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

IIA IIA-CIA-PART3 Online Questions & Answers

• Question 1001:

  According to the ISO 14001 standard, which of the following is not included in the requirements for a quality management system?

  A. Key processes across the entity which impact quality must be identified and included.
  B. The quality management system must be documented in the articles of incorporation, quality manual, procedures, work instructions, and records.
  C. Management must review the quality policy, analyze data about quality management system performance, and assess opportunities for improvement and the need for change.
  D. The entity must have processes for inspections, testing, measurement, analysis, and improvement.
  B. The quality management system must be documented in the articles of incorporation, quality manual, procedures, work instructions, and records.

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  Explanation

• Question 1002:

  The reason(s) governments most likely restrict trade include

  A. To help foster new industries. II. To protect declining industries. III. To increase tax revenues. IV. To foster national security.
  B. I only.
  C. I and II only.
  D. II and Ill only.
  E. I, II, and IV only.
  D. II and Ill only.

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  Explanation

  Governmental impediments to global competition are generally imposed for the announced purpose of protecting local firms and jobs, developing new industries, and fostering national security. They also may have the effect of raising revenue in the short run. In the long run, tax and revenues will decline because of reduced trade. Examples of governmental impediments are tariffs; duties; quotas; domestic content rules; preferences for local firms regarding procurement,taxes, RandD, labor regulations, and other operating rules; and laws (e.g., antibribery or tax) enacted by a national government that impede national firms from competing globally. These impediments are most likely when industries are viewed as crucial.

• Question 1003:

  Upon completing a follow-up audit engagement, the chief audit executive (CAE) noted that management has not implemented any mitigation measures to address the high risks that were reported in the initial audit report. What initial step must the CAE take to address this situation?

  A. Communicate the issue to senior management
  B. Discuss the issue with members of management responsible for the risk area
  C. Report the situation to the external auditors
  D. Escalate the issue to the board
  B. Discuss the issue with members of management responsible for the risk area

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  Explanation

  According to the International Standards for the Professional Practice of Internal Auditing, when significant risk exposures remain unaddressed after a follow-up engagement, the CAE must first discuss the matter with the appropriate level of

  management responsible for the area. The purpose is to determine whether there is a valid reason for not implementing the recommended corrective actions, to clarify management's perspective, and to encourage timely resolution.

  If management still refuses to act and the risk remains high, the CAE must then escalate the issue to senior management and, if necessary, to the board. Immediate escalation to the board without first discussing with management is

  inappropriate, as it bypasses the chain of accountability. Reporting directly to external auditors is also not the responsibility of the CAE unless specifically mandated by regulation or law.

  Therefore, the correct initial step is to discuss the issue with management responsible for the risk area (Option B) .

  IIA Standards - Standard 2500: Monitoring Progress; Implementation Guide 2500 - Monitoring Progress.

• Question 1004:

  Which of the following capital budgeting techniques considers the expected total net cash flows from investment?

  A. Cash payback.
  B. Annual rate of return.
  C. Incremental analysis.
  D. Net present value.
  D. Net present value.

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  Explanation

• Question 1005:

  Which of the following budgets must be prepared first?

  A. Cash budget.
  B. Production budget.
  C. Sales budget.
  D. Selling and administrative expenses budget.
  C. Sales budget.

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  Explanation

• Question 1006:

  A large hospital has an existing contract with a vendor in another country to provide software support and maintenance of the hospital's patient records information system. From the hospital management's perspective, which of the following controls would be most effective to address privacy risks related to this outsourcing arrangement?

  A. Conduct periodic reviews of the privacy policy to ensure that the existing policy meets current legislation requirements in both regions.
  B. Include a "right to audit" clause in the contract and impose detailed security obligations on the outsourced vendor
  C. Implement mandatory privacy training for management to help with identifying privacy risks when outsourcing services
  D. Develop an incident monitoring and response plan to track breaches from internal and external sources
  B. Include a "right to audit" clause in the contract and impose detailed security obligations on the outsourced vendor

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  Explanation

• Question 1007:

  Which of following best demonstrates the application of the cost principle?

  A. A company reports trading and investment securities at their market cost.
  B. A building purchased last year for $1 million is currently worth $1.2 million, but the company still reports the building at $1 million.
  C. A building purchased last year for $1 million is currently worth $1.2 million, and the company adjusts the records to reflect the current value.
  D. A company reports assets at either historical or fair value, depending which is closer to market value.
  D. A company reports assets at either historical or fair value, depending which is closer to market value.

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  Explanation

• Question 1008:

  Which of the following is a result of implementing an e-commerce system, which relies heavily on electronic data interchange and electronic funds transfer, for purchasing and billing?

  A. Higher cash flow and treasury balances.
  B. Higher inventory balances.
  C. Higher accounts receivable
  D. Higher accounts payable.
  D. Higher accounts payable.

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  Explanation

• Question 1009:

  Organizational charts often represent the formal structure of an organization. Often the organizational chart represents a pyramid with the chief executive on the top and the operating workforce on the bottom. Which of the following would not be included in a typical organizational chart?

  A. The span of control and the number of organizational levels.
  B. Communication channels.
  C. Promotional or career tracks.
  D. Informal influence or friendships.
  D. Informal influence or friendships.

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  Explanation

  Organizational charts often show the formal relationships between employers and employees. However, a shortcoming of organizational charts is that they do not show informal relationships between the upper and lower levels of the corporate hierarchy.

• Question 1010:

  Which of the following analytical techniques would an internal auditor use to verify that none of an organization's employees are receiving fraudulent invoice payments?

  A. Perform gap testing.
  B. Join different data sources.
  C. Perform duplicate testing.
  D. Calculate statistical parameters.
  D. Calculate statistical parameters.

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  Explanation