Free IIA IIA-CIA-Part3 Exam Questions (page: 60)

Is PERT analysis a control tool or a planning tool?

  1. Option A
  2. Option C
  3. Option C
  4. Option D

Answer(s): B

Explanation:

PERT Program Evaluation and Review Technique) is applied in the management of complex projects. It analyzes the project in terms of its component activities and determines their sequencing and timing. Thus, it systematically combines planning with control.



Various tools are employed to control large scale projects. They include all of the following except:

  1. PERT.
  2. GPM.
  3. Statistical process control
  4. Gantt charts.

Answer(s): C

Explanation:

Statistical process quality) control is not used to control large scale projects. Statistical quality control is a method of determining whether the shipment or production run of units lies within acceptable limits. It is also used to determine whether production processes are out of control.



Which of the following statements is false regarding the efficient and economical achievement of the organization's objectives?

  1. Economical performance accomplishes objectives with minimal use of resources with no regard to risk exposure.
  2. Efficient performance accomplishes objectives in a timely manner.
  3. Economical performance accomplishes objectives with minimal use of resources commensurate with the risk exposure.
  4. Efficient performance accomplishes objectives in an accurate and economical manner.

Answer(s): A

Explanation:

Efficient performance accomplishes objectives and goals in an accurate, timely, and economical fashion. Economical performance accomplishes objectives and goals with minimal use of resources i.e., cost) commensurate with risk exposure. Thus, to achieve economical performance when accomplishing objectives, the minimal cost should correspond to the degree of risk exposure.



Business process reengineering is most likely to:

  1. Implement modern information systems technology to eliminate some controls.
  2. Be applied within individual departments.
  3. Improve existing procedures.
  4. Apply a continuous improvement model.

Answer(s): A

Explanation:

Reengineering and TQM techniques eliminate many traditional controls. They exploit modern technology to improve productivity and decrease the number of clerical workers. Thus, controls should be automated and self-correcting and require minimal human intervention. Moreover, auditors must be prepared to encounter and use) new technologies.
The emphasis therefore shifts to monitoring so management can determine when an operation may be out of control and corrective action is needed.



Monitoring is an important component of internal control.
Which of the following is not an example of monitoring?

  1. Management regularly compares divisional performance with budgets for the division.
  2. Data processing management regularly generates exception reports for unusual transactions or volumes of transactions and follows up with investigation as to causes.
  3. Data processing management regularly reconciles batch control totals for items processed with batch controls for items submitted.
  4. Management has asked internal auditing to perform regular audits of the controls over cash processing.

Answer(s): C

Explanation:

Monitoring assesses the quality of internal control over time. Management considers whether internal control is properly designed and operating as intended and modifies it to reflect changing conditions. Monitoring may be in the form of separate, periodic evaluations or of ongoing monitoring. Ongoing monitoring occurs as part of routine operations. It includes management and supervisory review, comparisons, reconciliations, and other actions by personnel as part of their regular activities. However, reconciling batch control totals is a processing control. This information is relevant to a theory of constraints TOC) analysis. A manufacturer that can sell all of its output produces its sole product using three operations. Each unit sells for US $120, and direct materials costing US $48 per unit are added at the start of the first operation. Other variable costs are immaterial. The following annual cost and capacity information is available concerning those operations:



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