Certified Internal Auditor (CIA) Part 3: Business Knowledge for Internal Auditing — Question 234

Which of the following is an advantage of a decentralized organizational structure, as opposed to a centralized structure?

Answer options

• A. Greater cost-effectiveness,
• B. Increased economies of scale.
• C. Larger talent pool.
• D. Strong internal controls.

Correct answer: A

Explanation

A decentralized organizational structure allows for more flexibility and responsiveness, often leading to greater cost-effectiveness by empowering local managers to make decisions. In contrast, increased economies of scale, a larger talent pool, and strong internal controls are typically advantages associated with centralized structures.