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

IIA IIA-CIA-PART3 Online Questions & Answers

• Question 1031:

  How can the chief audit executive best provide the internal audit function with the resources needed to fulfill the annual audit plan?

  A. Improve skills by strengthening staff competencies
  B. Map the audit risk assessment to the organization's strategic plan
  C. Collaborate with other risk management functions in the organization
  D. Refine its audit processes according to the Global Internal Audit Standards
  A. Improve skills by strengthening staff competencies

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  Explanation

  According to the IIA Standards, the CAE must ensure that the internal audit activity is appropriately staffed with competent individuals to achieve the approved audit plan. While risk-based planning and collaboration with risk functions support

  effectiveness, the most direct way to ensure resources are adequate is by developing and maintaining the competencies of internal audit staff through training, recruitment, and professional development.

  Mapping the audit risk assessment (Option B), collaboration with risk functions (Option C), or refining processes (Option D) may strengthen planning and alignment, but they do not directly address the resource requirement. Only enhancing

  and ensuring competencies ensures the internal audit activity has the skills necessary to execute the plan.

  IIA Standards - Standard 2030: Resource Management.

• Question 1032:

  Which of the following IT disaster recovery plans includes a remote site designated for recovery with available space for basic services, such as internet and telecommunications, but does not have servers or infrastructure equipment?

  A. Frozen site.
  B. Cold site.
  C. Warm site.
  D. Hot site.
  B. Cold site.

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  Explanation

• Question 1033:

  Which of the following is a cybersecurity monitoring activity intended to deter disruptive codes from being installed on an organization's systems?

  A. Boundary defense.
  B. Malware defense.
  C. Penetration tests.
  D. Wireless access controls.
  A. Boundary defense.

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  Explanation

• Question 1034:

  Which of the following professional organizations sets standards for quality and environmental audits?

  A. The Committee of Sponsoring Organizations of the Treadway Commission.
  B. The Board of Environmental, Health, and Safety Auditor Certifications.
  C. The International Organization of Supreme Audit Institutions.
  D. The International Standards Organization.
  D. The International Standards Organization.

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  Explanation

• Question 1035:

  Which of the following can be classified as debt investments?

  A. Investments in the capital stock of a corporation.
  B. Acquisition of government bonds.
  C. Contents of an investment portfolio.
  D. Acquisition of common of a stock corporation.
  B. Acquisition of government bonds.

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  Explanation

• Question 1036:

  A fragmented industry is most likely to:

  A. Have substantial economies of scale.
  B. Have low transportation costs.
  C. Be characterized by suppliers with little bargaining power.
  D. Approximate pure competition.
  D. Approximate pure competition.

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  Explanation

  According to Michael E. Porter, individual firms in a fragmented industry have insignificant market shares and little influence on industry outcomes. Examples are retailing, agriculture, and creative enterprises. Thus, the situation approximates what economists call pure competition. Moreover, the industry has many small- or medium-sized firms with no market leader, products may or may not be significantly differentiated, and the technology may or may not be sophisticated.

• Question 1037:

  Which of the following motivation theories is based on Japanese management practices?

  A. Theory X.
  B. Theory Y.
  C. Theory Z.
  D. Herzberg's Two-Factor Theory.
  C. Theory Z.

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  Explanation

  Ouchi's Theory Z is based on the Japanese practice of providing long-term employment to workers. This creates job loyalty with a goal of achieving a long-range orientation among workers.

• Question 1038:

  During a payroll audit, the internal auditor is assessing the security of the local area network of the payroll department computers. Which of the following IT controls should the auditor test?

  A. IT application-based controls
  B. IT systems development controls
  C. Environmental controls
  D. IT governance controls
  A. IT application-based controls

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  Explanation

  IIA Business Knowledge for Internal Auditing, IT Application Controls section.

• Question 1039:

  A firm has a strategic business unit (SBU) that has a low market share in a high growth market. To maintain even this low share of the market requires the firm to commit a significant amount of cash. The firm might successfully adopt a build strategy for this unit if the:

  A. SBU shows a strong potential to grow and obtains a significant share of the market. II. Firm can finance its growth. III. Firm expects a short-term increase in cash flow. IV. Firm is willing to forgo short-term earnings.
  B. I only.
  C. II and Ill only.
  D. Ill and IV only.
  E. I, II, and IV only.
  D. Ill and IV only.

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  Explanation

  One of the two portfolio models most frequently used for competitive analysis was created by the Boston Consulting Group (BCG). This model, the growth-share matrix, has two variables. The market growth rate (MGR) is on the vertical axis, and the firm's relative market share (RMS) is on the horizontal axis. The growth-share matrix has four quadrants. The firm's SBUs are commonly represented in their appropriate quadrants by circles. The size of a circle is directly proportional to the SBU's sales volume. Question marks (low RMS, high MGR) are weak competitors in high-growth markets. They need large amounts of cash not only to finance growth and keep pace with the market but also to increase RMS, but do poorly in cash generation. If RMS increases significantly, a question mark may become a star. If not, it becomes a dog. A build strategy is necessary for a question mark with the potential to be a star. Consequently, a firm may adopt a build strategy for this type of SBU if it shows a strong potential to grow, if the firm is willing to forgo short- term earnings and cash flow, and if the firm is willing and has the capacity to finance its growth. However, a firm that expects only a short-term increase in cash flow may adopt either a divest or a harvest strategy but not a build strategy. This type of SBU needs a lot of cash flow to finance its growth.

• Question 1040:

  Several organizations have developed a strategy to open co-owned shopping malls. What would be the primary purpose of this strategy?

  A. To exploit core competence.
  B. To increase market synergy.
  C. To deliver enhanced value.
  D. To reduce costs.
  B. To increase market synergy.

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  Explanation

  When multiple organizations co-own shopping malls, their primary strategy is to increase market synergy, meaning they combine resources and expertise to enhance market presence, attract more customers, and improve competitive positioning.

  (A)

  To exploit core competence.

  Incorrect: Core competencies refer to unique internal capabilities , whereas co-owning shopping malls is a collaborative market strategy .

  (B)

  To increase market synergy. (Correct Answer)

  Market synergy occurs when businesses collaborate to create greater market impact than they could individually.

  Shared ownership enhances customer traffic, brand reach, and business opportunities.

  IIA Standard 2110 - Governance highlights the importance of strategic partnerships in achieving synergy.

  (C)

  To deliver enhanced value.

  Incorrect: While value is a benefit, the main goal of co-ownership is strategic market advantage and synergy .

  (D)

  To reduce costs.

  Incorrect: Cost reduction may be a secondary benefit, but the primary goal is market synergy through shared resources and customer base expansion .

  IIA Standard 2110 - Governance: Encourages strategic collaborations for business growth.

  COSO ERM - Strategy and Objective-Setting: Highlights market synergy as a key factor in strategic partnerships.

  Analysis of Each Option:IIA References Supporting the Answer:Thus, the correct answer is (B) because co- ownership of shopping malls primarily aims to increase market synergy, allowing organizations to leverage shared resources and

  customer networks for greater market impact .