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

IIA IIA-CIA-PART3 Online Questions & Answers

• Question 291:

  In mergers and acquisitions, which of the following is an example of a horizontal combination?

  A. Dairy manufacturing company taking over a large dairy farm.
  B. A movie producer acquires movie theaters.
  C. A petroleum processing company acquires an agro-processing firm.
  D. A baker taking over a competitor.
  D. A baker taking over a competitor.

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  Explanation

• Question 292:

  The behavioral science literature identifies diffusion as an effective approach to resolving conflict. An auditor effectively using diffusion in working with a confrontationalauditedwould:

  A. Set aside critical issues temporarily and try to reach agreement on less controversial issues first.
  B. Emphasize differences between the parties.
  C. Avoid the conflict situation.
  D. Identify the sources of conflict and address them directly.
  A. Set aside critical issues temporarily and try to reach agreement on less controversial issues first.

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  Explanation

  Diffusion temporarily leaves the conflict unresolved. Smoothing (downplaying differences and emphasizing common interests) and compromise (requiring each party to make concessions) are diffusion approaches to conflict management. The disadvantage is that the underlying problems remain unresolved while the less controversial issues are being addressed first.

• Question 293:

  An organization has limited resources and wants to utilize its current IT physical infrastructure as much as possible. Which of the following technologies would assist the organization?

  A. Virtualization.
  B. Cloud computing.
  C. Open-source software.
  D. Robotic process automation.
  A. Virtualization.

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  Explanation

• Question 294:

  The internal audit function conducted an engagement on maintenance operations of a construction organization and identified several issues of medium importance. The head of maintenance proposed an improvement plan with deadlines and personnel responsible. The internal audit function issued the final report to senior management. Senior management was dissatisfied with the report as they believed that improvement plan deadlines should be considerably shorter.

  Which of the following should the internal audit function change in the reporting process?

  A. Discontinue discussing draft reports with responsible employees, as their input is needed during fieldwork only
  B. Involve senior management at the draft report stage and in the development of action plans
  C. Request senior management to issue a separate memo regarding their changes to deadlines
  D. Invite senior management to the board meeting regarding engagement results so that they can express their concerns
  B. Involve senior management at the draft report stage and in the development of action plans

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  Explanation

  Action plans should be agreed upon collaboratively, with both the responsible managers and senior management involved. Involving senior management earlier in the draft report and action plan stage ensures alignment on deadlines and

  accountability before final issuance.

  Option A would reduce input and transparency. Option C creates fragmented reporting. Option D is excessive and bypasses proper reporting procedures.

  IIA Standards - Standard 2410: Criteria for Communicating; Standard 2440: Disseminating Results.

• Question 295:

  Which of the following price adjustment strategies encourages prompt payment?

  A. Cash discounts.
  B. Quantity discounts.
  C. Functional discounts.
  D. Seasonal discounts.
  A. Cash discounts.

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  Explanation

• Question 296:

  A firm wishing to sell its well-known brand of men's clothing in a certain foreign country redesigned the products because of the greater average size of consumers in that country. However, the firm retained the same basic advertising campaign. According to Keegan's model of adaptation strategies, this firm has adopted a strategy of

  A. Straight extension.
  B. Product adaptation.
  C. Forward invention.
  D. Backward invention.
  B. Product adaptation.

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  Explanation

  Using a product adaptation strategy, a firm makes changes to the product for each market but not its promotion. This can reduce profit potential but may also provide a marketing advantage by taking into account local wants and needs.

• Question 297:

  An internal auditor discovered that the organization was not in full compliance with a regulatory labeling requirement for one of its products. The responsible manager indicated that the current product labeling has been in use for several years without any problems. If discovered, this regulatory breach could result in significant fines for the organization.

  What should be the chief audit executive's next course of action?

  A. Discuss the matter with the CEO and other senior management
  B. Recommend that disciplinary action be taken against the manager for exposing the company to such risk
  C. Communicate to the board the current situation, including the risk exposure to the company
  D. Take on the initiative of implementing corrective actions to mitigate the identified risks
  C. Communicate to the board the current situation, including the risk exposure to the company

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  Explanation

  The CAE must communicate significant risk exposures and control issues to the board. A regulatory noncompliance issue that could result in significant fines qualifies as a high residual risk. Internal audit should not implement corrective

  actions (management's responsibility) or recommend disciplinary action. While discussions with management (Option A) are appropriate, the ultimate duty is to escalate the matter to the board (Option C).

  IIA Standards - Standard 2060: Reporting to Senior Management and the Board.

• Question 298:

  According to IIA guidance, whose input must be considered when developing the annual internal audit plan?

  A. Operational management
  B. External auditors
  C. The CEO
  D. Internal assurance providers
  D. Internal assurance providers

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  Explanation

  When developing the annual internal audit plan, the CAE must consider input from senior management, the board, and other internal assurance providers to ensure coordination and avoid duplication of efforts. While operational management,

  external auditors, and the CEO may also provide input, IIA Standards emphasize coordination with internal assurance providers as a mandatory step.

  IIA Standards - Standard 2050: Coordination and Reliance.

• Question 299:

  A line position:

  A. Is indirectly responsible for achieving the organization's basic objectives.
  B. Makes administrative and operating decisions.
  C. Advises and assists staff positions.
  D. Is indirectly involved with the organization's product(s) and/or services.
  B. Makes administrative and operating decisions.

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  Explanation

  A line position is in the direct chain of command and is responsible for administering policy and making operating decisions. People in line positions have direct responsibility for achieving the organization's basic objectives and thus have formal or legitimate authority.

• Question 300:

  Which of the following risks is the result of an organization failing to create and establish strategies for the use of social media?

  A. The organization does not ensure that all employee posts have been vetted by the relevant department.
  B. The organization may be subject to penalties for employee posts.
  C. The organization does not ensure the board's tone at the top reaches all employees.
  D. The organization is reactive rather than proactive in the use of social media.
  D. The organization is reactive rather than proactive in the use of social media.

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  Explanation