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IIA Business Knowledge for Internal Auditing Sample Questions (Q164-Q169):

NEW QUESTION # 164
One of the main reasons total quality management (TQM) can be used as a strategic weapon is that:

• A. Introducing new products can lure customers away from competitors.
• B. Reduced costs associated with better quality can support higher shareholder dividends.
• C. TQM provides a comprehensive planning process for a business.
• D. The cumulative improvement from a company's TQM efforts cannot readily be copied by competitors.

Answer: D Explanation:
TQM is a comprehensive approach to quality. It treats the pursuit of quality as a basic organizational function that is as important as production or marketing. Because TQM affects every aspect of the organization's activities, it is part of the organizational culture. Thus, the cumulative effect of TQM's continuous improvement process can attract and hold
customers and cannot be duplicated by competitors.
NEW QUESTION # 165
In a traditional ERP system, the receipt of a customer order may result in:
I. Customer tracking of the order's progress
II. Automatic replenishment of inventory by a supplier
III. Hiring or reassigning of employees
IV.
Automatic adjustment of output schedules

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

Answer: B Explanation:
The traditional ERP system is one in which subsystems share data and coordinate their activities. Thus, if marketing receives an order, it can quickly verify that inventory is sufficient to notify shipping to process the order. Otherwise, production is notified to manufacture more of the product, with a consequent automatic adjustment of output schedules. If materials are inadequate for this purpose, the system will issue a purchase order. If more labor is needed, human resources will be instructed to reassign or hire employees. However, the subsystems in a traditional ERP system are internal to the organization. Hence, they are, often called back-office functions. The information produced is principally but not exclusively) intended for internal use by the organization's managers. The current generation of ERP software ERP II) has added front-office functions. Consequently, ERP II. but not traditional ERP, is capable of customer tracking of the order's progress and automatic replenishment of inventor/ by a supplier.
NEW QUESTION # 166
Which of the following statements is true regarding cybersecurity risk?

• A. Installation of antivirus and malware software prevents cybersecurity risks
• B. Deployment of proper cybersecurity measures assures business success
• C. Cybersecurity risks are identical across all organizations regardless of industry
• D. Information value extends the emergence of cybersecurity risks

Answer: B
NEW QUESTION # 167
Unfortunately, the company has not revised its contingency plan since the time when its data processing was mostly centralized at headquarters. The existing plan is likely to be out of date because of:

• A. Changes in equipment, data, and software.
• B. Personnel turnover at regional centers.
• C. Lack of arrangements for a backup site for headquarters.
• D. Inadequate processing capability at headquarters.

Answer: A Explanation:
When a company decentralizes its information processing, many changes in equipment, data, and software occur as a result of the different processing methods. Since the company has not revised its contingency plan since the time processing was centralized, the plan is most likely out of date as a result of the changes in equipment, data, and software.
NEW QUESTION # 168
Which of the following quality costs are nonconformance costs?

• A. Environmental costs.
• B. Costs of quality circles.
• C. Systems development costs.
• D. Costs of inspecting in-process items.

Answer: A Explanation:
Nonconformance costs include internal and external failure costs. External failure costs include environmental costs, e.g., fines for violations of environmental laves and loss of customer goodwill.
NEW QUESTION # 169
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