Which of the following bring-your-own-device (BYOD) practices is likely to increase the risk of infringement on local regulations such as copyright or privacy laws?

• A.Jailbreaking a locked smart device.
• B.Applying a weak password for access to a mobile device
• C.Updating operating software in a haphazard manner
• D.Not installing anti-malware software

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The audit committee of a global corporation has mandated a change in the organization's business ethics policy. Which of the following approaches describes the best way to accomplish the policy's diffusion worldwide?

• A.Introduce the policy region by region, using any lessons learned to change the subsequent version of the policy for the next area.
• B.Consult with legal and operational management in each affected country to ensure the final version can be implemented globally, following audit committee approval.
• C.Deploy the policy in the corporate headquarters' language, so everyone gets an unfiltered version simultaneously.
• D.Send the board-approved version of the policy to each country's senior leadership, and empower them to tailor the policy to the local language and culture.

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When assessing application controls, which one of the following input controls or edit checks is most likely to be used to detect a data input error in the customer account number field?

• A.Limit check.
• B.Validity check.
• C.Control total.
• D.Hash total.

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Which of the following steps should an internal auditor take during an audit of an organization's business continuity plans?
1.Evaluate the business continuity plans for adequacy and currency.
2.Prepare a business impact analysis regarding the loss of critical business.
3.Identify key personnel who will be required to implement the plans.
4.Identify and prioritize the resources required to support critical business processes.

• A.1, 2, 3, and 4
• B.1, 3, and 4 only
• C.1 only
• D.2 and 4 only

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The following ratios relate to an entity's financial situation compared with that of its:

What conclusion could a financial analyst validly draw from these ratios?

• A.The entity's product has a high market share, leading to higher profitability.
• B.The entity uses more debt than does the average entity in the industry.
• C.The entity's profits are increasing over time.
• D.The entity's shares have a higher market value to carrying amount than does the rest of the industry.

Correct Answer: B

The use of financial leverage has a multiplier effect on the return on assets. The extended Du Pont formula illustrates this point by showing that the return on equity equals the return on assets times the grace factor, also called the equity multiplier total assets -ordinary equity). Thus, greater use of debt increases the equity multiplier and the return on equity. In this example, the equity multiplier is 1:12 15.2% ROE / 7.9% ROA), and the industry average is 1.40 12.9% ROE / 9.2% ROA). The higher quality multiplier Indicates that the entity uses more debt than the industry average.

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