The use of derivatives to either hedge or speculate results in:
Correct Answer: C
Derivatives, including options and futures, are contracts between the parties who contract. Unlike stocks and bonds, they are not claims on business assets. A futures contract is entered into as either a speculation or a hedge. Speculation involves the assumption of risk in the hope of gaining from price movements. Hedging is the process of using offsetting commitments to minimize or avoid the impact of adverse price movements.
Question 82
According to IIA guidance, which of the following links computers and enables them to -communicate with each other?
Correct Answer: D
* Understanding Computer Communication Systems: * Computers communicate with each other using network infrastructure, which allows data transfer, resource sharing, and remote access. * A network connects multiple devices, enabling them to exchange information, access shared resources, and collaborate efficiently. * Why Option D (Networks) Is Correct? * A computer network consists of hardware (routers, switches, and cables) and software (protocols like TCP/IP) that facilitate communication. * Networks can be local (LAN), wide-area (WAN), or cloud-based, providing the backbone for IT operations. * IIA GTAG 11 - Developing the IT Audit Plan emphasizes auditing network security and communication controls. * Why Other Options Are Incorrect? * Option A (Application program code): * Application programs allow users to perform specific tasks but do not link computers for communication. * Option B (Database system): * A database stores and retrieves data, but it does not enable direct communication between computers. * Option C (Operating system): * The operating system manages a single computer's resources but does not connect multiple computers. * Networks are responsible for linking computers and enabling communication, making option D the correct choice. * IIA GTAG 11 highlights the importance of network infrastructure in IT auditing. Final Justification:IIA References: * IIA GTAG 11 - Developing the IT Audit Plan * ISO 27001 - IT Network Security Management * NIST SP 800-53 - Network Security Controls
Question 83
Which of the following is true regarding reporting on the quality assurance and improvement program (QAIP)?
Correct Answer: A
The CAE must communicate the results of the QAIP, including both ongoing monitoring and periodic assessments, to the board and senior management. Specifically, results of ongoing monitoring must be reported annually, ensuring the board remains informed about the internal audit activity's quality and conformance. Options B and C are incorrect because results are reported after completion, not before. Option D is useful for external assessors but not a reporting requirement. Reference: IIA Standards - Standard 1320: Reporting on the Quality Assurance and Improvement Program.
Question 84
If the bank uses the rnaxirna criterion for selecting the location of the branch, it will select:
Correct Answer: D
Under the maximax criterion, the decision maker selects the choice that maximizes the maximum profit. The maximum profits for the five locations are A bank plans to open a branch in one of five locations labeled L1, L2, L3, L4, L5). Demand for bank services may be high, medium, or low at each of these locations. Profits for each location-demand combination are presented in the payoff matrix.
Question 85
The use of teams in total quality management TOM) is important because:
Correct Answer: A
Teams can use the diverse knowledge and skills of all team members. Employee involvement means training and empowering employees to harness their creativity for problem solving. Quality control circles are used to obtain input from employees and to locate the best perspective on problem solving.
