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IIA Business Knowledge for Internal Auditing Sample Questions (Q114-Q119):

NEW QUESTION # 114
Which of the following creates a valid contract between the parties?

A. Anxious Father promised to pay Albert Niceguy US $4,000 to take his daughter to the annual Mulestone Dance. Albert agreed.
B. Slim Polestone promised to give Mabel Abbot a wedding present.
C. Festival Fanny was drowning in her hot tub. Her boyfriend pulled her out. After the rescue, Festival's husband promised to pay her boyfriend US $4 for rescuing his wife.
D. A reward was posted for the capture of Tom Jones_ Maypole Burden, the county sheriff, captured Jones and claimed the reward.

Answer: A

Explanation:
A valid contract exists because Anxious Father offered to pay Albert US $4,000 for taking his daughter to the dance. This is a unilateral contract supported by the consideration of US $4,000. Albert will be entitled to the US $4,000 after he takes the daughter to the dance.

NEW QUESTION # 115
Within an enterprise, IT governance relates to the:
1.Alignment between the enterprise's IT long term plan and the organization's objectives.
2.Organizational structures of the company that are designed to ensure that IT supports the
organization's strategies and objectives.
3.Operational plans established to support the IT strategies and objectives.
4.Role of the company's leadership in ensuring IT supports the organization's strategies
and objectives.

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

Answer: C

NEW QUESTION # 116
The measurement date in accounting for shares issued to employees in share option plans accounted for in accordance with the fair value method prescribed by FRS 2 is:

A. The date the entity forgoes alternative use of the shares to be sold under option
B. The date on which options are granted to specified employees.
C. The earliest date on which both the number of shares to be issued and the option price are known.
D. The date on which the options are exercised by the employees.

Answer: B

Explanation:
Under the fair-value-based method prescribed by IFRS 2, compensation expense is measured at the grant date. This expense is based on the fair value of the award at that date and recognized over the sting period, the period over which the vesting conditions are expected to be satisfied.

NEW QUESTION # 117
Which of the following costs of quality is a failure cost?

A. Costs of quality circles.
B. Costs of inspecting in-process items.
C. Contract penalty for delivery of nonconforming goods.
D. Systems development costs.

Answer: C

Explanation:
Failure costs are incurred after defective output has been removed from production. A contract penalty for faulty goods is an example of an external failure cost.

NEW QUESTION # 118
According to IIA guidance, which of the following would be the best first step to manage risk when a third party is overseeing the organization's network and data?

A. Applying administrative privileges to ensure right-to-access controls are appropriate
B. Creating a comprehensive reporting system for vendors to demonstrate their ongoing due diligence in network operations
C. Drafting a strong contract that requires regular vendor control reports and a right-to-audit clause
D. Creating a standing cybersecurity committee to identify and manage risks related to data security

Answer: C

Explanation:
Reference: IIA Business Knowledge for Internal Auditing, Third-Party Risk Management section.

NEW QUESTION # 119
......

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