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

IIA IIA-CIA-PART3 Online Questions & Answers

• Question 271:

  According to Michael E Porter, evolutionary processes involving both internal and external factors operate to move an industry from its initial structure to its potential structure. A likely structural effect of the major evolutionary processes is that:

  A. Expansion of industry scale will discourage entry by large firms.
  B. Sellers' industries tend to become less concentrated as customers' industries become more concentrated.
  C. Learning by buyers who become more sophisticated increases product differentiation.
  D. Diffusion of proprietary knowledge will tend to reduce entry barriers.
  D. Diffusion of proprietary knowledge will tend to reduce entry barriers.

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  Explanation

  Diffusion of proprietary knowledge may result from reverse engineering (a form of imitation) or another form of competitive intelligence (e.g., that obtained from suppliers, distributors, or customers), expiration of patents, purchase, migration of personnel to new firms, and spinoffs of operating segments. Thus, because barriers created by proprietary knowledge and specialized personnel tend to disappear, new competitors may emerge, and vertical integration becomes more likely. However, if further technological advances are feasible, economies of scale in RandD may create a protective barrier against new competition. The problem of diffusion may be met by creation of a substantial capacity to develop new proprietary knowledge.

• Question 272:

  According to IIA guidance on IT auditing, which of the following would not be an area examined by the internal audit activity?

  A. Access system security.
  B. Policy development.
  C. Change management.
  D. Operations processes.
  B. Policy development.

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  Explanation

• Question 273:

  Firms that sell products worldwide are most likely to have the lowest costs with a marketing mix that is

  A. Adapted to each market.
  B. Standardized for all markets.
  C. A combination of new and adapted products in each market.
  D. A combination of standardized products and adapted promotions.
  B. Standardized for all markets.

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  Explanation

  Firms that operate globally must choose a marketing program after considering the need for adaptation to local circumstances. The possibilities lie on a continuum from a purely standardized marketing mix to a purely adapted marketing mix. The former chooses to standardize products, promotion, and distribution. The latter adapts the elements of the mix to each local market. Worldwide standardization of all elements should be the lowest cost marketing strategy. However, even well established global brands ordinarily undergo some adaptation to local markets.

• Question 274:

  The greatest advantage of functional departmentalization is that it:

  A. Facilitates communication between primary functions.
  B. Helps to focus on the achievement of organizational goals.
  C. Provides for efficient use of specialized knowledge .
  D. Accommodates geographically dispersed companies
  C. Provides for efficient use of specialized knowledge .

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  Explanation

• Question 275:

  To achieve conformance with the Global Internal Audit Standards, the chief audit executive must include which of the following activities in the quality assurance and improvement program (QAIP)?

  A. Require board oversight of the QAIP
  B. Assess Standards conformance for each individual assurance engagement
  C. Conduct a self-assessment at least once every five years
  D. Report the results of the QAIP to the board
  D. Report the results of the QAIP to the board

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  Explanation

  The CAE must communicate the results of the QAIP to the board and senior management. This includes results from ongoing monitoring, periodic self-assessments, and external assessments.

  Option A (board oversight) is part of governance but not a QAIP requirement. Option B is incorrect because conformance is assessed for the activity overall, not per engagement. Option C is incorrect because self- assessments are ongoing,

  while external assessments are required at least once every five years.

  Thus, the essential QAIP requirement for conformance is reporting results to the board (Option D).

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

• Question 276:

  When reviewing application controls using the four-level model, which of the following processes are associated with level 4 of the business process method?

  A. Activity
  B. Subprocess
  C. Major process
  D. Mega process
  D. Mega process

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  Explanation

  The four-level model for reviewing application controls follows a hierarchy: Level 1 - Activity: Smallest unit of work within a process.

  Level 2 - Subprocess: A collection of related activities that accomplish a part of the process.

  Level 3 - Major Process: A significant business function consisting of multiple subprocesses.

  Level 4 - Mega Process: The highest level, representing an end-to-end business process, often spanning multiple departments or systems.

  Mega processes encompass entire business functions (e.g., order-to-cash or procure-to-pay cycles).

  They involve multiple major processes and provide a high-level perspective on business operations.

  At level 4 , the focus is on strategic alignment of IT application controls with enterprise-wide objectives.

  Option A: Activity - Too detailed and only represents individual tasks.

  Option B: Subprocess - A subset of a major process, not a high-level business function.

  Option C: Major Process - A significant function but not the highest-level view .

  IIA's GTAG on Business Process Controls - Recommends a hierarchical review model to assess IT application controls.

  COBIT 2019 (Governance and Management of IT) - Defines mega processes as enterprise-wide workflows.

  ISO 27001 Annex A.12 (Operational Security) - Highlights process-based security in IT controls.

  Why "Mega Process" is the Correct Answer - Why Not the Other Options?IIA References:# Final Answer: Option D:Mega process.

• Question 277:

  Which of the following issues is a concern that a database administrator may face when integrating an organization's applications that were once operated separately?

  A. The integrity of the data created by the applications may be compromised by the integration.
  B. The number of users with access to the applications may decrease as a result of the integration.
  C. The cost of maintaining the integration of the applications may increase at the start of the process.
  D. The implementation of more security protocols on the applications may slow down user productivity.
  A. The integrity of the data created by the applications may be compromised by the integration.

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  Explanation

• Question 278:

  A manager implementing the directive leader approach should:

  A. Closely supervise each employee.
  B. Display confidence in each employee's ability.
  C. Work with the employee when developing goals.
  D. Clearly signal that the employee is expected to be successful.
  A. Closely supervise each employee.

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  Explanation

• Question 279:

  Which of the following is true with regard to the contingency approach to solving problems within an organization?

  A. The organization's environment plays the largest role in finding situational determined answers.
  B. The organization may be less adaptive when the environment is more uncertain.
  C. The organization should search fora design format that can be used in all cases.
  D. The contingency approach focuses on a closed systems thinking.
  A. The organization's environment plays the largest role in finding situational determined answers.

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  Explanation

  The contingency approach arguesfor situationaldetermined answers, the key is finding the relevant factors in the organization's environment.

• Question 280:

  When auditing the account receivables for the first time, an internal auditor noted that the finance team had not--over many accounting periods--reviewed the accounts receivables for debts that could no longer be collected. How should the auditor proceed?

  A. Escalate the finding to the board, due to the significance of the risk
  B. Recommend that management review the receivables for debts that can no longer be collected and remove them from the cash flow statement
  C. Recommend that management review the receivables for debts that can no longer be collected and write them off
  D. Document the finding and conclude that no immediate action is warranted, as bad debt allowances are merely estimates
  C. Recommend that management review the receivables for debts that can no longer be collected and write them off

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  Explanation

  Best practice and accounting standards require that receivables unlikely to be collected be written off to avoid overstating assets. Internal audit should recommend that management review the receivables and write off uncollectible debts

  accordingly.

  Option A (escalation to the board) is premature; it should first be addressed with management. Option B (removing from cash flow statement) is not correct because write-offs affect the balance sheet and income statement, not just cash

  flows. Option D ignores a material risk of misstated financial statements.

  IIA Standards - Standard 2410: Criteria for Communicating; Accounting best practices for doubtful accounts.