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

IIA IIA-CIA-PART3 Online Questions & Answers

• Question 471:

  Which of the following assessments will assist in evaluating whether the internal audit function is consistently delivering quality engagements?

  A. Periodic assessments
  B. Ongoing monitoring
  C. Full external assessments
  D. Self-Assessment with Independent Validation (SAIV)
  B. Ongoing monitoring

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  Explanation

  The QAIP (Quality Assurance and Improvement Program) requires both ongoing monitoring and periodic assessments. Among these, ongoing monitoring is the mechanism that ensures continuous evaluation of whether engagements are

  being performed with quality and in conformance with the Standards.

  Option A (periodic assessments) review effectiveness but are not continuous. Option C (external assessments) and Option D (SAIV) are broader and periodic, not engagement-level consistency checks.

  IIA Standards - Standard 1311: Internal Assessments.

• Question 472:

  Departmentalization may be performed by:

  A. Function II. Product III. Geography
  B. I only.
  C. II only.
  D. I and II only.
  E. I, II and III.
  D. I and II only.

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  Explanation

  Departmentation may be performed by function, product, and geography. Departmentation by function is found in almost every organization at some level, whether for-profit or nonprofit. The most common departments in for-profit organizations are marketing, production, and finance though other terms maybe used). These often extend upward in the organizational chart to the level below the chief executive. Departmentation by product or service is growing in importance for multiline, large-scale enterprises. It is often an outgrowth of functional departmentation. The result is that product-service subunits may be treated as separate businesses with a high degree of autonomy. Managers must therefore have a broad perspective, not a merely functional orientation. Departmentation by territory geographic location) is favored by national or multinational firms and government agencies with scattered resources, offices, or plants.

• Question 473:

  Keeping a conflict from surfacing at all is an example of following which conflict management strategy?

  A. Avoidance.
  B. Defusion.
  C. Containment.
  D. Confrontation
  A. Avoidance.

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  Explanation

  An avoidance strategy aims to resolve the conflict by ignoring it or imposing a solution. It is appropriate if the conflict is trivial or if quick action is needed to prevent the conflict from arising.

• Question 474:

  Which of the following statements is true with regard to capital budgeting?

  A. Using the net present value method, a proposal is acceptable when the net present value is negative.
  B. The internal rate of return is the highest interest rate that will cause the present value of the proposed capital expenditure to be less than the present value of expected net annual cash ows.
  C. The cash payback technique is used to determine the period of time required to recover the capital investment, plus the expected return, from the annual cash flow produced by the investment.
  D. The annual rate of return technique is used to estimate the profitability of a capital expenditure by dividing the expected annual net income by the average investment.
  D. The annual rate of return technique is used to estimate the profitability of a capital expenditure by dividing the expected annual net income by the average investment.

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  Explanation

• Question 475:

  Which of the following application controls, implemented by management, monitors data being processed to ensure the data remains consistent and accurate?

  A. Management trail controls.
  B. Output controls.
  C. Integrity controls.
  D. Input controls.
  C. Integrity controls.

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  Explanation

• Question 476:

  Which of the following types of analytics would be used by an organization to examine metrics by business units and identity the most profitable business units?

  A. Detailed analytics
  B. Predictive analytics
  C. Diagnostic analytics
  D. Prescriptive analytics
  D. Prescriptive analytics

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  Explanation

• Question 477:

  With increased cybersecurity threats, which of the following should management consider to ensure that there is strong security governance in place?

  A. Inventory of information assets.
  B. Limited sharing of data files with external parties
  C. Vulnerability assessment.
  D. Clearly defined policies
  D. Clearly defined policies

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  Explanation

• Question 478:

  During an audit of the organization's annual financial statements, the internal auditor notes that the current cost of goods sold percentage is substantially higher than in prior years.

  Which of the following is the most likely explanation for this increase?

  A. Cost of raw material inventory items is decreasing.
  B. Process to manufacture goods is more efficient.
  C. Labor productivity to produce goods is increasing.
  D. Write-off of inventory is increasing.
  D. Write-off of inventory is increasing.

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  Explanation

• Question 479:

  Which of the following is a necessary action for an internal audit function if senior management chooses not to take action to remediate the finding and accepts the risk?

  A. The chief audit executive (CAE) must discuss this disagreement with senior management and communicate this information to external stakeholders
  B. The CAE must include this disagreement in the final audit report and conclude the engagement
  C. The CAE must make a judgment regarding the prudence of that decision and report to the board if needed
  D. The CAE must establish a follow-up process to monitor the acceptable risk level as part of the engagement
  C. The CAE must make a judgment regarding the prudence of that decision and report to the board if needed

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  Explanation

  According to IIA Standards, if senior management accepts a risk that the CAE believes may be unacceptable, the CAE must judge whether the risk is indeed acceptable and, if not, escalate the matter to the board. This ensures that

  governance bodies are aware of significant exposures. Reporting directly to external stakeholders (Option A) is not internal audit's role. Option B alone is insufficient if the risk is significant. Option D applies only when management's

  acceptance aligns with tolerance.

  IIA Standards - Standard 2600: Communicating the Acceptance of Risks.

• Question 480:

  Which of the following is the most significant reason that domestic governments and international organizations seek to eliminate cartels?

  A. The increased sales price reduces the amount of corporate tax revenues payable to the government.
  B. True competition keeps prices as low as possible, thus increasing efficiency in the marketplace.
  C. Small businesses cannot survive or grow without government protection.
  D. The economic stability of developing countries depends on a global free market.
  B. True competition keeps prices as low as possible, thus increasing efficiency in the marketplace.

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  Explanation

  A cartel is an organization of sellers (e.g., the oil cartel OPEC) who undertake joint action to maximize members' profits by controlling the supply, and therefore the price, of their product. Under the laws of many nations, such collusive conduct is illegal when engaged in by firms subject to those laws. The reason is that, as a result of the monopolistic and anticompetitive practices of cartels, supply is lower, prices are high, competition is restrained, and the relevant industry is less efficient. Accordingly, governmental and international organizations seek to protect consumers and the health of the domestic and global economy through anti-cartel efforts.