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IIA Business Knowledge for Internal Auditing Sample Questions (Q235-Q240):

NEW QUESTION # 235
A master budget:

  • A. Can be used to determine manufacturing cost variances.
  • B. Contains the operating budget.
  • C. Contains only controllable costs.
  • D. Shows forecasted and actual results.

Answer: B Explanation:
The operating budget sequence is part of the master budget process that begins with the sales budget and culminates in the pro forma income statement.
NEW QUESTION # 236
Which of the following controls would enable management to receive timely feedback and help mitigate unforeseen risks?

  • A. Develop standard methods for performing established activities.
  • B. Require the grouping of activities under a single manager.
  • C. Assign each employee a reasonable workload.
  • D. Measure product performance against an established standard.

Answer: C
NEW QUESTION # 237
An organization is considering outsourcing its IT services, and the internal auditor as assessing the related risks. The auditor grouped the related risks into three categories;
- Risks specific to the organization itself.
- Risks specific to the service provider.
- Risks shared by both the organization and the service provider
Which of the following risks should the auditor classify as specific to the service provider?

  • A. Inadequate staffing.
  • B. Unexpected increases in outsourcing costs.
  • C. Loss of data privacy.
  • D. Violation of contractual terms.

Answer: D
NEW QUESTION # 238
Management of a bookkeeping company observed that the average time spent to perform identical tasks using a new software package decreases as the number of tasks performed increases. The following information on the use of the new software was collected.

If this learning effect continues, what is the average time to perform each of the first eight tasks?

  • A. 7.29 minutes.
  • B. 6.56 minutes.
  • C. 5.90 minutes.
  • D. 8.1 minutes.

Answer: A Explanation:
Learning curves reflect the increased rate at which people perform tasks as they gain experience. The time required to perform a given task becomes progressively shorter. This technique is applicable only to the early stages of production or to any new task. One common assumption is that the cumulative average time per unit is reduced by a fixed percentage each time cumulative production is doubled. Based on the given data, this company has a 90% learning curve (90% x 10 minutes = 9 minutes, and 90% x 9 minutes =
8.1 minutes). Accordingly, the cumulative average time to perform eight tasks is 7.29 minutes (90% x 8.1 minutes).
NEW QUESTION # 239
A catalog company has been experiencing an increasing incidence of problems in which the wrong products have been shipped to the customer. Most of the customer orders come in over the telephone, and an operator enters the data into the order system immediately. Which of the following control procedures, if properly implemented, would address the problem?
I. Have the computer automatically assign a sequential order number to each customer order.
II. Implement a self-checking digit algorithm for each product number and request entries by product number.
III.
Request entries by product number, have the computer program identify the product and price, and require the operator to orally verify the product description with the customer.

  • A. II and Ill only.
  • B. II only.
  • C. I, II, and Ill.
  • D. I and II only.

Answer: A Explanation:
A self-checking digit detects incorrect codes. The digit is generated by applying an algorithm to the code. During input, the digit is recomputed by applying the algorithm to the code actually entered. Oral verification also addresses the problem of incorrectly identifying the product number. Assigning a sequential number to the customer's order helps build an audit trail but does not address the product identification issue.
NEW QUESTION # 240
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