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

IIA IIA-CIA-PART3 Online Questions & Answers

• Question 1061:

  Which of the following sites would an Internet service provider most likely use to restore operations after its servers were damaged by a natural disaster?

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

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  Explanation

  A hot site is a fully operational, ready-to-use backup site that allows an organization to quickly resume business operations after a disaster. For an Internet Service Provider (ISP) , maintaining continuous operations is critical, and a hot site ensures minimal downtime by providing pre-configured hardware, software, and network connectivity.

  A. On-site - Keeping backups and disaster recovery infrastructure on-site is risky because it can be affected by the same disaster that damaged the primary servers.

  B. Cold site- A cold site is a backup location that has infrastructure but lacks pre-installed systems and configurations. It takes significant time to become operational, making it unsuitable for an ISP needing quick recovery.

  C. Hot site (Correct Answer) - A hot site is fully operational , with replicated data, applications, and network configurations that allow an ISP to quickly switch operations, minimizing service disruption.

  D. Warm site - A warm site is partially equipped with some hardware and software but requires configuration before becoming operational. This delays recovery compared to a hot site .

  IIA GTAG (Global Technology Audit Guide) 10 - Business Continuity Management emphasizes the importance of hot sites for organizations requiring real-time service restoration . IIA IPPF Standard 2120 - Risk Management advises

  organizations to assess disaster recovery plans and ensure continuity strategies align with business needs.

  COBIT 2019 - DSS04 (Managed Continuity) discusses different recovery site types and their impact on business continuity.

• Question 1062:

  The internal audit activity has identified accounting errors that resulted in the organization overstating its net income for the fiscal year. Which of the following is the most likely cause of this overstatement?

  A. Beginning inventory was overstated for the year.
  B. Cost of goods sold was understated for the year.
  C. Ending inventory was understated for the year.
  D. Cost of goods sold was overstated for the year.
  B. Cost of goods sold was understated for the year.

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  Explanation

  Understanding Net Income Overstatement:

  Net Income (NI) = Revenue - Expenses

  If net income is overstated , then expenses must be understated or revenue must be overstated .

  Cost of Goods Sold (COGS) is an expense that directly affects net income.

  Why Understated COGS Causes Overstated Net Income:

  COGS = Beginning Inventory + Purchases - Ending Inventory

  If COGS is understated, expenses are lower than they should be, resulting in a higher net income .

  Why Other Options Are Incorrect:

  Option A: Beginning inventory overstated: This would increase COGS (not decrease it), leading to a lower net income.

  Option C: Ending inventory understated: This would increase COGS, reducing net income.

  Option D: COGS overstated: This would result in a lower net income, not an overstatement.

  IIA Standards and References:

  IIA Standard 2120 - Risk Management: Internal auditors must assess financial misstatements and risks.

  IIA Practice Guide: Auditing Financial Statement Close Processes (2018): Emphasizes accuracy in inventory and expense reporting.

  COSO Internal Control - Integrated Framework: Supports accuracy in financial reporting and controls over misstated financial data.

  Thus, the correct answer is B: Cost of goods sold was understated for the year.

• Question 1063:

  Which of the following types of accounts must be closed at the end of the period?

  A. Income statement accounts
  B. Balance sheet accounts
  C. Permanent accounts
  D. Real accounts
  A. Income statement accounts

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  Explanation

• Question 1064:

  A starting point for developing competitive strategies is customer value analysis (CVA). According to theCVA approach.

  A. Customer value equals customer benefits.
  B. Bad competitors rather than good competitors should be targeted.
  C. Strong competitors should be avoided even when they have exploitable weaknesses.
  D. Distant competitors are the usual threats.
  B. Bad competitors rather than good competitors should be targeted.

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  Explanation

  Bad competitors should be targeted rather than good competitors. The former disturb the competitive equilibrium, e.g., by excessive expansion of capacity or overly risky behavior. The latter make sound business decisions that promote the long-term health of the industry, e.g., about prices, entry into newsegments, and pursuit of market share.

• Question 1065:

  Nonverbal communication is a powerful but little-understood form of communication in organizations. All of the following represent forms of nonverbal communication except:

  A. The tone of voice a person selects.
  B. The positioning of furniture in a person's office.
  C. Prolonged eye contact.
  D. A facsimile message from a business associate.
  D. A facsimile message from a business associate.

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  Explanation

  Nonverbal communication consists of the nuances that accompany a verbal communication. For instance, the tone of a speaker's voice may communicate something totally different from the words being spoken. Similarly, body language facial expressions, gestures,posture, and appearance) is a nonverbal communicator. Even the positioning or nature of furniture in an office may communicate something to a listener. A fax message, however is a verbal communication to the extent that it contains words.

• Question 1066:

  A true market signal:

  A. Is a direct market communication indicating intent.
  B. May involve a threat not intended to be carried out.
  C. May be an attempt to minimize a future provocative move.
  D. Announces a move that will occur.
  C. May be an attempt to minimize a future provocative move.

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  Explanation

  Prior announcements of moves may minimize the provocation caused by a future strategic adjustment, e.g., a price cut. Such a move may be a genuine attempt to realign prices with changes in costs, not an aggressive grab for market share. However, the move may also be an attempt to mislead.

• Question 1067:

  During which stage of group development does a group exhibit a consolidation of power and reach an agreement among members about authority, structure, and procedures?

  A. Conflict and challenge stage.
  B. Disillusion stage.
  C. Acceptance stage.
  D. Cohesion stage.
  D. Cohesion stage.

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  Explanation

  The consolidation of power shifts begun during the conflict and challenge stages occurs during the cohesion stage. Members often reach an agreement on authority, structure, and procedures.

• Question 1068:

  How can the concept of relevant cost help management with behavioral analysis?

  A. It explains the assumption that both costs and revenues are linear through the relevant range.
  B. It enables management to calculate a minimum number of units to produce and sell without having to incur a loss.
  C. It enables management to predict how costs such as the depreciation of equipment will be affected by a change in business decisions.
  D. It enables management to make business decisions, as it explains the cost that will be incurred for a given course of action.
  D. It enables management to make business decisions, as it explains the cost that will be incurred for a given course of action.

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  Explanation

• Question 1069:

  Which of the following factors is critical for the success of participative management?

  A. Trust.
  B. Control.
  C. Information.
  D. Influence.
  A. Trust.

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  Explanation

  Trust is the key factor in any participative management approach. Management should take action to build trust as soon as groups are formed. If there is a lack of trust, then success is unlikely because both the team and management will act in their own self- interest and not the interest of the organization.

• Question 1070:

  An organization that sells products to a foreign subsidiary wants to charge a price that will decrease import tariffs. Which of the following is the best course of action for the organization?

  A. Decrease the transfer price.
  B. Increase the transfer price.
  C. Charge at the arm's length price.
  D. Charge at the optimal transfer price.
  C. Charge at the arm's length price.

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  Explanation