IIA IIA Certifications IIA-CIA-PART4 Questions & Answers

• Question 401:

  The director of internal auditing for a large company has established an excellent reputation because of her strong professional credentials and tactful but firm handling of auditor-auditee relationships. With regard to auditees, she must rely upon what sources of power?

  A. Expert and coercive.

  B. Referent and reward.

  C. Referent and expert.

  D. Legitimate and coercive.

  Correct Answer: C

  The internal audit director has no formal (legitimate or position) power over auditees. Nor does she have the power to coerce (punish) or reward them. Rather, her ability to exert power (influence others) must derive from her specialized ability and knowledge and the force of her personal qualities.

• Question 402:

  Which of the following is not an example of positive reinforcement of behavior?

  A. Paying a bonus to employees who had no absences for any four-week period.

  B. Giving written warnings to employees after only every other absence.

  C. Assigning a mentor to each employee who exhibits a desire to develop leadership skills.

  D. Having a lottery every month where 10% of the employees with no absences receive a US $200 bonus.

  Correct Answer: B

  Positive reinforcement encourages a desired behavior by following it with the presentation of a reward. Punishment, on the other hand, discourages an undesired behavior by following it with a negative consequence. While punishment ideally should follow every occurrence of an undesirable behavior, this is not always possible. Thus, even though written warnings are given to employees only after every other absence, the action is considered punishment, not positive reinforcement.

• Question 403:

  Which of the following is true concerning generic influence tactics?

  A. Consultation involves appealing to emotions, values, or ordeals.

  B. Ingratiating tactics attempt to raise the other person's self-esteem prior to a request.

  C. Coalition tactics try to convince others by reliance on a detailed plan, supporting evidence, and reason.

  D. Pressure tactics are based on the formal or informal support of higher management.

  Correct Answer: B

  Management literature describes generic influence tactics that may be used in any direction. As noted by researchers, ingratiating tactics attempt to raise the other person's self-esteem prior to a request.

• Question 404:

  A company's decisions are made solely by one person, who is the CEO and major shareholder. Which of the following powers is this person least likely to relate to the other individuals to whom the person has delegated some authority?

  A. Coercive power.

  B. Legitimate power.

  C. Referent power.

  D. Reward power.

  Correct Answer: C

  A person who is the head of a company may exert influence through five types of power. Referent power is the capacity for the individual's personality and style to cause others to identify with or like him or her. Thus, it is the one type of power not necessarily held by a CEO and major shareholder. This person has the ability to reward others and apply pressure. (S)he also has the right to expect cooperation.

• Question 405:

  A manager can use power and authority to accomplish objectives. The relationship between these two important concepts is best explained as follows:

  A. Power is the right to do things, while authority is the ability to do things.

  B. Authority is the right to do things, while power is the ability to do things.

  C. Power and authority are both required to accomplish a task.

  D. Power and authority are simply two words that describe the same concept -- how to get things done in organizations.

  Correct Answer: B

  Authority is the officially sanctioned privilege to direct others. A clear hierarchy of authority enhances coordination and accountability. Power is the ability to marshal organizational resources to obtain results. A manager may have both authority and power, or one without the other.

• Question 406:

  Globalization assists in achieving economies of scale, which is:

  A. Cost benefit

  B. Timing benefit.

  C. Learning benefit.

  D. Arbitrage benefit.

  Correct Answer: A

  Cost benefits are obtained from economies of scale as a firm expands its operations. Average costs of output decline because of standardization of products or processes, and increased bargaining power versus suppliers of raw materials, components, and services. Moreover, economies of scale may arise from centralized production or from marketing, logistical, or purchasing factors.

• Question 407:

  Globalization and localization are shaping the competitive structure of industries. The scenario contributing to the most competitive environment is when:

  A. Global forces dominate.

  B. Local forces dominate.

  C. Mix of global and local forces dominate.

  D. Neither global nor local forces dominate.

  Correct Answer: C

  Competitiveness of firms is greatest, and the competitive environment is most intense, when the benefits of global integration and coordination and the benefits of localization (flexibility, proximity, and quick response time) are achieved.

• Question 408:

  All of the following are impediments to global competition except:

  A. Economies of scale.

  B. Rapid changes in technology.

  C. Differing marketing tasks.

  D. Sensitivity to lead times.

  Correct Answer: A

  Economies of scale are sources of global competitive advantage. Economies of scale in centralized production, logistics, purchasing, or marketing facilitate entry into the global market.

• Question 409:

  For an industry to be genuinely global, it must be involved in which of the following significant activities?

  I. Licensing

  II. Export

  III.

  Direct Investment

  A.

  I. and II.

  B.

  II. or Ill.

  C.

  I. and lll.

  D.

  Ill. only.

  Correct Answer: B

  A genuinely global industry requires a firm to compete globally. Participation in foreign markets is usually by licensing; export; or, after the firm has obtained experience, direct investment. A genuinely global industry will have significant export activity or direct investment. Nevertheless, direct investment does not necessarily signal the existence of global competition. Direct investment also may occur when purely national factors determine a subsidiary's competitive position.

• Question 410:

  Which strategy in a global industry is most likely to rely on domestic content rules or high tariffs?

  A. A protected niche strategy.

  B. A national focus strategy.

  C. A national segment strategy.

  D. A global focus strategy.

  Correct Answer: A

  A protected niche strategy is applied in nations where global competitors are discouraged by governmental impediments, such as domestic content rules or tariffs. The strategy is designed to be effective in markets with governmental constraints and requires close attention to the national government.