Business - Organizational Objectives, Behavior, and Performance

Question 1

Organization Objectives

Answer 1

1) Defines what the organization wants to achieve
2) Ongoing success will depend on if the organization completed the objectives
3) Indicate what is expected from a governance, risk management, & internal control perspective

Question 2

Primary Blanket Objective

Answer 2

Enhance Stakeholder Value

Question 3

Where are objectives reflected?

Answer 3

Organizations mission and vision statement

Question 4

What is the best way to get people to buy into an objective?

Answer 4

Getting input from all people when creating or updating the objective

Question 5

Mission Statement

Answer 5

1) Broad expression of what the organization wants to achieve in the present
2) Indicates the organizations purpose
- Reason for being
- How it will add value to customers & stakeholders
3) Serves as a day to day charge to employees

Question 6

Vision Statement

Answer 6

1) Conveys what the organization aspires to achieve or become in the future
2) Highest aspiration view and goals in context of serving and adding value to it stakeholder’s

Question 7

What guides the development of strategic objectives and to preform strategic planning, which results in strategic plans?

Answer 7

Mission and Vision Statement

Question 8

Strategic Objectives

Answer 8

1) Desired outcomes set by management that specifically relate to stakeholder value enhancement

Question 9

What could strategic objectives relate too?

Answer 9

1) Innovation
2) Growth
3) Cost Control
4) Investment’s in the organizations people
5) Social Responsibility

Question 10

Where are strategic objectives reflected?

Answer 10

Organizations strategic planning process and plans

Question 11

Strategic Planning

Answer 11

Disciplined upper management and board level future oriented process that determines the direction the organization will take to achieve objectives over the long term given the changing business environment

Question 12

Strategic planning involves?

Answer 12

1) Evaluating change in the environment and then determining how to create a competitive advantage in this environment
2) Gathering input from multiple stakeholders
3) Innovating and Brain storming, followed by feasibility analysis of ideas
4) Coming to agreement on priorities and initiatives for the best use of limited resources
5) Determining the desired end result, how to get there and how to determine if the strategy is successful
6) Documenting the results of this process in the organizations strategic plans

Question 13

Strategic Plans

Answer 13

high level, long term plans for multiple years into the future

Question 14

Strategic Plans are valuable what?

Answer 14

Communication tools

Question 15

Strategic Plans sent the tone for?

Answer 15

Proper Governance

Question 16

Strategic Plans are an important input or subject for many assurance and consulting engagements, those consist of?

Answer 16

1) Understanding of the strategy, key business objectives, associated risks, and risk management processes is vital for setting the context for must engagements
2) Assurance engagements may verify that the organizations strategy aligns with its risk appetite
3) Assurance Engagements often check that plans and objectives for the audit area align with and integrate into top level plans
4) Assurance engagements related to strategic plans may need to verify that the plan is effectively communicated
5) Consulting engagements related to improving the strategy or strategic planning may asses whether the organization has a sound strategy and/or strategic planning process

Question 17

Who does the CAE need to consult to gain an understanding of the organizations strategy?

Answer 17

Entity’s board and senior management

Question 18

What does the organizations strategic plan need to reflect?

Answer 18

Global & Competitive Considerations

Question 19

The organizations success depends on?

Answer 19

1) successful execution
2) opportunities & risks that exist in the organizations environment

Question 20

Sources of competitive advantage?

Answer 20

1) Labor Market: low cost, high skill, wide labor pool
2) Suppliers & Raw Materials: favorable prices, good or long term relationships with vendors, supplier proximity, degree of ownership or control of supplier
3) Customer Base: Established customer base/market share, loyal and satisfied customers
4) Process & Methodology Maturity: Risk, control, quality, change management, manufacturing or other frame works; maturity level and difficulty in achieving that maturity
5) Supply Chain & Transportation: Relative cost and speed of supply chain, # of options for a level of convenience to customers
6) Regional economy & politics; culture, legal and regulatory environment

Question 21

Organizations Strategy seeks to?

Answer 21

1) Leverage relative strengths & mitigate relative weaknesses in order to asses opportunities (ex: online, locally, or globally)
2) Minimize the likelihood of impact of risks, including competitors taking market share

Question 22

What will internal audit be assessing in regards to a companies strategy?

Answer 22

Is the organization altering its strategy fast enough to survive and thrive when such factors are changing quickly

Question 23

What is COSO’s Internal Control - Integrated Framework?

Answer 23

Framework used by organizations to evaluate internal controls, identifies three categories of such objectives: operations, reporting, compliance

Question 24

What does the entity side of the COSO’s cube represent?

Answer 24

The overall entity, divisions, subsidiaries, and so on

Question 25

What 5 components are required to represent adequate governance, risk management, and internal control?

Answer 25

1) Control environment
2) Risk Assessment
3) Control Activities
4) Information and Communication
5) Monitoring Activities

Question 26

Operations Objectives

Answer 26

Relate to the effectiveness and efficiency of operations, including but not limited to operational and financial performance goals and safeguarding of assets

Question 27

Reporting Objectives

Answer 27

relate to financial and nonfinancial reporting, both internal and external, and may include reliability, timeliness, transparency, completeness, or other terms as identified by the standards setters, regulators, or policies of the entity

Question 28

Compliance Objectives

Answer 28

Relate to laws, regulations, policies, and procedures to which the entity is subject and the entity’s adherence to the same. Subcategories may include compliance with contracts, industry standards and best practices, and internal policy.

Question 29

Performance Measurement

Answer 29

a management process of determining appropriate metrics to measure performance, setting related performance targets, communicating these measurements and targets to responsible persons or entities, monitoring performance against these targets, and following up on variances to correct course as needed.

Question 30

Key Performance Indicators (KPIs)

Answer 30

a subset of performance measures that focus on accomplishments or behaviors that are valued by the organization and are needed to successfully achieve the organization’s strategy and mission. Valid KPIs need to measure the right things and be understandable to management (who use them to guide and improve performance in key areas related to strategy).

Question 31

KPIs may

Answer 31

1) Be measure of outcome (sales, production)
2) Be measure of process characteristics (timeliness, accuracy)
3) Be quantitative (% of )
4) Be qualitative (appropriate use of)

Question 32

What are KRIs?

Answer 32

When KPIs measure risk

Question 33

Leading Indicator

Answer 33

measured used to predict future performance because the metric is an input to a process

Question 34

Lagging indicator

Answer 34

measure used to confirm past performance because the metric is an output of a process

Question 35

When can management identify and correct the root cause before actual damage occurs?

Answer 35

If a KRI is a leading indicator that is trending dangerously upward or crosses a predefined threshold

Question 36

Efficiency

Answer 36

minimizing the use of resources in a process as compared to target expectations

Question 37

Effectiveness

Answer 37

Outputs and the degree to which an organization’s goals and objectives are achieved.

Question 38

Performance Target

Answer 38

The expected level of performance outcome for a measurement or key performance indicator

Question 39

Internal Targets

Answer 39

1) Based on the level of performance in the measurement area that is needed to achieve organizational objectives
2) Targets should be challenging but feasible
3) Some organizations set both minimum and stretch goals for a metric

Question 40

External Targets

Answer 40

Reflect the requirements of regulations, laws, or voluntary standards