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

IIA IIA-CIA-PART3 Online Questions & Answers

• Question 1111:

  Which of the following best describes a potential benefit of using data analytics?

  A. It easily aligns with existing internal audit competencies to reduce expenses.
  B. It provides a more holistic view of the audited area.
  C. Its outcomes can be easily interpreted into audit conclusions.
  D. Its application increases internal auditors' adherence to the Standards.
  B. It provides a more holistic view of the audited area.

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  Explanation

• Question 1112:

  Which of the following describes a third-party network that connects an organization specifically with its trading partners?

  A. Value-added network (VAN).
  B. Local area network (LAN).
  C. Metropolitan area network (MAN).
  D. Wide area network (WAN).
  D. Wide area network (WAN).

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  Explanation

• Question 1113:

  An emerging industry is new or newly formed and is small in size initially. An emerging industry results from innovation, changes in cost structures, new customer needs, or another factor that creates an attractive opportunity for selling a product or service. Which of the following is a structural characteristic of an emerging industry?

  A. A long time horizon for product development.
  B. Low initial costs and a shallow learning curve.
  C. Mobility barriers include economies of scale and brand identification.
  D. The presence of embryonic companies and spinoffs.
  D. The presence of embryonic companies and spinoffs.

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  Explanation

  Embryonic companies (firms newly formed and not new units of established entities) are numerous in the emerging phase of industry evolution. Entry is not discouraged by the presence of economies of scale or strategic certainty. Spin-offs from existing firms also are common. Given the strategic uncertainties and the lure of equity interests, employees of these firms may have the incentive, and be well-placed, to create new firms. Their motive is to exploit ideas that may not have received a favorable reception by their former employers.

• Question 1114:

  The chief audit executive hired a consultant to update the internal audit function's methodologies. Which of the following would best ensure that the internal audit function will adhere to the updated methodologies?

  A. Placing the updated methodologies in an easily accessible location for reference
  B. Requiring a signed acknowledgment that each auditor will comply with the updated methodologies
  C. Preparing a recorded training that reviews the updated methodologies
  D. Sharing a one-page summary of the updated methodologies during an internal audit function meeting
  C. Preparing a recorded training that reviews the updated methodologies

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  Explanation

  The most effective way to ensure adherence to updated methodologies is through training that reviews and explains the changes in detail. A recorded training session allows all auditors to learn consistently and revisit the content as needed.

  Option A improves accessibility but does not ensure understanding or compliance. Option B documents acknowledgment but does not ensure comprehension. Option D provides awareness but lacks sufficient depth.

  IIA Practice Guide - Developing Internal Audit Methodologies.

• Question 1115:

  Which of the following tactics may employees use when feeling that employees' individual power is insignificant?

  A. Employees may engage in posturing by taking credit for the work of a coworker.
  B. Employees may engage in destructive competition by spreading false rumors.
  C. Employees may engage in creating power and loyalty cliques with other coworkers.
  D. Employees may attempt to conceal errors made by a supervisor in order to aid theemployees' own future advancement within the corporation.
  C. Employees may engage in creating power and loyalty cliques with other coworkers.

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  Explanation

  Employees will often form groups when they feel their collective bargaining power is greater than the power of an individual.

• Question 1116:

  Which of the following is the first step an internal audit activity should undertake when executing a data analytics process?

  A. Conduct a risk assessment regarding the effectiveness of the data analytics process.
  B. Analyze possible and available sources of raw data
  C. Define the purpose and the anticipated value
  D. Select data for cleaning and normalization procedures.
  B. Analyze possible and available sources of raw data

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  Explanation

• Question 1117:

  A company that formerly paid certain management employees on a salary plus commission basis decided to compensate a test group solely with commissions. Performance of these employees declined. The most likely explanation for this result is that:

  A. The employee received special attention.
  B. Compensation was a motivational factor.
  C. Compensation was not a hygiene factor.
  D. Increased concerns about security made the employees risk averse.
  D. Increased concerns about security made the employees risk averse.

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  Explanation

  A straight salary with commissions rewarded increased efforts while providing greater security and a reduction in anxiety. Satisfaction of the need for security may have permitted the employees to adopt promising and profitable but more risky strategies. Because people concerned about security needs tend to be risk averse, the change in compensation method probably caused the performance decline.

• Question 1118:

  If the price elasticity of demand for a normal good is estimated to be 2. 5, a 5% reduction in its price causes:

  A. Total revenue to fall by 5%.
  B. Total revenue to fall by 12. 5%.
  C. Quantity demanded to rise by 12. 5%.
  D. Quantity demanded to decrease by 5%.
  C. Quantity demanded to rise by 12. 5%.

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  Explanation

  Price elasticity is the percentage change in quantity demanded divided by the percentage change in price. An elasticity of 2. 5 means that the change in demand will increase by 250% of any change in price measured in absolute terms (the

  minus sign is ignored). Hence, a 5% price reduction increases demand by 12. 5% (2. 5 5%).

• Question 1119:

  The retail petroleum industry consists of a few large firms that sell a standardized product.Which of the following best describes this industry?

  A. Monopoly.
  B. Oligopoly.
  C. Monopolistic competition.
  D. Pure competition.
  B. Oligopoly.

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  Explanation

  An oligopoly consists of a few large firms. If products are standardized, competition may be based solely on price. If products are partially differentiated, each firm may attempt to lead the industry regarding a given attribute, e.g., price, quality, service, or features. The retail petroleum industry is dominated by a small number of firms that control a vast majority of the market. Furthermore, it is an example of an industry that sells a standardized product, with competition based primarily on price.

• Question 1120:

  A manager resolves a conflict between two employees by recommending that concessions to be made by both employees. The two employees agree to the concessions and the conflict is resolved. Both employees gain and lose. Which of the following describes the way the manager addressed the conflict?

  A. Forcing.
  B. Smoothing.
  C. Compromise.
  D. Problem solving.
  C. Compromise.

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  Explanation

  Compromise entails negotiation by the parties in conflict. The conflict is resolved through aprocess by which each side makes concessions. Thus, the parties both gain and lose. Because both employees made concessions, the conflict was resolved through compromise.