Which of the following best demonstrates that the internal audit activity is using due professional care?
Correct Answer:D
Demonstrating due professional care involves using appropriate technology and data analysis techniques to enhance the audit's effectiveness and efficiency. These tools help auditors identify anomalies, trends, and potential areas of risk more accurately and timely, reflecting a higher standard of care in their audit activities.
References:
✑ "Auditing Standards and Guidelines," which emphasize the importance of using advanced techniques in audit processes.
Which of the following statements is true regarding the reporting of tangible and intangible assets?
Correct Answer:A
Plant Assets Cost: For plant assets, which are tangible fixed assets such as buildings and machinery, the cost includes all expenditures necessary to acquire the asset and prepare it for its intended use. This includes the purchase price and additional costs such as design and construction.
: This aligns with standard accounting practices where costs related to bringing an asset to
its operational state are capitalized as part of the asset's cost.
Intangible Assets Cost: The cost of intangible assets, such as patents and trademarks, typically includes the purchase price and development costs. However, option B refers to this, but the correct focus for plant assets is emphasized in option A.
Amortization of Intangible Assets: Intangible assets with finite useful lives are subject to amortization, contradicting option C. Those with indefinite lives are not amortized but tested annually for impairment.
Expense of Developing Plant Assets: Development costs for plant assets are capitalized, not expensed immediately, making option D incorrect.
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.
Internal auditors map a process by documenting the steps in the process, which provides a framework for understanding Which of the following is a reason to use narrative memoranda?
Correct Answer:C
Step by Step Comprehensive Detailed Explanation with References:
✑ Introduction:
✑ Purpose of Narrative Memoranda:
✑ Options Analysis:
✑ Conclusion:
:
Internal Audit Standards and Practice Guides.
Which of the following would be the most effective fraud prevention control?
Correct Answer:C
Training new hires on fraud and employee misconduct is a proactive measure that raises awareness and educates employees about the organization??s policies and the consequences of fraudulent behavior.
Such training helps create a culture of integrity and compliance, making employees less likely to engage in or tolerate fraud.
Continuous education and reinforcement of ethical behavior are essential components of an effective fraud prevention strategy