Which of the following is true of matrix organizations?
Correct Answer:B
✑ Matrix Organization Structure: In matrix organizations, employees report to both functional and product managers. This dual reporting structure allows the organization to efficiently use its personnel across different projects and functions.
✑ Advantages of Matrix Structure:
✑ Unity-of-Command: Option A is incorrect because the unity-of-command principle is compromised in a matrix organization due to dual reporting lines.
✑ Authority and Accountability: Option C is correct to some extent but does not capture the primary benefit of resource utilization.
✑ Suitability: Option D refers to the best use cases for matrix structures, but option B provides a more comprehensive understanding of how matrix organizations function.
: Management and Organizational Behavior textbooks.
Which of the following situations best applies to an organization that uses a project, rather than a process, to accomplish its business activities?
Correct Answer:B
To determine which situation best applies to an organization that uses a project, rather than a process, to accomplish its business activities, it's important to understand the fundamental difference between a project and a process. A project is a temporary endeavor undertaken to create a unique product, service, or result. It has a defined beginning and end and is often constrained by time, budget, and resources. In contrast, a process is ongoing and repetitive, focusing on sustaining and improving existing operations.
✑ Option A: A clothing company designs, makes, and sells a new item.
✑ Option B: A commercial construction company is hired to build a warehouse.
✑ Option C: A city department sets up a new firefighter training program.
✑ Option D: A manufacturing organization acquires component parts from a contracted vendor.
Reference:
This analysis aligns with project management principles and definitions, such as those found in the Project Management Institute's (PMI) PMBOK Guide, which defines a project as a temporary endeavor undertaken to create a unique product, service, or result.
Which of the following offers the best evidence that the internal audit activity has achieved organizational independence?
Correct Answer:C
The internal audit charter is a formal document that defines the internal audit activity's purpose, authority, and responsibility. It is crucial for establishing the internal audit function's independence and objectivity. When the internal audit charter is properly drafted and approved by the appropriate parties, it provides a clear mandate for the internal audit activity and sets the foundation for its operations. This ensures that the internal audit activity can function independently without undue influence from management.
: According to the IIA's International Standards for the Professional Practice of Internal
Auditing (Standards), specifically Standard 1000 (Purpose, Authority, and Responsibility), the internal audit charter is essential in defining the internal audit activity's role and ensuring its independence.
Which of the following is an example of a properly supervised engagement?
Correct Answer:D
Supervision in Internal Audit: Effective supervision ensures that the engagement is carried out according to plan, objectives are met, and quality standards are maintained. It involves guiding, mentoring, and reviewing the work of auditors throughout the engagement.
IIA Standards:
✑ Standard 2340 – Engagement Supervision: Internal audit engagements must be properly supervised to ensure objectives are achieved, quality is maintained, and staff are developed.
✑ Proper supervision includes overseeing the engagement, providing direction, and ensuring that work complies with standards and achieves engagement objectives.
Examples of Proper Supervision:
✑ Reasonable Assurance: The auditor in charge providing reasonable assurance that engagement objectives were met is a fundamental aspect of effective supervision. It ensures that the engagement delivers the intended outcomes and adheres to quality standards.
✑ Daily Records and Workpaper Review: Options A and B involve administrative tasks and peer review, which are supportive but do not alone constitute comprehensive supervision.
✑ Accompanied Training: Option C involves on-the-job training, which is beneficial but not the primary aspect of engagement supervision.
A bakery chain has a statistical model that can be used to predict daily sales at individual stores based on a direct relationship to the cost of ingredients used and an inverse relationship to rainy days What conditions would an auditor look for as an Indicator of employee theft of food from a specific store?
Correct Answer:A
The statistical model indicates that daily sales have a direct relationship with the cost of ingredients used and an inverse relationship with rainy days.
✑ Option A: On a rainy day, if total sales are greater than expected compared to the
cost of ingredients used, it may indicate discrepancies that could be a sign of employee theft. For instance, if ingredients are used but not reflected in the sales, it suggests that items might be missing (stolen).
✑ Option B: On a sunny day, lower-than-expected sales compared to the cost of
ingredients could indicate wastage but not necessarily theft.
✑ Option C and D: Both scenarios where total sales and the cost of ingredients are higher or lower than expected do not specifically point to theft without additional context.
Which of the following recognized competitive strategies focuses on gaining efficiencies?
Correct Answer:B
Competitive Strategies: Recognized competitive strategies include cost leadership, differentiation, focus, and innovation. Each strategy emphasizes different aspects of competitive advantage.
Cost Leadership Strategy:
✑ Efficiency Focus: Cost leadership focuses on gaining efficiencies and reducing costs to offer products or services at a lower price than competitors. This strategy aims to achieve the lowest operational costs and prices in the industry.
✑ Economies of Scale: It involves optimizing production processes, achieving economies of scale, and minimizing expenses to maintain competitive pricing.
Comparison with Other Strategies:
✑ Focus Strategy: Concentrates on serving a particular market niche with specialized products or services.
✑ Innovation Strategy: Emphasizes creating unique products or services through innovation and technological advancement.
✑ Differentiation Strategy: Focuses on offering unique and superior products or services that stand out from competitors.
IIA Guidance and References:
✑ Cost leadership as a competitive strategy centers on achieving cost efficiencies to gain a competitive edge in pricing, making it a strategic choice for organizations looking to compete on price rather than product differentiation.