CHAPTER 2 | Auditing Business Process Outsourcing Industry

1. Statement I: Special Economic Zone Act is a form of government support for the Philippine
BPO industry.
Statement II: Special Economic Zone Act provides tax increase, exemptions, and other
privileges to foreign investors.
Only statement I is true
Both statements are true
Statement I is false
Both statements are false

2. Statement I: Offshore vendors are located outside of the company’s own country.
Statement II: Onshore vendors are located in countries that neighbor the contracting company’s
country.
Only statement I is true
Both statements are true
Statement I is false
Both statements are false

3. Statement I: Philippine government is always quick to pass key legislative changes which
favor global organizations looking to outsource to the Philippines and it contributed to the
growth of BPO industry in the country.
Statement II: ePLDT is the first call center founded in the Philippines.
Only statement I is true
Both statements are true
Statement I is false
Both statements are false

4. Statement I: During the Covid-19 pandemic, the government ordered BPO companies to
provide accommodation, shuttle, and meals to employees who work on-site.
Statement II: Globally, the travel, hospitality, and tourism industries got the heaviest hit of the
pandemic due to travel restrictions and community quarantines.
Only statement I is true
Both statements are true
Statement I is false
Both statements are false

5. Statement I: Finance and accounting services include check, credit, and debit card processing;
collection; receivables; direct and indirect procurement; transportation administration; logistics
and dispatch; and warehouse management.
Statement II: Back-office transactions include billing, accounts payable, receivables, general
accounting, auditing, and regulatory compliance.
Only statement I is true
Both statements are true
Statement I is false
Both statements are false
CHAPTER 2 | Auditing Business Process Outsourcing Industry

6. Statement I: A company can incur extraneous costs and increase productivity when the vendor
encounters problems or lapses in its work.
Statement II: Language barriers can limit activities when your company hires individual service
providers spread across the globe.
Only statement I is true
Both statements are true
Statement I is false
Both statements are false

7. Statement I. Investors in the Philippine BPO industry being offered a sizeable number of
incentives is one key factor that contributed to the growth of the BPO industry.
Statement II: According to PEZA, as of 2020 there are 788 BPO companies operating in the
Philippines.
Only statement I is true
Both statements are true
Statement I is false
Both statements are false

8. Statement I: When outsourcing your processes and parts of your business, you face significant
risks, depending on the type and structure of your company.
Statement II: Other possible risks associated with outsourcing include Data breaches, Quality
control, and Political stability.
Only statement I is true
Both statements are true
Statement I is false
Both statements are false

9. Statement I: Executives should identify the key objectives for outsourcing a function —
whether it's cost savings, increased quality, quicker turnaround or some other objective — and
then use that criteria to determine which provider would be best suited to handle the work.
Statement II: The key objectives for outsourcing a functions should not be refrained as the basis
for contractual obligations that can be used to help assess the performance of the outsourced
provider and success of the function once it is outsourced.
Only statement I is true
Both statements are true
Statement I is false
Both statements are false

10. Statement I: Security is more difficult to maintain when the business taking care of your IS is
in the same country.
Statement II: The internet, which makes BFO for IT feasible, also may offer a portal through
which hackers enter.
Only statement I is true
Both statements are true
Statement I is false
Both statements are false
CHAPTER 2 | Auditing Business Process Outsourcing Industry

11. Statement I: Management experts should identify the workflows and processes impacted by
the work shifting from in-house staff to the external partner and adjust, if necessary, those
workflows and processes to accommodate the outsourcing of the work.
Statement II. Management experts advise enterprise executives to identify functions that can be
outsourced and then evaluate that function against the pros and cons of outsourcing to determine
if shifting that task to an outsourced provider makes strategic sense for the organization.
Only statement I is true
Both statements are true
Statement I is false
Both statements are false

12. Statement I: Front -office services include internal business processes, such as billing or
purchasing.
Statement II: Back-office services pertain to the contracting company’s customers, such as
marketing and tech support.
Only statement I is true
Both statements are true
Statement I is false
Both statements are false

13. Statement I: Under Communication issues, companies that employ BPO vendors often
underestimate the running costs, especially in upgrades and contract renegotiation.
Statement II: Under Overdependence on service providers, once a company designates a vendor
for specific processes, the vendor becomes a part of the workflow.
Only statement I is true
Both statements are true
Statement I is false
Both statements are false

14. Statement I: One of the key factors that contributed to the growth of BPO industry in the
Philippines is that it focuses on low-risk industries instead of those growing but volatile
industries.
Statement II: Sharp drop in revenues of businesses during the height of the pandemic did not
necessarily affect the BPO industry in the Philippines.
Only statement I is true
Both statements are true
Statement I is false
Both statements are false

15. Statement I: BPO can be an alternative to labor migration, allowing the labor force to remain
in their home country while contributing their skills abroad.
Statement II: BPO usually fills supplementary — as opposed to core — business functions, with
services that could be either technical or nontechnical.
Only statement I is true
Both statements are true
Statement I is false
CHAPTER 2 | Auditing Business Process Outsourcing Industry

Both statements are false

17. ___________ operate within the same country as the contractor, although they may be
located in a different city or state.
Offshore vendors
Nearshore vendors
Onshore vendors
None of the above

18. These technical support functions include application development and testing,
implementation services, and IT helpdesk.
Human Resource Services
Knowledge Services
IT and Software Operations
Back-office Transactions

19. Enforced community quarantines boost the growth of some industries including:
Food service industry
Logistics industry
Hospitality industry
Airlines industry

20. What are the three categories of BPO that are based on the location of the vendor?
Back Office, Admin Office, and Front Office
Offshore, Nearshore, and Onshore
Finance and Accounting, Human Resource and Knowledge Service
None of the above

21. These higher-level processes may include data analytics, data mining, data and knowledge
management, and internet and web research, as well as developing an information governance
program and providing the voice of customer feedback.
Human Resource Services
Knowledge Services
IT and Software Operations
Back-office Transactions

22. The following are Filipino skills/traits that contributed to the growth of BPO industry in the
Philippines, except:
Fluency in western-accented English
High problem-solving capabilities
CHAPTER 2 | Auditing Business Process Outsourcing Industry

Multi-tasking skills
More patient, especially when facing irate customers

23. BPOs can help address workforce challenges. They can also cover payroll services,
healthcare administration, hiring and recruitment, workforce training, insurance processing, and
retirement benefits.
Human Resource Services
Knowledge Services
IT and Software Operations
Back-office Transactions

24. It is the practice of contracting a specific work process or processes to an external service
provider.
IT Outsourcing
Operational Outsourcing
Manufacturing Outsourcing
Business Process Outsourcing

25. The organization may also have to invest in a ________ solution to enable the smooth flow
of work from the organization itself to the outsource provider.
Human Resource
Technology
Knowledge Services
Business Process Outsourcing

26. The first multinational corporation to set up a BPO center in the Philippines
Convergys Corp.
Sykes Asia
eTelecare
ePLDT ventus

27. Which of the following is not an element that must work together in harmony to enable
success
Data
People
Process
All of the choices are correct

28. One of the key reasons behind the growth of BPO in the Philippines is the extended support
of the government to incentivize local and international investments and other tax benefits. What
was the act passed by the congress in 1995 promising tax incentives to foreign investors?
Foreign investment act
Public service act
Special Economic Zone Act
PEZA act
CHAPTER 2 | Auditing Business Process Outsourcing Industry

29. All of the following are main types of BPO service, except:
Back office
Front office
Admin office
All of the choices are correct

30. Which of the following is a possible risk associated with outsourcing?