Certified Internal Auditor (CIA) Practice Test

How can an organization minimize defects in finished goods caused by poor quality raw materials?

1. By documenting procedures for handling work-in-process inventory.

2. By requiring material specifications for all purchases.

3. By timely follow-up on unfavorable usage variances.

4. By determining spoilage at the end of the manufacturing process.

The correct answer is: By requiring material specifications for all purchases.

Requiring material specifications for all purchases is crucial in minimizing defects in finished goods due to poor quality raw materials. By establishing clear and specific material specifications, an organization ensures that all incoming raw materials meet the requisite quality standards necessary for production. This step is vital because if raw materials do not conform to specified standards, the resulting finished products can also fall short in quality, potentially leading to increased defects. This practice helps create a reliable supply chain, as suppliers understand the quality expectations and are held accountable for delivering only materials that meet those requirements. Additionally, using defined specifications enables better planning and control during the procurement process and can lead to improved supplier relationships based on mutual understanding of quality standards. Other options, while they contribute to the overall quality control process, do not directly address the root cause of defects arising from poor quality raw materials as effectively. Documenting procedures for work-in-process inventory is important for managing production stages but does not prevent poor quality inputs. Timely follow-up on unfavorable usage variances and determining spoilage at the end of the manufacturing process are both reactive measures; they help identify and manage issues after they may have already impacted the final product rather than preventing them upfront through stringent material specifications.