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Exam IIA-CIA-Part1 All Questions

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Exam IIA-CIA-Part1 topic 1 question 50 discussion

Actual exam question from IIA's IIA-CIA-Part1
Question #: 50
Topic #: 1
[All IIA-CIA-Part1 Questions]

Which of the following procedures would provide the best evidence of the effectiveness of a credit-granting function?

  • A. Observe the process.
  • B. Review the trend in receivables write-offs.
  • C. Ask the credit manager about the effectiveness of the function.
  • D. Check for evidence of credit approval on a sample of customer orders.
Show Suggested Answer Hide Answer
Suggested Answer: B 🗳️
by rizipakistani at Dec. 25, 2020, 2:32 p.m.

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NadiaD
Highly Voted 4 years ago
If the credit granting function is effective, then the write-offs would be minimal.
upvoted 5 times
Ivana2000
3 years, 6 months ago
But you do not know if the non-functional loan unit effectiveness is covering the granting function non effectiveness, so I still do not understand.... very unprecise
upvoted 1 times
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Elvoo
Most Recent 8 months, 3 weeks ago
Review the trend in receivables write-offs. The correct answer should be B: This method provides objective, outcome-based evidence of the effectiveness of the credit-granting function by showing how well the credit decisions are performing over time.
upvoted 1 times
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Mary1982
3 years, 3 months ago
This does not make sense at all. We need an explanation please. I feel that observing the process is more effective than reviewing write off trend.
upvoted 2 times
John1237
2 years, 8 months ago
Observation gives a snapshot of the situation. It does not account for the effectiveness of the function over time. The very purpose of the function is to grant credits that remain in a good state. If there is a high breakage rate (write-offs), the function is not effective.
upvoted 1 times
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rizipakistani
4 years, 1 month ago
Didnt understand this. Can anyone please explain?
upvoted 1 times
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C (25%)
B (20%)
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