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

IIA IIA-CIA-PART3 Online Questions & Answers

• Question 591:

  A parent wishes to sell a subsidiary for US $1.6 billion. A buyer wishes to acquire the subsidiary for US $1.1 billion, with the best alternative to a negotiated agreement (BATNA) of US $1.4 billion. What is an acceptable BATNA for the seller in order for negotiation to be feasible?

  A. US $1.3 billion.
  B. US $1.5 billion.
  C. US $1.7 billion.
  D. US $1.75 billion.
  A. US $1.3 billion.

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  Explanation

  US $1.3 billion is an acceptable BATNA because the BATNA of the buyer is US $1.4 billion. Any amount over US $1.4 billion would cause negotiation to not be feasible.

• Question 592:

  In an organization with a poor control environment, which of the following indicators would help an internal audit function measure its ability to provide risk-based assurance?

  A. The value of potential cost savings, or prevented losses, identified per year
  B. The percentage of observations that can be linked to significant organizational risks
  C. The extent of data mining or data analytics used during assurance engagements
  D. The amount of time dedicated to organization-wide risk assessments
  B. The percentage of observations that can be linked to significant organizational risks

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  Explanation

  The main objective of risk-based assurance is to demonstrate that audit observations are directly connected to organizational risks. By measuring the percentage of audit observations that can be tied to significant risks, the internal audit

  function shows that it is focusing on areas of importance to governance and risk management.

  Options A, C, and D are useful performance metrics, but they do not measure the ability of internal audit to deliver risk-based assurance as directly as Option B.

  IIA Practice Guide - Measuring Internal Audit Effectiveness and Efficiency.

• Question 593:

  Which of the following is not an advantage of group effort compared with work performed by individuals?

  A. Groups provide support to members.
  B. Groups make decisions that are more easily accepted.
  C. Groups provide a clear link between effort and outcome.
  D. Groups control and discipline members.
  C. Groups provide a clear link between effort and outcome.

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  Explanation

  In a culture that strongly emphasizes individual identity and competition, the preference tends to be for a clear link between effort and outcome. However, groups tend to submerge individual identity and responsibility and therefore to blur the link between individual effort and its results.

• Question 594:

  A new manager received computations of the internal rate of return regarding his project proposal. What should the manager compare the computation results to in order to determine whether the project is potentially acceptable?

  A. Compare to the annual cost of capital.
  B. Compare to the annual interest rate.
  C. Compare to the required rate of return
  D. Compare to the net present value.
  D. Compare to the net present value.

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  Explanation

• Question 595:

  Which of the following types of data analytics would be used by a hospital to determine which patients are likely to require readmittance for additional treatment?

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

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  Explanation

  https://www.healthcareitnews.com/sponsored-content/predictive-analytics-used-help-large-hospital-group-reduce-readmission-rates

• Question 596:

  Which of the following scenarios would require the chief audit executive (CAE) to change the internal audit plan and seek approval for the changes from the board?

  A. The CAE meets with the organization's new CFO to review the internal audit plan. After reviewing the plan, the CFO is satisfied that the plan addressed the top risks facing the organization
  B. The CAE oversees an internal audit function that has one IT auditor on staff. This auditor left the organization eight months ago and the CAE has been unable to hire a suitable replacement
  C. The effective date of a new government regulation occurs during the internal audit plan year. The new regulation and its effective date have been public for several years
  D. The CAE oversees an internal audit function of 15 auditors. An auditor left the organization and was replaced the following week with an auditor who has similar skills and experience
  B. The CAE oversees an internal audit function that has one IT auditor on staff. This auditor left the organization eight months ago and the CAE has been unable to hire a suitable replacement

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  Explanation

  Losing the only IT auditor in the internal audit function significantly impacts the ability to perform IT audits in the approved plan. This resource limitation requires the CAE to revise the plan and seek board approval for changes. Option A does not change the plan. Option C was foreseeable and should already have been included in prior planning. Option D has no material impact since the vacancy was quickly filled with a qualified replacement. Reference:

  IIA Standards - Standard 2020: Communication and Approval.

• Question 597:

  Which of the following statements accurately describes one of the characteristics that distinguishes a multinational company from a domestic company?

  A. A multinational company has stockholders in other countries.
  B. A multinational company exports its products to other countries.
  C. A multinational company operates outside of its country of origin.
  D. A multinational company uses raw materials and components from more than one country.
  C. A multinational company operates outside of its country of origin.

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  Explanation

• Question 598:

  A public university would be considered which type of organization?

  A. Commonweal organization.
  B. Business organization.
  C. Nonprofit service organization.
  D. Mutual benefit organization.
  C. Nonprofit service organization.

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  Explanation

  Nonprofit service organizations include charities and universities. Nonprofit service organizations serve particular groups of clients.

• Question 599:

  Which of the following lists is comprised of computer hardware only?

  A. A central processing unit, a scanner, and a value-added network
  B. A computer chip, a data warehouse, and a router
  C. A server, a firewall, and a smartphone
  D. A workstation, a modem, and a disk drive
  D. A workstation, a modem, and a disk drive

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  Explanation

  Comprehensive and Detailed In-Depth Explanation:

  Computer hardware refers to the physical components of a computer system.

  Workstation: A high-performance computer designed for technical or scientific applications.

  Modem: A device that modulates and demodulates signals for data transmission over communication lines.

  Disk drive: A device that reads and/or writes data to a disk storage medium.

  Option D lists only physical components, fitting the definition of computer hardware.

  In contrast:

  Value-added network (option A): A hosted service offering specialized networking services, not a physical component.

  Data warehouse (option B): A system used for reporting and data analysis, representing a data storage concept rather than a physical device.

  Firewall (option C): While it can be hardware, it is often implemented as software; thus, the term doesn't exclusively denote hardware.

  Therefore, option D accurately represents a list of computer hardware components.

  References:

  The Institute of Internal Auditors. (n.d.). CIA Exam Syllabus. Retrieved from [https://www.theiia.org/en /certifications/cia

• Question 600:

  Which of the following measures immediate liquidity?

  A. Acid-test (quick) ratio.
  B. Current ratio.
  C. Profit margin.
  D. Times interest earned.
  A. Acid-test (quick) ratio.

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  Explanation