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

IIA IIA-CIA-PART3 Online Questions & Answers

• Question 1101:

  Which would provide the board with the highest level of assurance regarding whether an internal audit function can achieve its objectives?

  A. Percentage of completed audit engagements
  B. Key stakeholder satisfaction surveys
  C. External quality assurance feedback
  D. Audit personnel commitment and turnover rates
  C. External quality assurance feedback

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  Explanation

  The IIA requires internal audit functions to have an external quality assessment at least once every five years. External quality assurance feedback provides the most independent, objective, and reliable assurance to the board regarding

  whether the internal audit function conforms with standards and is positioned to achieve its objectives.

  Option A measures productivity but not quality. Option B provides useful insights but is subjective. Option D indicates staffing health but does not directly assess ability to meet objectives.

  IIA Standards - Standard 1312: External Assessments.

• Question 1102:

  Following a decision to change the composition of several work teams, management encounters significant resistance to the change from members of the teams. The most likely reason for the resistance is:

  A. Possible inefficiencies of the new arrangement.
  B. The breakup of existing teams.
  C. Understaffing for the tasks involved.
  D. The selection of a more costly approach to performing the assigned tasks.
  B. The breakup of existing teams.

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  Explanation

  Commitment to a group depends on its attractiveness and cohesiveness. Attractiveness is a favorable view from the outside. Cohesiveness is the tendency of members to adhere to the group and unite against outside pressures. Group attractiveness and cohesiveness are fostered by its prestige and status, cooperation among the members, substantial member interaction, small size of the group, similarity of members, good public image, and common external threat. Thus, members of cohesive work groups often exert pressure to resist changes that threaten to break up the group.

• Question 1103:

  The email received by the executive committee was faulty. In terms of the links in the communications process, the error occurred because of:

  A. Noise in the communication chain.
  B. The sender's perception.
  C. Message encoding.
  D. The choice of transmission medium.
  C. Message encoding.

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  Explanation

  Encoding is the sender's packaging of an idea for better understanding. It entails translating the message into symbols that can be transmitted through the chosen medium of communication and then decoded by the recipient. In this example, the sender's wording of the message was misleading. A multinational firm was attempting to buy a controlling interest in a medium size US $10 million annual sales) foreign metal-working firm. The multinational firm's negotiator in the foreign country sent the following email:The foreign firm won't deal unless 51% ownership." The executive committee of the multinational firm, not wanting a minority interest, then canceled the deal. Upon returning to the multinational firm, the negotiator pointed out that the foreign firm wanted to sell no more than 51% ownership i n order to retain at least 49%. Thus, the deal could have been made.

• Question 1104:

  What strategy seeks to gain a larger share of a current market for a current product?

  A. Market penetration.
  B. Market development.
  C. Product development.
  D. Diversification.
  A. Market penetration.

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  Explanation

  Market penetration is the percentage of potential users of a product in a current market who buy the product. A firm's market penetration strategy may be to (1) convince its current customers toincrease their usage frequency, (2) convince other firms' customers to switch, or (3) convert nonusers in the target market.

• Question 1105:

  Which of the following describes a mechanistic organizational structure?

  A. Primary direction of communication tends to be lateral
  B. Definition of assigned tasks tends to be broad and general
  C. Type of knowledge required tends to be broad and professional
  D. Reliance on self-control tends to be low
  D. Reliance on self-control tends to be low

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  Explanation

• Question 1106:

  The head of the research and development department at a manufacturing organization believes that his team lacks expertise in some areas, and he decides to hire more experienced researchers to assist in the development of a new product. Which of the following variances are likely to occur as the result of this decision?

  1. Favorable labor efficiency variance.

  2. Adverse labor rate variance.

  3. Adverse labor efficiency variance.

  4. Favorable labor rate variance.

  A. 1 and 2.
  B. 1 and 4.
  C. 3 and 4.
  D. 2 and 3.
  A. 1 and 2.

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  Explanation

• Question 1107:

  A financial institution receives frequent and varied email requests from customers for funds to be wired out of their accounts. Which veri cation activity would best help the institution avoid falling victim to phishing?

  A. Reviewing the customer's wire activity to determine whether the request is typical.
  B. Calling the customer at the phone number on record to validate the request.
  C. Replying to the customer via email to validate the sender and request.
  D. Reviewing the customer record to verify whether the customer has authorized wire requests from that email address.
  D. Reviewing the customer record to verify whether the customer has authorized wire requests from that email address.

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  Explanation

• Question 1108:

  When compared to individuals, groups have advantages and disadvantages for decision making. Which of the following is true regarding group decisions? Advantages Disadvantages:

  A. Increased personalDisagreements do not accountability surface because of pressures to conform
  B. Increased Takes more time to acceptance ofarriveat a decision by participants
  C. Takes less time to Lack of personal arrive at adecisionalaccountability
  D. Increased diversity Reduced acceptance ofexpertise decisionby participants
  B. Increased Takes more time to acceptance ofarriveat a decision by participants

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  Explanation

  Group decision making and problem solving has the following advantages:1) The group has greater knowledge and experience than an individual:2) the group provides multipleperspectives:3) members participating in a group process tend to have a better understanding of the reasons for different actions:4) those actively participating in the group process tend to accept, and have ownership of, the result:and 5) group involvement provides training for the less experienced members. The following are the disadvantages:1) The social pressure to conform may inhibit creativity:) the group may be dominated by a few aggressive members:3) the decision or solution may be a product of logrolling political dealing):4) the goal of reaching a good decision or solution may be displaced by a secondary concern, e.g., competing with a rival:and 5) the process may suffer from groupthink, or preference for unanimity over the quality of the decision or solution.

• Question 1109:

  A technological factor that may lead to overbuilding in an industry is:

  A. The need to add capacity in large increments.
  B. The lack of a credible market leader.
  C. Changes in industry structure.
  D. Inflated future expectations.
  A. The need to add capacity in large increments.

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  Explanation

  The need to add capacity in large increments is a technological factor that may lead to overbuilding. The following are other such factors:

  (1)

  the presence of economies of scale or a steep learning curve encourages preemption:

  (2)

  long lead times for adding capacity increase the risk of competitive inferiority if a firm does not act quickly to begin raising its capacity; (3) when the minimum efficient scale increases, large plants are becoming more efficient even though demand is not growing; and

  (4)

  changes in production technology result in new construction while old plants remain in operation, particularly when exit barriers are high.

• Question 1110:

  An analytical model determined that on Friday and Saturday nights the luxury brand stores should be open for extended hours and with a doubled number of employees present, while on Mondays and Tuesdays costs can be minimized by reducing the number of employees to a minimum and opening only for evening hours. Which of the following best categorizes the analytical model applied?

  A. Descriptive.
  B. Diagnostic.
  C. Prescriptive.
  D. Prolific.
  C. Prescriptive.

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  Explanation