Question 1

Which of the following best explains why an organization would enter into a capital lease contract?
A) To increase the ability to borrow additional funds from creditors.
B) To reduce the organization's free cash flow from operations.
C) To improve the organization's free cash flow from operations.
D) To acquire the asset at the end of the lease period at a price lower than the fair market value.

Accepted Answer

A capital lease contract allows the organization to acquire the asset at the end of the lease period at a price lower than the fair market value.

Question 2

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 has the organization chosen?
A) Vertical integration.
B) Unrelated diversification.
C) Differentiation.
D) Focus.

Accepted Answer

The organization has chosen vertical integration because it is expanding its operations into a different stage of production by producing its own milk for milk chocolate.

Question 3

Which of the following describes the most effective control that restricts access to secure areas?
A) Employee security policy.
B) Access log reviews.
C) Biometric authorization.
D) Security cameras.

Accepted Answer

Biometric authorization is the most effective control for restricting access to secure areas as it uses unique biological traits, making it difficult to forge or bypass.

Question 4

The audit committee has asked the internal audit activity to integrate data analytics into all work programs going forward. To accomplish this, which of the following describes the first step an audit team should take when planning for an audit?
A) Ensure that there are sufficient audit resources or train personnel in data analytics.
B) Obtain and assess as much data as possible for the audit.
C) Identify the business question or need, data required, and expected results.
D) Gain management's approval and willingness to accept audit findings based on data analytics.

Accepted Answer

The first step in planning for an audit with data analytics is to identify the business question or need, determine the data required, and outline the expected results. This ensures that the data analytics efforts are aligned with the audit objectives.

Question 5

Which of the following is a result of implementing an e-commerce system, which relies heavily on electronic data interchange and electronic funds transfer, for purchasing and billing?
A) Higher cash flow and treasury balances.
B) Higher inventory balances.
C) Higher accounts receivable
D) Higher accounts payable.

Accepted Answer

Higher accounts payable is a result of implementing an e-commerce system, which relies heavily on electronic data interchange and electronic funds transfer, for purchasing and billing.

Question 6

Which of the following controls helps protect externally stored sensitive or confidential data from cyberthreats?
A) Secure configurations and access controls.
B) Strong vendor contracts with control reports provided by service organizations.
C) Active and frequent monitoring of network traffic activities.
D) Firewalls to block unauthorized processing of transactions.

Accepted Answer

The answer of Which of the following controls helps protect...

Question 7

An internal auditor identified a database administrator with an incompatible dual role. Which of the following duties should not be performed by the identified administrator?
A) Designing and maintaining the database.
B) Preparing input data and maintaining the database.
C) Maintaining the database and providing its security.
D) Designing the database and providing its security.

Accepted Answer

Preparing input data and maintaining the database are incompatible duties because it allows the administrator to both input data and control the database, which could lead to data manipulation without detection.

Question 8

An internal auditor was asked to review an equal equity partnership. In one sampled transaction, Partner A transferred equipment into the partnership with a self-declared value of $10,000, and Partner B contributed equipment with a self-declared value of $15,000. The capital accounts of each partner were subsequently credited with $12,500. Which of the following statements is true regarding this transaction?
A) The capital accounts of the partners should be increased by the original cost of the contributed equipment.
B) The capital accounts should be increased using a weighted average based on the current percentage of ownership.
C) No action is needed, as the capital account of each partner was increased by the correct amount.
D) The capital accounts of the partners should be increased by the fair market value of their contribution.

Accepted Answer

The capital accounts were credited equally, reflecting the equal partnership agreement, despite the differing self-declared values of the equipment contributed.

Question 9

According to IIA guidance, which of the following best describes an adequate management (audit) trail application control for the general ledger?
A) Report identifying data that is outside of system parameters.
B) Report identifying general ledger transactions by time and individual.
C) Report comparing processing results with original input.
D) Report confirming that the general ledger data was processed without error.

Accepted Answer

The answer of According to IIA guidance, which of the...

Question 10

Which of the following is a primary driver behind the creation and prioritization of new strategic initiatives established by an organization?
A) Risk tolerance.
B) Performance.
C) Threats and opportunities.
D) Governance.

Accepted Answer

The answer of Which of the following is a primary...

Question 11

Which of the following is a systems software control?
A) Restricting server room access to specific individuals.
B) Housing servers with sensitive software away from environmental hazards.
C) Ensuring that all user requirements are documented.
D) Performing of intrusion testing on a regular basis.

Accepted Answer

The answer of Which of the following is a systems...

Question 12

With regard to project management, which of the following statements about project crashing is true?
A) It leads to an increase in risk and often results in rework.
B) It is an optimization technique where activities are performed in parallel rather than sequentially.
C) It involves a revaluation of project requirements and/or scope.
D) It is a compression technique in which resources are added to the project.

Accepted Answer

Project crashing is a compression technique in which resources are added to the project to reduce the project duration.

Question 13

Which type of bond sells at a discount from face value, then increases in value annually until it reaches maturity and provides the owner with the total payoff?
A) High-yield bonds.
B) Commodity-backed bonds.
C) Zero coupon bonds.
D) Junk bonds.

