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

IIA IIA-CIA-PART3 Online Questions & Answers

• Question 1311:

  Which one of the following statements about the nature of communication is true?

  A. Communication occurs only when people deliberately and consciously decide to communicate.
  B. Accounting terms such as expense, revenue, net income, and variance mean the same to all users.
  C. Because managerial accounting reports classify and summarize vast amounts of data, the reports do not add to the information overload within an organization.
  D. Communication between departments is affected by the level of functional specialization within departments.
  D. Communication between departments is affected by the level of functional specialization within departments.

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  Explanation

  Communication between departments is sometimes affected by the level of functional specialization within those departments. Noise of any sort can inhibit communication, and that noise can be physical or nonphysical. An example of nonphysical noise is the difference in expertise between the sender and the recipient. A sender must establish a climate that encourages the elimination of interpersonal barriers to communication.

• Question 1312:

  Which of the following facilitates data extraction from an application?

  A. Application program code.
  B. Database system.
  C. Operating system.
  D. Networks.
  B. Database system.

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  Explanation

• Question 1313:

  Which of the following statements is true regarding leadership styles?

  A. The manager dictates all decisions to the employees, so communication is downward and tasks are clearly defined in authoritarian leadership.
  B. Employees in a group are given the authority and responsibility to make individual decisions in democratic leadership.
  C. The leader delegates substantial authority and employees participate in defining and assigning tasks in laissez-faire leadership.
  D. None of the answers are correct.
  A. The manager dictates all decisions to the employees, so communication is downward and tasks are clearly defined in authoritarian leadership.

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  Explanation

  When a manager uses an authoritarian leadership style, he or she dictates all decisions to the employees, so communication is downward. Moreover, tasks are clearly defined. This is considered the classical approach to leadership. Employees are not allowed to give input.

• Question 1314:

  Which type of bond sells at a discount from face value, then increases in value annually until it reaches maturity and provides the owner with the total payoff?

  A. High-yield bonds.
  B. Commodity-backed bonds.
  C. Zero coupon bonds.
  D. Junk bonds.
  C. Zero coupon bonds.

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  Explanation

  https://www.investopedia.com/terms/z/zero-couponbond.asp

• Question 1315:

  Which of the following is true regarding reporting on the quality assurance and improvement program (QAIP)?

  A. The results of ongoing monitoring must be communicated annually to the board and other appropriate stakeholders
  B. The results of any periodic self-assessment and level of conformance with the Global Internal Audit Standards must be reported to the board before completion
  C. The results of any external assessments and level of conformance with the Standards must be reported to the board before completion
  D. The QAIP and the resulting action plan must be made available to external assessors
  A. The results of ongoing monitoring must be communicated annually to the board and other appropriate stakeholders

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  Explanation

  The CAE must communicate the results of the QAIP, including both ongoing monitoring and periodic assessments, to the board and senior management. Specifically, results of ongoing monitoring must be reported annually, ensuring the

  board remains informed about the internal audit activity's quality and conformance.

  Options B and C are incorrect because results are reported after completion, not before. Option D is useful for external assessors but not a reporting requirement.

  IIA Standards - Standard 1320: Reporting on the Quality Assurance and Improvement Program.

• Question 1316:

  Which of the following statements is true regarding the capital budgeting procedure known as discounted payback period?

  A. It calculates the overall value of a project.
  B. It ignores the time value of money.
  C. It calculates the time a project takes to break even.
  D. It begins at time zero for the project.
  C. It calculates the time a project takes to break even.

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  Explanation

  https://www.investopedia.com/terms/d/discounted-payback-period.asp#:~:text=The%20discounted%20payback%20period%20is,the%20time%20value%20of%20money

• Question 1317:

  In an analysis of alternative credit-management policies, which of the following components will cause the net present value of receivables on credit sales to increase, if everything else remains constant?

  A. A tougher collections policy that reduces the bad debt loss ratio.
  B. A higher cost per unit sold.
  C. A longer average collection period.
  D. An increase in the cost of capital.
  A. A tougher collections policy that reduces the bad debt loss ratio.

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  Explanation

• Question 1318:

  Which of the following purchasing scenarios would gain the greatest benefit from implementing electronic data interchange?

  A. A time-sensitive just-in-time purchase environment.
  B. A large volume of custom purchases.
  C. A variable volume sensitive to material cost.
  D. A currently inefficient purchasing process.
  A. A time-sensitive just-in-time purchase environment.

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  Explanation

• Question 1319:

  According to IIA guidance on IT, which of the following controls the routing of data packets to link computers?

  A. Operating system.
  B. Control environment.
  C. Network.
  D. Application program code.
  C. Network.

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  Explanation

• Question 1320:

  After auditing the treasury function, the internal audit team issued a final report, which included an action plan agreed with management. When the audit team returned three months later to follow up on the action plan, management indicated that the plan had not been implemented because the old treasury system was being replaced with a new system.

  Which of the following is the most appropriate audit response?

  A. The internal audit team should propose a new, relevant action plan that takes into account the new treasury system
  B. The internal audit team should disregard the original action plan and follow up next year, after management determines whether the new system poses any new risks
  C. The internal audit team should report this issue to the chief audit executive, who should communicate management's noncompliance directly to the board
  D. The internal audit team should report this issue to the chief audit executive, who should discuss the issue with senior management
  D. The internal audit team should report this issue to the chief audit executive, who should discuss the issue with senior management

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  Explanation

  When management has not implemented agreed action plans, the internal audit team must escalate the matter to the CAE. The CAE is responsible for discussing such cases with senior management to understand the reasons and determine

  next steps.

  Option A is inappropriate because it is management's responsibility--not internal audit's--to propose action plans. Option B disregards the initial high-risk issue. Option C (escalation to the board) is premature unless senior management fails to

  act.

  Thus, the correct response is Option D: report to the CAE, who should discuss with senior management.

  IIA Standards - Standard 2500: Monitoring Progress; Standard 2600: Communicating the Acceptance of Risks.