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IIA Business Knowledge for Internal Auditing Sample Questions (Q234-Q239):

NEW QUESTION # 234
Which of the following is the starting point for a chief audit executive to prioritize engagements to be included in the internal audit plan?

Answer: D

Explanation:
The CAE must prioritize engagements based on risk assessment. A risk matrix (considering likelihood and impact of risks) provides the starting point to evaluate which areas of the audit universe present the highest exposure and should be included in the plan.
Option A (maturity model) helps evaluate risk management capability but is not the starting point. Option C (assurance map) supports coordination but follows the risk assessment. Option D (control framework) provides criteria but not prioritization.
Reference:
IIA Standards - Standard 2010: Planning.


NEW QUESTION # 235
During a payroll audit, the internal auditor is assessing the security of the local area network of the payroll department computers. Which of the following IT controls should the auditor test?

Answer: C

Explanation:
Reference: IIA Business Knowledge for Internal Auditing, IT Application Controls section.


NEW QUESTION # 236
Under a total quality management (TQM) approach:

Answer: A

Explanation:
TQM emphasizes quality as a basic organizational function. TQM is the continuous pursuit of quality in every aspect of organizational activities. One of the basic principles of TQM is doing it right the first time. Thus, errors should be caught and corrected at the source.


NEW QUESTION # 237
In an organization that produces chocolate, the leadership team decides that the organization will open a milk production facility for its milk chocolate. Which of the following strategies have the organization chosen?

Answer: C

Explanation:
* Understanding Vertical Integration:
* Vertical integration is a business strategy where a company expands its operations into different stages of its supply chain.
* In this case, the chocolate-producing company is moving upstream by producing its own milk rather than purchasing it from suppliers.
* Why This Is Vertical Integration:
* The company controls more of its supply chain, reducing dependency on external suppliers.
* Benefits include:
* Cost savings on raw materials (by producing instead of buying).
* Improved quality control (since the company controls milk production).
* Greater market control (reducing reliance on third-party vendors).
* Why Other Options Are Incorrect:
* B. Unrelated diversification - Incorrect.
* Unrelated diversification occurs when a company expands into a completely different industry (e.g., a chocolate company entering the technology sector).
* C. Differentiation - Incorrect.
* Differentiation refers to creating unique products to gain a competitive advantage, but the strategy here is about controlling supply, not product uniqueness.
* D. Focus - Incorrect.
* Focus strategy targets a narrow market segment, but this scenario involves expanding into the supply chain, not focusing on a niche.
* IIA's Perspective on Business Strategy and Risk Management:
* IIA Standard 2120 - Risk Management requires auditors to assess the risks and benefits of vertical integration strategies.
* COSO ERM Framework advises monitoring operational and financial risks associated with supply chain integration.
* Porter's Value Chain Model supports vertical integration as a way to enhance operational efficiency and cost control.
IIA References:
* IIA Standard 2120 - Risk Management in Business Strategy
* COSO ERM - Managing Vertical Integration Risks
* Porter's Value Chain Model - Supply Chain Control
Thus, the correct and verified answer is A. Vertical integration.


NEW QUESTION # 238
Which of the following is the most effective control to prevent unauthorized entrance of a former employee of the organization?

Answer: C


NEW QUESTION # 239
......

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