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Passing the IIA-CIA-Part3 exam is a prerequisite for obtaining the Certified Internal Auditor (CIA) designation. The CIA designation is a globally recognized certification that indicates a high level of expertise and professionalism in the field of internal auditing. The IIA-CIA-Part3 Exam is one of three exams required to obtain the CIA designation.

IIA Business Knowledge for Internal Auditing Sample Questions (Q150-Q155):

NEW QUESTION # 150
An organization uses the management-by-objectives method whereby employee performance is based on defined goals. Which of the following statements is true regarding this approach?

A. It is particularly helpful to management when the organization is facing rapid change.
B. It is particularly successful in environments that are prone to having poor employer-employee relations.
C. It is a more successful approach when adopted by mechanistic organizations.
D. It is mere successful when goal setting is performed not only by management, but by all team members, including lower-level staff.

Answer: D

Explanation:
* Understanding Management by Objectives (MBO):
* MBO is a performance management approach where employees set clear, measurable goals aligned with organizational objectives.
* Success depends on employee participation in goal-setting to increase motivation, commitment, and performance.
* Why MBO Works Best with Employee Involvement:
* Engagement and Accountability: Employees are more motivated and accountable when they help define their goals.
* Alignment with Organizational Strategy: Ensures that goals at all levels support the company's broader objectives.
* Improved Communication: Encourages collaboration between management and employees, leading to better alignment of expectations.
* Why Other Options Are Incorrect:
* A. It is particularly helpful to management when the organization is facing rapid change:
* MBO is not well-suited for rapidly changing environments, as predefined goals may become irrelevant quickly.
* B. It is more successful when adopted by mechanistic organizations:
* Mechanistic organizations (rigid structures, strict hierarchies) often struggle with MBO because it requires flexibility and employee participation.
* D. It is particularly successful in environments that are prone to having poor employer- employee relations:
* While MBO can improve communication, it is not a solution for poor employer- employee relations, as trust and collaboration are essential for its success.
* IIA's Perspective on Performance Management and Organizational Success:
* IIA Standard 2120 - Risk Management emphasizes the need for effective goal-setting and employee involvement in performance assessment.
* Balanced Scorecard Framework supports MBO principles by aligning employee performance with strategic objectives.
* COSO ERM Framework highlights the importance of employee engagement in goal-setting to enhance decision-making and risk management.
IIA References:
* IIA Standard 2120 - Risk Management & Employee Performance Assessment
* COSO ERM - Performance & Risk Alignment
* Balanced Scorecard Approach - Employee Participation in Goal Setting
Thus, the correct and verified answer is C. It is more successful when goal setting is performed not only by management, but by all team members, including lower-level staff.

NEW QUESTION # 151
Which of the following conditions could lead an organization to enter into a new business through internal development rather than through acquisition?

A. The number of bidders to acquire the organization for sale is low.
B. It is expected that there will be slow retaliation from incumbents.
C. The acquiring organization has information that the selling organization is weak.
D. The condition of the economy is poor.

Answer: B

NEW QUESTION # 152
A chief audit executive (CAE) was asked to participate in the selection of an external auditor. Which of the following would not be a typical responsibility for the CAE?

A. Develop appropriate performance metrics.
B. Evaluate the proposed external auditor fee.
C. Monitor the work of the external auditors.
D. Recommend criteria to be used in the selection process.

Answer: A

NEW QUESTION # 153
A clothing company sells shirts for $8 per shirt. In order to break even, the company must sell 25.000 shirts. Actual sales total S300.000. What is margin of safety sales for the company?

A. $275,000
B. $500,000
C. $100.000
D. $200,000

Answer: C

NEW QUESTION # 154
Which of the following statements is true regarding the capital budgeting procedure known as discounted payback period?

A. It begins at time zero for the project.
B. It calculates the time a project takes to break even.
C. It ignores the time value of money
D. It calculates the overall value of a project

Answer: B

NEW QUESTION # 155
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