group decision making are that the group will have broader experience, greater expertise, a wider range of perspectives, and a greater capacity for absorbing facts than an individual. The exchange of viewpoints within the group may provide more illumination of the problem than could be achieved by one person. Group- aided decision making facilitates analyzing problems and estimating needed actions. It encourages participation and acceptance of decisions.

• Question 262:

  In deciding whether to have a work group make a decision or to make the decision personally, a manager should consider

  A. When the decision is needed.

  B. How important it is for the work group to accept the decision.

  C. Whether there are strong individuals in the work group who could dominate the decisionmaking process.

  D. All of the answers are correct.

  Correct Answer: D

  If the decision is needed immediately, group decision making may not be indicated because assembling the group and the often inefficient interactions of its members are time consuming. Another disadvantage of group decision making is the possibility a few people will dominate the deliberations. If they lack ability, the group may not be effective. An advantage of the decision-making process is that it fosters acceptance by the members of the group. Participation by the individuals who will be required to implement the solution adopted increases the likelihood of its success.

• Question 263:

  An engagement to review an organization's budget process has revealed that department heads frequently circumvent budget controls by actions such as padding their budgets and concealing opportunities to cut costs. One of the engagement recommendations involves forming a group composed of department heads to find a solution for this problem. Which one of the following methods is likely to generate a high level of commitment to the solution among members of the group?

  A. The brainstorming technique in which group members orally identify as many alternatives as possible without criticism from other members.

  B. A mandate from top management.

  C. The Delphi technique in which a series of questionnaires is used to arrive at a consensus.

  D. An open discussion of the problem and potential solutions until a consensus is reached.

  Correct Answer: D

  Interacting groups, that is, traditional groups in which individuals meet face-to-face and interact in customary ways, potentially foster the greatest commitment to the solution reached. When individuals who must implement the solution participate in the decision through open discussion and arrive at a consensus, they are usually inclined to accept the decision.

• Question 264:

  Numerous factors enhance or detract from a group's attractiveness and cohesiveness. Select the factor that enhances cohesiveness.

  A. Favorable view from the outside-looking-in.

  B. Wide variety of members.

  C. A common threat in the environment.

  D. Moderately large size.

  Correct Answer: C

  Commitment to a group depends on its attractiveness and cohesiveness. The latter quality is the tendency of members to adhere to the group and resist outside influences. Factors that enhance group attractiveness and cohesiveness are prestige, status, a cooperative relationship, a high degree of interaction, small size, the similarity of members, a superior public image, and a common threat in the environment.

• Question 265:

  A project coordinator for a large capital project used a brainstorming session of the senior project managers to decide how to get the project back on schedule. A disadvantage of this approach is that:

  A. Responsibility for the decision will be unclear.

  B. Only situational factors will be addressed.

  C. Creativity will be decreased.

  D. Diversity of views will be decreased.

  Correct Answer: A

  Brainstorming is an aid to creativity in group decision making. This technique requires a group meeting, possibly online, to develop solutions in a criticism-free context. All ideas are recorded and are later either discarded or more fully developed. Thus, a nonjudgmental environment is essential. Moreover, to create such an environment or to avoid having personality conflicts interfere with the process, a means of conferring anonymity on the participants is sometimes used. However, brainstorming suffers from a structural weakness of group decision making, dispersal of accountability.

• Question 266:

  Which of the following would increase understanding of a complex and ambiguous situation confronted by an organization?

  I. Brainstorming.

  II. Polling.

  III.

  Lateral thinking.

  A.

  I only.

  B.

  I and Ill only.

  C.

  II and Ill only.

  D.

  I, II, and Ill.

  Correct Answer: B

  Brainstorming is a method of group decision making thatnonjudgmentalrecords all ideas offered. By encouraging groups to identify novel or unusual contributions, brainstorming helps make all of the elements of a problem and its resolution visible. Lateral thinking explores different ways of viewing an issue. Taking alternative perspectives increases the likelihood of finding better solutions. However, by identifying views without further analysis, polling does not increase understanding of a complex situation.

• Question 267:

  In an internal audit department, group decision making would be most appropriate for determining whether to:

  A. Report a significant audit finding that is critical of management.

  B. Expand an audit program because of uncertainty and risk regarding the operations of the audited entity.

  C. Expand audit procedures when initial sample results indicate a strong possibility of fraud.

  D. Review a critical audit finding with the client before preparation of the engagement final communication.

  Correct Answer: B

  Whether to expand an audit program because of uncertainty and risk regarding the operations of the audited entity is a matter of professional judgment. In discretionary matters of this kind, the advantages of group decision making become evident. The group has a greater base of knowledge than an individual and provides multiple perspectives. Furthermore, the extended discussions among group members clarify the issues and aid in understanding the reasons fordifferent actions. Also, the participants are likely to accept, or take ownership of, the final decision. In addition, the process provides training for the group's less experienced members.

• Question 268:

  A new production team has been formed by taking experienced high achievers from existing teams within the factory. The members of the new team have not been required to learn any new skills, and the machines used are identical to those used in their former teams. The team's production supervisor is a longtime employee of the organization but has not previously worked with any members of the new team. Despite the abilities and previous individual achievements of the individual team members, management is surprised by the mediocre performance of the new team. The best approach for the production supervisor to improve performance would be to:

  A. Increase pressure on the team through higher goals and reprimands.

  B. Replace the individuals on the team.

  C. Provide opportunities for the team members to socialize with each other.

  D. Do nothing now because it is too soon to draw any conclusions.

  Correct Answer: C

  As the team members work and socialize, cohesiveness will be enhanced because of the opportunity to discover commonalities and share experiences. However, performance may or may not improve as cohesiveness increases. Improvement is also contingent on the group's performance norms. A cohesive group enforces norms. Thus, if norms are high, greater cohesiveness should result in better performance.

• Question 269:

  Groups have often evolved by self-set standards of performance and behavior, usually based on the personal and social backgrounds of the individuals on the job. This establishment of a group culture is referred to as developing:

  A. Role models.

  B. Cohesiveness.

  C. Conformity.

  D. Norms.

  Correct Answer: D

  Norms are the standards of behavior adopted by a group when it is in its early stages. The norms of the group are often a composite of the personal and social backgrounds of the individuals who comprise the group.

• Question 270:

  A lack of cohesiveness and attractiveness in a group may lead to

  A. A lack of commitment by the members.

  B. Dissension in the formal organization.

  C. Cooperation among group members.

  D. Substantial group member interaction.

  Correct Answer: A

  Commitment to a group depends on the group's attractiveness and cohesiveness. A lack of commitment may lead to members joining other groups and bad experiences with the group.