Exam IIA-CIA-Part2 topic 1 question 75 discussion

Actual exam question from IIA's IIA-CIA-Part2

Question #: 75
Topic #: 1

Which of the following would provide the best audit evidence regarding the effectiveness of an applied research department?

A. Develop a cost-per-product analysis for products developed over the past five years.
B. Develop a report on revenue generated by or cost savings directly attributable to newly developed products.
C. Compare research as a percentage of revenue between this company and all major competitors in the same industry.
D. Compare the number of this year's new product developments to the number of new product developments for the past five years.

Show Suggested Answer

Suggested Answer: B 🗳️

by jicabratme at June 23, 2021, 5:46 p.m.

Comments

Submit Cancel

John1237

1 year ago

An effectiveness report (not efficiency report) is certainly the result/the outcome of a relevant analysis performed directly by the internal auditor.

upvoted 1 times

...

jicabratme

1 year, 8 months ago

Why not C?

upvoted 1 times

Operational research must optimize revenue, minimize costs and select the best possible alternatives (using BPR for example). Cost analysis (option A), benchmark (option C), examination of variations in number of products, don’t establish a relationship between innovation and gross margin. In option B, the relationship is direct; directly established by the internal auditor.

upvoted 1 times

...

Joyce914

1 year, 3 months ago

The percentage of research to revenue may not reflect the effectiveness of research department because some companies are so hesitate to invest on research which may result the low %.

upvoted 1 times

...

KonradK

1 year, 6 months ago

I think because it would be very hard for IA department to obtain sufficient information about competitors situation and their effectivness trends so I would say that B is the only right choice.

upvoted 1 times

...