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

IIA IIA-CIA-PART3 Online Questions & Answers

• Question 1041:

  Structural considerations affecting the threat of substitutes include all of the following except:

  A. Relative prices.
  B. Brand identity.
  C. Cost of switching to substitutes.
  D. Customers' inclination to use a substitute.
  B. Brand identity.

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  Explanation

  Substitutes are types of goods and services that serve the same purpose. All products that can replace a good or service should be considered substitutes. For example, bicycles and cars are substitutes for public transportation. Structural considerations determine the effect substitutes have on one another. However, because substitutes are types (not brands) of goods and services that have the same purposes, brand identity is not a structural consideration affecting the threat of substitutes.

• Question 1042:

  The punishing of employees is made less effective by

  A. Stating the offending behavior specifically.
  B. Postponing the start of disciplinary procedures.
  C. Permitting employees to challenge individual culpability.
  D. Focusing the discussion on the offending behavior instead of the offender.
  B. Postponing the start of disciplinary procedures.

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  Explanation

  The most effective discipline requires immediate corrective action to eliminate the negative effects of the undesirable employee conduct and to establish and reinforce appropriate behavior. Delay merely invites more serious consequences. Moreover, the punishment should becommensurate with the offense, and the employee should clearly perceive the relationship between the punishment and the behavior.

• Question 1043:

  The comparable uncontrolled price (CUP) method may be used when setting transfer prices in an organization. What is a common limitation of the CUP method?

  A. It may be difficult to find a transaction between independent companies that is similar enough to a controlled transaction
  B. The CUP method is likely to lead to management decisions that are not optimal for the company
  C. This approach to setting transfer prices is not flexible, as the CUP method does not allow for adjustments
  D. It offers only an indirect way of ascertaining an arm's-length price of a controlled transaction
  B. The CUP method is likely to lead to management decisions that are not optimal for the company

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  Explanation

• Question 1044:

  IT governance begins with which of the following activities?

  A. Identification of risk-mitigating options.
  B. Definition of IT objectives.
  C. Identification of IT risk events.
  D. Definition of risk response policies.
  B. Definition of IT objectives.

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  Explanation

  Comprehensive and Detailed In-Depth Explanation:

  IT Governance ensures that IT strategies align with business objectives. The first step in IT governance is to define IT objectives, which guide all subsequent activities.

  Option A (Identifying risk-mitigating options) is part of risk management but comes after setting objectives.

  Option C (Identifying IT risk events) happens during risk assessment, not governance initiation.

  Option D (Defining risk response policies) is a later stage in governance planning.

  Since governance starts with setting clear IT objectives, B is the correct answer.

  IIA IT Governance Framework - COBIT Principles

• Question 1045:

  The percentage of sales method, rather than the percentage of receivables method, would be used to estimate uncollectible accounts if an organization seeks to:

  A. Use an aging schedule to more closely estimate uncollectible accounts.
  B. Eliminate the need for an allowance for doubtful accounts.
  C. Emphasize the accuracy of the net realizable value of the receivables on the balance sheet.
  D. Use a method that approximates the matching principle.
  D. Use a method that approximates the matching principle.

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  Explanation

• Question 1046:

  Which of the following is not an advantage of group decision making as compared to individual decision making?

  A. Groups obtain an increased degree of acceptance of a solution so that it may be more easily implemented.
  B. Group decision making is consistent with democratic methods.
  C. Group members bring more complete information and knowledge into the decision process.
  D. Group members avoid expressing opinions that deviate from what appears to be the group consensus.
  D. Group members avoid expressing opinions that deviate from what appears to be the group consensus.

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  Explanation

  The groupthink phenomenon is undesirable. Groupthink occurs when group members accept what appears to be the group consensus rather than giving their honest input. The result maybe decisions with which some members of the group are not happy.

• Question 1047:

  An internal auditor is assessing the risks related to an organization's mobile device policy. She notes that the organization allows third parties (vendors and visitors) to use outside smart devices to access its proprietary networks and systems. Which of the following types of smart device risks should the internal auditor be most concerned about?

  A. Compliance.
  B. Privacy.
  C. Strategic.
  D. Physical security.
  A. Compliance.

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  Explanation

• Question 1048:

  Which of the following risks would involve individuals attacking an oil company's IT system as a sign of solidarity against drilling in a local area?

  A. Tampering.
  B. Hacking.
  C. Phishing.
  D. Piracy.
  B. Hacking.

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  Explanation

• Question 1049:

  Strategic control measurements that relate to external effectiveness concern customer satisfaction at the:

  A. Departmental level.
  B. Business-operating-system level.
  C. Business-unit level.
  D. Work-center level.
  B. Business-operating-system level.

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  Explanation

  Strategic controls should be established to monitor progress, isolate problems, identify invalid assumptions, and take prompt corrective action. As plans are executed at each organizational level, control measurements are made to determine whether objectives have been achieved. Thus, objectives flow down the organizational hierarchy, and control measures flow up. One category of strategic control measures relates to external effectiveness. At the business- operating-system level, these measures concern satisfaction and flexibility.

• Question 1050:

  Which of the following communication characteristics is achieved when the internal audit function avoids redundancies and excludes information that is unnecessary, insignificant, or unrelated to the engagement?

  A. Constructive communications
  B. Complete communications
  C. Concise communications
  D. Clear communications
  C. Concise communications

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  Explanation

  The IIA defines conciseness in audit communications as avoiding redundancy and excluding unnecessary or irrelevant details. This ensures reports remain focused, easy to read, and useful to stakeholders.

  Option A (constructive) means helping to add value and improve operations. Option B (complete) refers to covering all essential issues. Option D (clear) refers to understandable language. The correct characteristic here is concise (Option C).

  IIA Standards - Standard 2420: Quality of Communications.