Professional Documents
Culture Documents
culture.
Reviewing the reliability and integrity of financial and operational information.
Ensuring that external and internal auditors oversee the administration of the system of
risk management and control processes.
Implementing and monitoring controls designed by the board of directors.
1. Directors, management, external auditors, and internal auditors all play important roles in creating
proper control processes. Senior management is primarily responsible for
II.
III.
I and II only.
II and III only.
I and III only.
Minimize costs.
Maximize market share.
Minimize losses.
Maximize shareholder value.
5. Which of the following may be assessed by the internal auditor to determine the effectiveness of the
risk management process?
I.
Significant risks
II.
III.
Previous risk evaluation reports by management, internal auditors, external auditors, and any
other sources
I and II only.
I and III only.
II and III only.
I, II, and III.
6. Many organizations use electronic funds transfer to pay their suppliers instead of issuing checks.
Regarding the risks associated with issuing checks, which of the following risk management techniques
does this represent?
Controlling.
Accepting.
Transferring.
Avoiding.
7. Under the COSOs ERM framework, which of the following most accurately describes risk
management responsibilities?
Strategic objectives
II.
Operations objectives
III.
Reporting objectives
IV.
Compliance objectives
I and II only.
III and IV only.
II and IV only.
I and III only.
9. Internal auditors frequently recommend that formal policies be written. However, the presence of
certain conditions in an organization minimizes the need for written policies. One condition that minimizes
the need for written policies is
Function
II.
Product
III.
Geography
I only.
II only.
I and II only.
I, II and III.
11. Advantages of decentralization include all of the following except
Retail outlets.
Shipping point.
Consumers.
Warehouses.
13. When the economic order quantity (EOQ) decision model is employed, the <List A> are being offset
or balanced by the <List B>.
List A
List B
Ordering costs
Purchase costs
Carrying costs
Carrying costs
Purchase costs
Ordering costs
Quality costs
Stockout costs
14. A company manufactures banana hooks for retail sale. The bill of materials for this item and
the parts inventory for each material required are as follows:
Bill of Materials
Raw Material
Quantity Required
On Hand
Wooden neck
1
0
Wooden base
1
0
Swag hook
1
300
Wood screws
2
400
Foot pads
4
1,000
An incoming order calls for delivery of 2,000 banana hooks in 2 weeks. The company has 200
finished banana hooks in current inventory. If no safety stocks are required for inventory, what
are the companys net requirements for swag hooks and screws needed to fill this order?
Swag
Hooks
Wood
Screws
1,500
1,400
1,500
1,700
3,200
3,600
1,800
3,600
15. The emergence of electronic data interchange (EDI) as standard operating practice increases the risk
of
Lack of feedback.
Confusing language.
Inappropriate medium.
Perceptual selectivity.
18. Audit committees have been identified as a major factor in promoting the independence of both
internal and external auditors. Which of the following is the most important limitation on the effectiveness
of audit committees?