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CPA Exam BEC (1)
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Exam of 11 pages for the course CISA: Domain #2, Part A: IT Governance at CISA: Domain #2, Part A: IT Governance (CPA Exam BEC (1))
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CPA Exam BECThe fraud triangle includes each of the following, EXCEPT:
A) Incentive.
B) Collusion.
C) Opportunity.
D) Rationalization. - ANS-B) Collusion.
According to COSO, which of the following issues should lead to the greatest concern regarding
the effectiveness of an entity's internal control?
A) Monitoring internal control areas that have NEVER had a control failure.
B) Errors from control failures that were NOT detected timely by the routine monitoring
procedures.
C) Unwarranted duplication of efforts when multiple people monitor the same control.
D) Additional evaluations solely to meet regulatory requirements when elements of other
procedures would be sufficient. - ANS-B) Errors from control failures that were NOT detected
timely by the routine monitoring procedures.
A member of the audit committee is evaluating the following risk matrix for a company:
Item Number Likelihood Severity Risk
1 8.3% $20,235 Cash register embezzlement
2 13.6% $168,477 Vendor kickbacks (collusion)
3 7.5% $522,531 Server Outage
4 1.1% $2,937,632 F/S earning restatement
Using statistical risk ranking methodology, which of the following lists of risks is correctly
prioritized?
A) 2,1,3,4
B) 2,1,4,3
C) 3,4,2,1
D) 4,3,2,1 - ANS-C) 3,4,2,1
According to the Sarbanes-Oxley Act of 2002, each of the following is a corporate responsibility
requirement, EXCEPT:
A) The audit committee of the issuer is directly responsible for the appointment, compensation,
and oversight of the registered accounting firm.
, B) The audit committee chairperson must certify that the quarterly report be filed with the SEC
fairly presents the financial condition and results of operations.
C) The audit committee of the issuer must establish whistleblowing mechanisms and
procedures within the issuer.
D) Each audit committee member of the issuer must be independent. - ANS-B) The audit
committee chairperson must certify that the quarterly report be filed with the SEC fairly presents
the financial condition and results of operations.
A manufacturer performed an analysis of its product's price point in an effort to meet its
customers' demand without experiencing excess inventory.
Price Point Supply Demand
$4 20 10
$3 15 15
$2 10 20
$1 5 25
The manufacturer uses just-in-time inventory processes, and demand for the product is elastic.
Which of the following prices should management use in order to address the efforts above
while maximizing profits?
A) $1
B) $2
C) $3
D) $4 - ANS-C) $3
A company increased the price of its products and noted subsequent decreases in demand as
below:
Price increase Demand increase
Product A 20% 40%
Product B 30% 20%
The data above best support which of the following conclusions regarding the price elasticity of
demand for the two products?
A) Product A is treated by consumers as a necessity.
B) Product B is treated by consumers as a luxury item.
C) Substitutes are more readily available for Product A than for Product B
D) Substitutes are more readily available for Product B than for Product A. - ANS-C) Substitutes
are more readily available for Product A than for Product B
Two companies make handcrafted wooden ducks and rocking horses. Information about each
company's weekly production alternatives is as follows:
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