Accepted Answer

Zero coupon bonds are sold at a discount and do not pay periodic interest. Instead, they increase in value over time and pay the face value at maturity.

Question 14

Which of the following is the best example of a compliance risk that is likely to arise when adopting a bring-your-own-device (BYOD) policy?
A) The risk that users try to bypass controls and do not install required software updates.
B) The risk that smart devices can be lost or stolen due to their mobile nature.
C) The risk that an organization intrusively monitors personal information stored on smart devices.
D) The risk that proprietary information is not deleted from the device when an employee leaves.

Accepted Answer

The risk that users try to bypass controls and do not install required software updates.

Question 15

Which of the following situations best applies to an organization that uses a project, rather than a process, to accomplish its business activities?
A) A clothing company designs, makes, and sells a new item.
B) A commercial construction company is hired to build a warehouse.
C) A city department sets up a new firefighter training program.
D) A manufacturing organization acquires component parts from a contracted vendor.

Accepted Answer

A project is a temporary endeavor with a specific goal and end date, like building a warehouse, whereas processes are ongoing and repetitive.

Question 16

At an organization that uses a periodic inventory system, the accountant accidentally understated the organization's beginning inventory. How would the accountant's accident impact the income statement?
A) Cost of goods sold will be understated and net income will be overstated.
B) Cost of goods sold will be overstated and net income will be understated.
C) Cost of goods sold will be understated and there will be no impact on net income.
D) There will be no impact on cost of goods sold and net income will be overstated.

Accepted Answer

The answer of At an organization that uses a periodic...

Question 17

Which of the following application controls is the most dependent on the password owner?
A) Password selection.
B) Password aging.
C) Password lockout.
D) Password rotation.

Accepted Answer

The answer of Which of the following application controls is...

Question 18

According to Herzberg's Two-Factor Theory of Motivation, which of the following factors are mentioned most often by satisfied employees?
A) Salary and status.
B) Responsibility and advancement.
C) Work conditions and security.
D) Peer relationships and personal life.

Accepted Answer

The answer of According to Herzberg's Two-Factor Theory of Motivation,...

Question 19

Based on test results, an IT auditor concluded that the organization would suffer unacceptable loss of data if there was a disaster at its data center. Which of the following test results would likely lead the auditor to this conclusion?
A) Requested backup tapes were not returned from the offsite vendor in a timely manner.
B) Returned backup tapes from the offsite vendor contained empty spaces.
C) Critical systems have been backed up more frequently than required.
D) Critical system backup tapes are taken off site less frequently than required

Accepted Answer

The answer of Based on test results, an IT auditor...

Question 20

An organization has an established bring-your-own-device policy. Due to this policy, which of the following privacy risks would be most relevant to the organization?
A) Employees who consider updates of software or operating systems degrading to the performance of their devices might choose not to install the updates.
B) Confidential intellectual property of the organization may be compromised if the smart device is physically lost.
C) Concern by employees that the organization could intrusively monitor them through their smart devices.
D) Malware may infect smart devices that contain the organization's confidential data if the device does not have adequate security restrictions.

Accepted Answer

The answer of An organization has an established bring-your-own-device policy....

Exam 5: Business Analysis and Information Technology

Which of the following best explains why an organization would enter into a capital lease contract?

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 has the organization chosen?

Which of the following describes the most effective control that restricts access to secure areas?

The audit committee has asked the internal audit activity to integrate data analytics into all work programs going forward. To accomplish this, which of the following describes the first step an audit team should take when planning for an audit?

Which of the following is a result of implementing an e-commerce system, which relies heavily on electronic data interchange and electronic funds transfer, for purchasing and billing?

Which of the following controls helps protect externally stored sensitive or confidential data from cyberthreats?

An internal auditor identified a database administrator with an incompatible dual role. Which of the following duties should not be performed by the identified administrator?

According to IIA guidance, which of the following best describes an adequate management (audit) trail application control for the general ledger?

Which of the following is a primary driver behind the creation and prioritization of new strategic initiatives established by an organization?

Which of the following is a systems software control?

With regard to project management, which of the following statements about project crashing is true?

Which type of bond sells at a discount from face value, then increases in value annually until it reaches maturity and provides the owner with the total payoff?

Which of the following is the best example of a compliance risk that is likely to arise when adopting a bring-your-own-device (BYOD) policy?

Which of the following situations best applies to an organization that uses a project, rather than a process, to accomplish its business activities?

At an organization that uses a periodic inventory system, the accountant accidentally understated the organization's beginning inventory. How would the accountant's accident impact the income statement?

Which of the following application controls is the most dependent on the password owner?

According to Herzberg's Two-Factor Theory of Motivation, which of the following factors are mentioned most often by satisfied employees?

Based on test results, an IT auditor concluded that the organization would suffer unacceptable loss of data if there was a disaster at its data center. Which of the following test results would likely lead the auditor to this conclusion?

An organization has an established bring-your-own-device policy. Due to this policy, which of the following privacy risks would be most relevant to the organization?