BT15,16 (3)

Which feature of services describe services that cannot be stored for later

Answer explanation

The feature of services that describes their inability to be stored for later use is called perishability. This means that services are consumed at the moment they are provided and cannot be saved or inventoried.

Internal auditors have an unavoidable __________ problem, as they report to those people whose activities they are reporting on. Type in the missing word!

Answer explanation

The correct word is 'Independence'. Internal auditors face an independence problem because they report to the same individuals whose activities they are evaluating, which can compromise their objectivity.

Aruzhan is preparing a seminar for the Board of Directors of the company she works for regarding internal and external audit and the differences between the two. Which TWO of the following points are correct with regards to internal and external audit?

• The scope of the internal auditors’ work is determined by the management of the company, while external auditors determine the scope of their own work

• Internal auditors test the organisation’s underlying transactions, while external auditors test the operations of the organisation’s systems

• Internal audit and external audit are usually both legal requirements

• Internal auditors can be employees of the company they audit, while external auditors must not be

Answer explanation

The correct points highlight that internal auditors' scope is set by management, while external auditors define their own. Additionally, internal auditors can be company employees, whereas external auditors must remain independent.

InDriver is a company that operates taxis within several cities in country U and has received a number of complaints regarding the behaviour of its drivers towards passengers. One of InDriver’s marketing executives has pointed out that even if the customer’s journey is fast, cheap and reliable, customers will still see the service offered by InDriver as poor if the driver behaves poorly.

What aspect of the nature of service provision is InDriver’s marketing executive referring to?

• Intangibility

• Perishability

• Variability

• Inseparability

Answer explanation

InDriver's marketing executive refers to inseparability, which highlights that service quality is affected by the interaction between the service provider (driver) and the customer, making driver behavior crucial to customer perception.

Which of the following is NOT a way in which an organisation’s production department would co-ordinate wi its accounting department?

• Calculating charge out rates for services provided by the organisation

• Calculating the budgets for the number of units to be produced

• Estimation of the costs of the raw materials required for production

• Decisions on the quality of raw materials that the organisation can afford to use

Answer explanation

Calculating charge out rates for services is typically a function of the accounting department, not the production department. The other options involve direct production activities and cost estimations.

Zholbarys is entering customer details onto a computer system. The system requires him to log in and checks that he is allowed to enter customer details. The system also checks that he has entered all the required information about the customer. These computer system controls will NOT ensure which of the following?

• Completeness

• Authorisation

• Validity

• Identification

Answer explanation

The system checks for authorisation and completeness but does not verify if the entered customer details are valid or accurate. Therefore, it does not ensure validity.

Consider the following two statements:

1 Responsibility for the internal controls is shared between management and the internal auditors.

2 The internal auditor’s role often includes helping to set corporate objectives and the design and monitoring of performance measures.

Which of these options is/are correct?

• 1 only

• 2 only

• Both

• Neither

Answer explanation

Statement 1 is incorrect because management holds primary responsibility for internal controls, while internal auditors assess their effectiveness. Statement 2 is correct as internal auditors assist in setting objectives and monitoring performance.

Every evening the last person leaving the office premises needs to switch on the security alarm. This control belongs to which of the following categories?

• Authorisation

• Verification

• Reconciliation

• Physical or logical

Answer explanation

The action of switching on the security alarm by the last person leaving the office is a control measure that falls under 'Physical or logical' security, as it involves a physical action to protect the premises.

Consider the following two statements:

1 To practice as an internal auditor, the person must be a qualified accountant.

2 There is greater flexibility in how internal audit work is done relative to external audit work, since external audit work is controlled by the law and audit standards.

Which of these options is/are correct?

• 1 only

• 2 only

• Both

• Neither

Answer explanation

Statement 1 is incorrect; internal auditors do not need to be qualified accountants. Statement 2 is correct; internal audit has more flexibility compared to external audit, which is governed by laws and standards.

Which of the following actions is most likely to be considered a preventive measure?

• Implementing a training program for new employees

• Reviewing financial statements at the end of each month

• Performing surprise audits on inventory

• Setting up a system for tracking overdue accounts

Answer explanation

Implementing a training program for new employees is a preventive measure as it equips them with necessary skills and knowledge, reducing the likelihood of errors and improving overall performance.