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IIA Business Knowledge for Internal Auditing Sample Questions (Q19-Q24):

NEW QUESTION # 19
According to Maslow's hierarchy of needs theory, which of the following would likely have the most impact on retaining staff, if their lower-level needs are already met?

• A. Social benefits.
• B. Compensation.
• C. Recognition
• D. Job safety.

Answer: C
NEW QUESTION # 20
Which one of the following is least likely to be recommended by the auditor when an EDIEFT system is being designed?

• A. Data security procedures should be written to prevent changes to data by unauthorized individuals
• B. Disaster recovery plans should be established.
• C. Remote access to electronic data should be denied.
• D. The identity of the individual approving an electronic document should be stored as a data field.

Answer: C Explanation:
One of the benefits of an EDI-EFT system is that it can provide remote access at any time from any place if telecommunications links are available. However, appropriate controls should prevent unauthorized access. A multinational company has an agreement with a value-added network VAN) that provides the encoding and communications transfer for the company's electrons.. data interchange EDI) and electronic funds transfer EFT) transactions. Before transfer of data to the VAN, the company performs online preprocessing of the transactions. The internal auditor is responsible for assessing preprocessing controls. In addition, the agreement between the company and the VAN states that the internal auditor is allowed toe :amine and report on the controls in place at the VAN on an annual basis. The contract specifies that access to the VAN can occur on a surprise basis during the second or third quarter of the company's fiscal year. This p n I was -hosen so it would not interfere with processing during the VAN's peak transaction periods. This provision was riot reviewed with internal auditing. The annual audit plan approved by the board of directors specifies that a full audit would be done during the current year.
NEW QUESTION # 21
In which of the following organizational structures does total quality management (TQM) work best?

• A. Hierarchal.
• B. Teams of people from the same specialty.
• C. Teams of people from different specialties.
• D. Specialists working individually.

Answer: C Explanation:
TQM advocates replacement of the traditional hierarchal structure with teams of people from different specialties. This change follows from TQM's emphasis on empowering employees and teamwork. Employees should (1) have proper training, necessary information, and the best tools; (2) be fully engaged in the decision process; and (3) receive fair compensation. If such empowered employees are assembled in teams of individuals with the required skills, TQM theorists believe they will be more effective than people performing their tasks separately in a rigid structure.
NEW QUESTION # 22
The following forms of short-term borrowing are available to an entity: Floating lien Factoring Revolving credit Chattel mortgages Bankers' acceptances . Lines of credit Commercial paper
The forms of short-term borrowing that are unsecured credit are:

• A. Floating lien, chattel mortgage, bankers' acceptances, and line of credit
• B. Factoring, chattel mortgage, bankers' acceptances, and line of credit
• C. Floating lien, revolving credit, chattel mortgage, and commercial paper
• D. Revolving credit, bankers' acceptances, line of credit, and commercial paper

Answer: D Explanation:
An unsecured loan is a loan made by a bank based on credit information about the borrower and the ability of the borrower to repay the obligation. The loan is not secured by collateral, but is made on the signature of the borrower. Unsecured credit is not backed by collateral. Revolving credit bankers' acceptances, lines of credit, and commercial paper are all unsecured means of borrowing. A chattel mortgage is a loan secured by personal property movable property such as equipment or livestock). A floating lien is also secured by property, such as inventory, the composition of which may be constantly changing. Factoring is a form of financing in which receivables serve as security.
NEW QUESTION # 23
According to IIA guidance, which of the following steps are most important for an internal auditor to perform when evaluating an organization's social and environmental impact on the local community?
* Determine whether previous incidents have been reported, managed, and resolved.
* Determine whether a business contingency plan exists.
* Determine the extent of transparency in reporting.
* Determine whether a cost/benefit analysis was performed for all related projects.

• A. 2 and 3.
• B. 1 and 4.
• C. 2 and 4.
• D. 1 and 3.

Answer: D
NEW QUESTION # 24
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