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IIA-CIA-Part3 PDF DEMO:
QUESTION NO: 1
A company with many branch stores has decided to use its best-performing store as a  benchmark organization for the purpose of analyzing the accuracy and reliability of branch store  financial reporting.
Which one of the following is the most likely measure to be included in a financial benchmark?
A. High turnover of employees.
B. High level of employee participation in setting budgets.
C. High amount of bad debt write-offs.
D. High number of suppliers.
Answer: C
Explanation:
Internal benchmarking is the application of best practices in one part of the organization (e.g., a  high-performing branch store) to its other parts (other branches). This process requires, among  other things, use of quantitative and qualitative measures. A key indicator for financial performance  measurement is the amount of bad debt write-offs. A high level of bad debt write-offs could  indicate fraud, which would compromise the accuracy and reliability of financial reports. Bad debt  write-offs may result from recording fictitious sales.
QUESTION NO: 2
Which of the following costs of quality is a failure cost?
A. Systems development costs.
B. Costs of inspecting in-process items.
C. Contract penalty for delivery of nonconforming goods.
D. Costs of quality circles.
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.
QUESTION NO: 3
A traditional quality control process in manufacturing consists of mass inspection of goods  only at the end of a production process. A major deficiency of the traditional control process is that:
A. It is expensive to do the inspections at the end of the process.
B. It is not possible to rework defective items.
C. It is not 100% effective.
D. It does not focus on improving the entire production process.
Answer: A
Explanation:
The process used to produce the goods is not thoroughly reviewed and evaluated for efficiency and  effectiveness. Preventing defects and increasing efficiency by improving the production process  raises quality standards and decreases costs.
QUESTION NO: 4
In which of the following organizational structures does total quality management (TQM) work  best?
A. Hierarchal.
B. Teams of people from the same specialty.
C. Teams of people from different specialties.
D. Specialists working individually.
Answer: C
Explanation:
TQM advocates replacement of the traditional hierarchal structure with teams of people from  different specialties. This change follows from TQM's emphasis on empowering employees and  teamwork. Employees should (1) have proper training, necessary information, and the best tools;
(2) be fully engaged in the decision process; and (3) receive fair compensation. If such empowered  employees are assembled in teams of individuals with the required skills, TQM theorists believe  they will be more effective than people performing their tasks separately in a rigid structure.
QUESTION NO: 5
The use of teams in total quality management (TQM) is important because:
A. Well-managed teams can be highly creative and are able to address complex problems better  than individuals can.
B. Teams are quicker to make decisions, thereby helping to reduce cycle time.
C. Employee motivation is higher for team members than for individual contributors.
D. The use of teams eliminates the need for supervision, thereby allowing a company to become  leaner and more profitable.
Answer: A
Explanation:
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.
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Updated: May 27, 2022