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

IIA IIA-CIA-PART3 Online Questions & Answers

• Question 581:

  An audit manager allowed a work group to make a decision about whether to adopt a new work procedure. In allowing the group to make the decision, the manager should be aware that groups tend to make:

  A. Very conservative decisions and do not want to assume risk.
  B. Faster decisions than do individuals because groups have more expertise than does any one person.
  C. Decisions that are less accurate than those made by individuals.
  D. Riskier decisions than do individuals, and individual responsibility for the group's decision is lessened.
  D. Riskier decisions than do individuals, and individual responsibility for the group's decision is lessened.

  ---

  Explanation

  Groupshift is the difference between the decisions that members of a group would make singly and the group's decision. Sometimes the group's decision is more conservative, butmore often it is riskier. What apparently occurs is that the group discussion accentuates the initial tendency of the group. The most likely reason for the more frequent shift toward the riskier course is diffusion of responsibility among members of the group. Thus, no one will be wholly to blame for failure.

• Question 582:

  Job instructions, official memos, and procedures manuals are examples of which type of organizational communication?

  A. Upward.
  B. Downward.
  C. Lateral.
  D. Diagonal.
  B. Downward.

  ---

  Explanation

  Downward communication from superior to subordinate) is vertical communication consisting of orders, instructions, notices, memos, bulletins, newsletters, handbooks, loudspeakers, and the chain of command. It also includes job instructions and procedures manuals.

• Question 583:

  Cross-training of employees in various functions is an example of job:

  A. Enlargement.
  B. Rotation.
  C. Enrichment.
  D. Redesign.
  B. Rotation.

  ---

  Explanation

  Job rotation may introduce a welcome element of change in boring, highly specialized jobs. It may also have such benefits as cross-functional training and avoidance of repetitive stress injuries.

• Question 584:

  After purchasing shoes from an online retailer, a customer continued to receive additional unsolicited offers from the retailer and other retailers who offer similar products. Which of the following is the most likely control weakness demonstrated by the seller?

  A. Excessive collecting of information
  B. Application of social engineering.
  C. Retention of incomplete information
  D. Undue disclosure of information
  D. Undue disclosure of information

  ---

  Explanation

• Question 585:

  Which of the following descriptions of the internal control system are indicators that risks are managed effectively?

  1. Existing controls promote compliance with applicable laws and regulations.

  2. The control environment is designed to address all identified risks to the organization.

  3. Key controls for significant risks to the organization remain consistent over time.

  4. Monitoring systems are in place to alert management to unexpected events.

  A. 1 and 3.
  B. 1 and 4.
  C. 2 and 3.
  D. 2 and 4.
  B. 1 and 4.

  ---

  Explanation

• Question 586:

  According to IIA guidance, which of the following corporate social responsibility (CSR) evaluation activities may be performed by the internal audit activity?

  1. Consult on CSR program design and implementation.

  2. Serve as an advisor on CSR governance and risk management.

  3. Review third parties for contractual compliance with CSR terms.

  4. Identify and mitigate risks to help meet the CSR program objectives.

  A. 1, 2, and 3
  B. 1, 2, and 4
  C. 1, 3, and 4
  D. 2, 3, and 4
  A. 1, 2, and 3

  ---

  Explanation

• Question 587:

  During the process of setting the annual audit plan, the chief audit executive receives a request from senior management to conduct an assurance engagement on the cybersecurity controls of the organization. Which of the following is a reason cybersecurity should be included in the annual internal audit plan?

  A. In order to maintain good relationships with senior management
  B. Cybersecurity is a new area for auditors to learn
  C. Cybersecurity has been identified as a high risk during the annual risk assessment
  D. The Global Internal Audit Standards require that all management-requested engagements be included in the annual internal audit plan
  C. Cybersecurity has been identified as a high risk during the annual risk assessment

  ---

  Explanation

  The internal audit plan must be risk-based, as required by the IIA Standards. If cybersecurity has been identified as a high risk during the annual risk assessment, then it should be included in the audit plan to provide assurance over the

  adequacy of controls.

  Including engagements simply to satisfy management (Option A) or for auditor learning purposes (Option B) does not align with risk-based planning principles. Likewise, management requests alone (Option D) do not dictate audit plan

  content; engagements must be prioritized based on risk to the organization.

  IIA Standards - Standard 2010: Planning; Implementation Guide 2010 - Risk-Based Planning.

• Question 588:

  Many factors cause firms to overbuild, resulting in industry overcapacity. The structural factor that may lead to overbuilding is: A. A reduction in supplier prices.

  B. A shallow learning curve.

  C. An absence of exit barriers.

  D. The presence of a strong market leader.

  Correct Answer. A
  A

  ---

  Explanation

  Suppliers of capital, equipment, materials, etc., face their own competitive pressures. Thus, lower supplier prices, government subsidies, favorable interest rates, and similar incentives may promote expansion by customer industries.

• Question 589:

  Which of the following are steps in a customer value analysis (CVA)?

  A. Determining what customers value II. Having customers rank the relative significance of the elements of customer value III.Evaluating how well the firm and its competitors perform relative to the elements of customer value IV.Focusing on performance with respect to each element of customer value
  B. I, Ill, and IV only.
  C. I, II, and Ill only.
  D. I, II, and Ill only.
  E. I, II, Ill, and IV.
  D. I, II, and Ill only.

  ---

  Explanation

  The steps in a CVA are to:

  Determine what customers value.

  Assign quantitative amounts to the elements of customer value and have customers rank their relative significance.

  Evaluate how well the firm and its competitors perform relative to each element.

  Focus on performance with respect to each element, vis-a-vis an important competitor in a given market segment.

  Repeat the foregoing steps as circumstances change.

• Question 590:

  The most important reason to use risk assessment in audit planning is to:

  A. Identify redundant controls.
  B. Improve budgeting accuracy.
  C. Enhance assurance provided to management.
  D. Assist in developing audit programs.
  C. Enhance assurance provided to management.

  ---

  Explanation