1. Technological uncertainty, subsidy, and spin-offs are usually characteristics of:

2. An internal auditor is reviewing physical and environmental controls for an IT organization.

Which control activity should not be part of this review?

3. Which of the following does not provide operational assurance that a computer system is operating properly?

4. An organization produces two products, X and Y. The materials used for the production of both products are limited to 500 kilograms (kg) per month. All other resources are unlimited and their costs are fixed.

Individual product details are as follows:

Product X

Product Y

Selling price per unit

$10

$13

Materials per unit (at $1/kg)

2 kg

6 kg

Monthly demand

100 units

120 units

In order to maximize profit, how much of product Y should the organization produce each month?

5. Evaluate whether the procedures for program change management are adequate.

6. Which of the following stages of group development is associated with accepting team responsibilities?

7. Which of the following standards would be most useful in evaluating the performance of a customer-service group?

8. An internal auditor has been asked to conduct an investigation involving allegations of independent contractor fraud.

Which of the following controls would be least effective in detecting any potential fraudulent activity?

9. According to the waterfall cycle approach to systems development, which of the following sequence of events is correct?

10. Monitoring systems are in place to alert management to unexpected events.

11. Which of the following best describes a market signal?

12. Ability to empathize with other people.

13. A small furniture-manufacturing firm with 100 employees is located in a two-story building and does not plan to expand. The furniture manufactured is not special-ordered or custom-made.

The most likely structure for this organization would be:

14. In order to provide useful information for an organization's risk management decisions, which of the following factors is least important to assess?

15. Ensure that performance targets are always achieved.

16. Which of the following is not a method for implementing a new application system?

17. According to IIA guidance, which of the following is a typical risk associated with the tender process and contracting stage of an organization's IT outsourcing life cycle?

18. Which of the following best describes the concept of relevant cost?

19. Which of the following COSO internal control framework components encompasses establishing structures, reporting lines, authorities, and responsibilities?

20. The cost to enter a foreign market would be highest in which of the following methods of global expansion?

21. The audit committee of a global corporation has mandated a change in the organization's business ethics policy.

Which of the following approaches describes the best way to accomplish the policy's diffusion worldwide?

22. An organization decided to install a motion detection system in its warehouse to protect against after-hours theft.

According to the COSO enterprise risk management framework, which of the following best describes this risk management strategy?

23. Which of the following is a characteristic of an emerging industry?

24. Import quotas that limit the quantities of goods that a domestic subsidiary can buy from its foreign parent company represent which type of barrier to the parent company?

25. According to the International Professional Practices Framework, internal auditors who are assessing the adequacy of organizational risk management processes should not:

26. The organization makes exclusive arrangements with the channels.

27. To assess the performance of employees.

28. The activity that involves a trial run of a product in a typical segment of the market before proceeding to a national launch is referred to as:

29. Which of the following describes the result if an organization records merchandise as a purchase, but fails to include it in the closing inventory count?

30. Which of the following conditions could lead an organization to enter into a new business through internal development rather than through acquisition?

31. In mergers and acquisitions, which of the following is an example of a horizontal combination?

32. An organization needs to borrow a large amount of cash to fund its expansion plan.

Which of the following annual interest rates is least expensive?

33. A milestone requires resource allocation and needs time to be completed.

34. Emergency changes that bypass the normal control process frequently are deemed necessary.

35. An organization's balance sheet indicates that the total asset amount and the total capital stock amount remained unchanged from one year to the next, and no dividends were declared or paid. However, the organization reported a loss of $200,000.

Which of the following describes the most likely year-over-year change to the organization's total liabilities and total stockholder equity?

36. Which of the following is a key characteristic of a zero-based budget?

37. Organizations use matrix management to accomplish which of the following?

38. Which of the following statements is true regarding the roles and responsibilities associated with a corporate social responsibility (CSR) program?

39. If legal or regulatory standards prohibit conformance with certain parts of The IIA's Standards, the auditor should do which of the following?

40. Senior management has decided to implement the Three Lines of Defense model for risk management.

Which of the following best describes senior management's duties with regard to this model?

41. All of the following are possible explanations for a significant unfavorable material efficiency variance except:

42. The recession.

43. Which of the following is a type of network in which an organization permits specific users (such as existing customers) to have access to its internal network through the Internet by building a virtual private network?

44. Which of the following would not impair the objectivity of internal auditor?

45. Refer to the exhibit.

A company's financial balance sheet is presented below:

The company has net working capital of:

46. Which of the following is the best reason for considering the acquisition of a nondomestic organization?

47. International marketing activities often begin with:

48. What are the objectives of governance as defined by the Standards?

49. Which of the following is an example of a risk avoidance response?

50. Which of the following activities most significantly increases the risk that a bank will make poor-quality loans to its customers?

51. When writing a business memorandum, the writer should choose a writing style that achieves all of the following except:

52. According to IIA guidance, which of the following would be a primary reason for an internal auditor to test the organization's IT contingency plan?

53. Which of the following must be adjusted to index a progressive tax system to inflation?

54. According to Porter, which of the following is associated with fragmented industries?

55. Which of the following factors would reduce dissatisfaction for a management trainee but would not particularly motivate the trainee?

56. Which of the following local area network physical layouts is subject to the greatest risk of failure if one device fails?

57. An internal auditor is trying to assess control risk and the effectiveness of an organization's internal controls.

Which of the following audit procedures would not provide assurance to the auditor on this matter?

58. Which of the following describes a typical desktop workstation used by most employees in their daily work?

59. A manager has difficulty motivating staff to improve productivity, despite establishing a lucrative individual reward system.

Which of the following is most likely the cause of the difficulty?

60. In creating a risk-based plan, which of the following best describes a top-down approach to understanding business processes?

61. Which of the following techniques would be least effective in resolving the conflict created by an internal audit client's perception of the audit report as a personal attack on his management performance?

62. Which of the following is an element of effective negotiating?

63. Which of the following is not a potential area of concern when an internal auditor places reliance on spreadsheets developed by users?

64. Which of the following price adjustment strategies encourages prompt payment?

65. Which of the following would best prevent unauthorized external changes to an

organization's data?