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IIA Business Knowledge for Internal Auditing Sample Questions (Q210-Q215):

NEW QUESTION # 210
Which of the following statements is true regarding the term "flexible budgets" as it is used in accounting?

A. The term is a red flag for weak budgetary control activities.
B. Flexible budgets exclude outcome projections, which are hard to determine, and instead rely on the most recent actual outcomes.
C. The term describes budgets that exclude fixed costs.
D. Flexible budgets project data for different levels of activity.

Answer: D

NEW QUESTION # 211
An internal auditor observed that the organization's disaster recovery solution will make use of a code site in a town several miles away Which of the following is likely to be a characteristic of this disaster recovery solution?

A. Servers are not available and need to be procured
B. Recovery time is expected to be less than one week
C. Data is synchronized in real lime
D. Recovery resources and data restore processes have not been defined

Answer: A

NEW QUESTION # 212
An organization's computer help-desk function is usually a responsibility of the:

A. Systems programming unit.
B. Computer operations unit.
C. Applications development unit.
D. User departments.

Answer: B

Explanation:
Help desks are usually a responsibility of computer operations because of the operational nature of their functions. A help desk logs reported problems, resolves minor problems, and forwards more difficult problems to the appropriate information systems resources, such as a technical support unit or vendor assistance.

NEW QUESTION # 213
An internal auditor discovered that the organization was not in full compliance with a regulatory labeling requirement for one of its products. The responsible manager indicated that the current product labeling has been in use for several years without any problems. If discovered, this regulatory breach could result in significant fines for the organization. What should be the chief audit executive's next course of action?

A. Recommend that disciplinary action be taken against the manager for exposing the company to such risk
B. Discuss the matter with the CEO and other senior management
C. Take on the initiative of implementing corrective actions to mitigate the identified risks
D. Communicate to the board the current situation, including the risk exposure to the company

Answer: D

Explanation:
The CAE must communicate significant risk exposures and control issues to the board. A regulatory noncompliance issue that could result in significant fines qualifies as a high residual risk. Internal audit should not implement corrective actions (management's responsibility) or recommend disciplinary action. While discussions with management (Option A) are appropriate, the ultimate duty is to escalate the matter to the board (Option C).
Reference:
IIA Standards - Standard 2060: Reporting to Senior Management and the Board.

NEW QUESTION # 214
The immediate goal of a theory of constraints (TOC) analysis is to:

A. Maximize the efficiency of the entire production process.
B. Maximize contribution margin through the constraint.
C. Minimize direct materials cost.
D. Smooth production flow to eliminate backup in the system.

Answer: B

Explanation:
A basic principle of TOC analysis is that short-term profit maximization requires maximizing the contribution margin through the constraint, called the throughput margin or throughput contribution.

NEW QUESTION # 215
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