IIA IIA-CIA-PART3 Online Practice Questions and Exam Preparation

IIA IIA-CIA-PART3 Online Questions & Answers

• Question 91:

  Which one of the following is not an example of formal communication within an organization?

  A. The grapevine.
  B. Variance analysis.
  C. The performance evaluation system.
  D. A budget.
  A. The grapevine.

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  Explanation

  Formal communication is conducted through the officially established structure of the organization. Informal communication operates outside officially established structural channels. The grapevine is an example. Although the grapevine is usually accurate, it can also carry gossip and rumor.

• Question 92:

  A leader who explains decisions and provides opportunity for clarification is described as having which leadership style?

  A. Selling.
  B. Telling.
  C. Participating.
  D. Delegating.
  A. Selling.

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  Explanation

  According to Hersey and Blanchard, a selling style of leadership provides a high degree of task orientation and a high degree of relationship orientation. This type of leader explains decisions and provides opportunities for clarification. Thus, upward and downward, two- way communication is active. This approach is more democratic than authoritarian.

• Question 93:

  During a routine bank branch audit, the internal audit function observed that the sole security guard at the branch only worked part time. The chief audit executive (CAE) believed that this increased the risk of loss of property and life in the event of a robbery. The branch security manager informed the CAE that a full-time guard was not needed because the branch was in close proximity to a police station. Still, the CAE found this to be an unacceptable risk due to the recent increase in robberies in that area.

  Which of the following is the most appropriate next step for the CAE to take?

  A. Immediately report the issue to the board to ensure timely corrective actions are taken to resolve the risk
  B. Continue discussions with the security manager until he is persuaded and agrees to increase branch security
  C. Document the security manager's decision to accept the risk in the audit workpapers
  D. Escalate the issue to the bank's chief security officer to determine acceptability of the risk
  D. Escalate the issue to the bank's chief security officer to determine acceptability of the risk

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  Explanation

  When the CAE disagrees with local management's acceptance of a risk, the next step is to escalate the issue to higher management responsible for the risk--in this case, the bank's chief security officer. If senior management also accepts the

  risk and the CAE still considers it unacceptable, the matter should then be reported to the board.

  Option A (direct to the board) skips the escalation chain. Option B is ineffective if the security manager has already decided. Option C alone does not address the CAE's responsibility to escalate unacceptable risks.

  IIA Standards - Standard 2600: Communicating the Acceptance of Risks.

• Question 94:

  Which of the following best explains how selling and administrative expenses are recognized under both absorption and variables costing approaches?

  A. They are recognized as product costs under absorption costing, and period costs under variable costing.
  B. They are recognized as period costs under absorption costing, and product costs under variable costing.
  C. They are recognized as period costs under both approaches.
  D. They are recognized as product costs under both approaches.
  C. They are recognized as period costs under both approaches.

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  Explanation

• Question 95:

  A production team has been together for several years and has worked well together. However, severe arguments have recently occurred between two members of the group,and other members have begun to take sides. This problem has had a negative effect on production performance. The best leadership style for the manager in this situation is:

  A. Directive.
  B. Supportive.
  C. Participative.
  D. Achievement-oriented.
  A. Directive.

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  Explanation

• Question 96:

  An organization is considering mirroring the customer data for one regional center at another center. A disadvantage of such an arrangement would be:

  A. Lack of awareness of the state of processing.
  B. Increased cost and complexity of network traffic.
  C. Interference of the mirrored data with the original source data.
  D. Confusion about where customer data are stored.
  B. Increased cost and complexity of network traffic.

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  Explanation

• Question 97:

  Which of the following statements best describes the frameworks set forth by the International Standards Organization?

  A. Globally accepted standards for industries and processes.
  B. Bridging the gaps among control requirements, technical issues, and business risks.
  C. Practical guidance and benchmarks for all organizations that use information systems.
  D. Frameworks and guidance on enterprise risk management, internal control, and fraud deterrence.
  A. Globally accepted standards for industries and processes.

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  Explanation

• Question 98:

  Which of the following statements regarding program change management is not correct?

  A. The goal of the change management process is to sustain and improve organizational operations.
  B. The degree of risk associated with a proposed change determines if the change request requires authorization.
  C. In order to protect the production environment, changes must be managed in a repeatable, defined, and predictable manner.
  D. All changes should be tested in a non-production environment before migrating to the production environment.
  B. The degree of risk associated with a proposed change determines if the change request requires authorization.

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  Explanation

• Question 99:

  Which of the following is a reason for a firm to remain in an industry despite poor profits?

  A. Lack of vertical integration.
  B. Economies of scale are not significant.
  C. The firm's assets have a low liquidation value.
  D. Distribution channels are willing to accept new products.
  C. The firm's assets have a low liquidation value.

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  Explanation

  Specialized assets and inventory in a declining industry may have a low liquidation value. Few purchasers who wish to operate in the same industry may be available. Durable assets may have a carrying amount far greater than the liquidation value. Hence, liquidation may result in a loss that the firm may not wish to recognize. Furthermore, a low liquidation value means that the future discounted cash flows from remaining in the industry may exceed the opportunity cost of the capital invested in the declining industry. Thus, the returns from the proceeds of liquidation may be less than the returns from keeping those assets in the business.

• Question 100:

  An organization has adopted a bring-your-own-device (BYOD) policy, and employees can access organizational data via their smart devices. Which of the following authentication policy requirements is the most advisable?

  A. Require a virtual private network (VPN).
  B. Require at least an eight-digit passcode or a complicated swipe pattern.
  C. Require the remote wipe function and encryption of local data.
  D. Require a passcode followed by a response requiring verification message.
  C. Require the remote wipe function and encryption of local data.

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  Explanation