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

IIA IIA-CIA-PART3 Online Questions & Answers

• Question 641:

  An internal audit function did not conform with the Global Internal Audit Standards in only one of many engagements, as the engagement was performed with a lack of adequate knowledge of the subject matter. Which of the following is appropriate in relation to declaring conformance with the Standards?

  A. The internal audit function can still declare conformance with the Standards for all engagements
  B. The internal audit function can still declare conformance with the Standards for all other engagements that satisfy the requirements
  C. The internal audit function can declare partial conformance with the Standards for all engagements
  D. The internal audit function needs to evaluate the impact of the nonconformance before it can declare nonconformance with the Standards
  D. The internal audit function needs to evaluate the impact of the nonconformance before it can declare nonconformance with the Standards

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  Explanation

  According to IIA guidance, if a nonconformance occurs, the CAE must evaluate its impact on the overall scope and operations of the internal audit activity. If the deficiency materially affects internal audit's overall ability to fulfill its

  responsibilities, conformance cannot be claimed. If the impact is limited, conformance may still be declared with appropriate disclosure.

  Options A and B assume automatic conformance without evaluation. Option C is incorrect because there is no concept of "partial conformance" under the Standards.

  IIA Standards - Standard 1321: Use of "Conforms with the Standards."

• Question 642:

  A small engineering consulting firm accepts special projects from customers in a variety of fields. Its choice of an organic organizational design was most likely based on its:

  A. Lack of concern for self-fulfillment of employees.
  B. Preference for formal communication.
  C. Adoption of directive leadership style.
  D. Participative decision making processes.
  D. Participative decision making processes.

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  Explanation

  The organic structure is best suited to a company that emphasizes operational efficiency less than the flexibility needed to respond quickly to changes in its environment and the creativity to find solutions to new problems. Decision making in this context tends to rely on input from many sources and requires multidirectional communication. Hence, a horizontal or flat structure typified by project or matrix management will be appropriate.

• Question 643:

  Which of the following is not a cost of decentralization?

  A. Dysfunctional decision making owing to disagreements of managers regarding overall goals and sub goals of the individual decision makers.
  B. A decreased understanding of the overall goals of the organization.
  C. Increased costs for developing the information system.
  D. Increased costs of corporate-level staff services and management talent.
  D. Increased costs of corporate-level staff services and management talent.

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  Explanation

  The costs of centralized staff may actually decrease under decentralization. On the other hand, the corporate staff and the various services they provide may have to be duplicated in various divisions, thereby increasing overall costs. Suboptimal decisions may result fromdisharmony among organizational goals, subgoals of the division, and the individual goals of managers. The overall goals of the firm may more easily be misunderstood because individual managers may not see the larger picture. Moreover, the information system necessary for adequate reporting in a decentralized mode will tend toward redundancy, which increases costs.

• Question 644:

  An internal auditor found the following information while reviewing the monthly financial statements for a wholesaler of safety glasses:

  Opening inventory: 1,000 units at $2 per unit Purchased: 5,000 units at $3 per unit Sold: 3,000 units at $7 per unit

  The cost of goods sold was reported at $8,500. Which of the following inventory methods was used to derive this value?

  A. Average cost method.
  B. First-in, first-out (FIFO) method.
  C. Specific identification method.
  D. Activity-based costing method.
  D. Activity-based costing method.

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  Explanation

• Question 645:

  Which of the following describes the primary advantage of using data analytics in internal auditing?

  A. It helps support the internal audit conclusions with factual evidence.
  B. It reduces the time and effort needed to prepare the audit report.
  C. It helps prevent internal auditors from unknowingly disregarding key process risks.
  D. It enables internal auditors to meet their responsibility for monitoring controls.
  A. It helps support the internal audit conclusions with factual evidence.

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  Explanation

  Comprehensive and Detailed In-Depth Explanation:

  Data analytics in internal auditing provides quantitative, evidence-based insights, enhancing audit conclusions and decision-making.

  Option B (Reduces report preparation time) - While efficiency is a benefit, the main advantage is improved accuracy and factual support.

  Option C (Prevents overlooking risks) - While true, data analytics primarily strengthens evidence collection.

  Option D (Monitoring controls) - Auditors assess controls, but data analytics enhances findings through data- driven validation.

  Thus, Option A is correct, as data analytics strengthens audit conclusions with factual evidence.

  IIA Audit Analytics Guide - Data-Driven Internal Auditing

• Question 646:

  Which of the following controls refers to requiring employees to use a combination of PINs, passwords, and /or biometrics to access an organization's smart device apps and data?

  A. Remote wipe.
  B. Software encryption.
  C. Device encryption.
  D. Authentication.
  D. Authentication.

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  Explanation

  Comprehensive and Detailed In-Depth Explanation:

  Authentication ensures that only authorized users can access a system by requiring credentials such as PINs, passwords, or biometrics.

  Option A (Remote wipe) - Deletes data but does not control initial access.

  Option B (Software encryption) - Protects stored data, not user access.

  Option C (Device encryption) - Secures the device, but authentication controls access.

  Since authentication ensures secure user verification, Option D is correct.

  IIA IT Security - Access Control Mechanisms

• Question 647:

  According to Herzberg's Two-Factor Theory of Motivation, which of the following factors are mentioned most often by satisfied employees?

  A. Salary and status.
  B. Responsibility and advancement.
  C. Work conditions and security.
  D. Peer relationships and personal life.
  B. Responsibility and advancement.

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  Explanation

• Question 648:

  The profile of an internal auditor's personality traits reveals that the auditor is most motivated by self-actualization needs. Given this, which of the following is likely to serve as the best motivator for this auditor?

  A. Rotate the auditor to work within a multi-disciplinary audit team
  B. Assign the auditor to work on complex and challenging audits
  C. Reassure the auditor that the internal audit budget is stable and the auditor's job is secure
  D. Offer increased benefits in the auditor's compensation package
  B. Assign the auditor to work on complex and challenging audits

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  Explanation

• Question 649:

  Which of the following lists best describes the classification of manufacturing costs?

  A. Direct materials, indirect materials, raw materials
  B. Overhead costs, direct labor, direct materials
  C. Direct materials, direct labor, depreciation on factory buildings
  D. Raw materials, factory employees' wages, production selling expenses
  B. Overhead costs, direct labor, direct materials

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  Explanation

• Question 650:

  Managerial attitudes toward global operations are viewed by researcher HowardPerl mutteras a key to understanding multinational firms. A polycentric attitude is indicated by

  A. An identification with the nationality of the owner.
  B. Evaluation and control standards that are both local and global.
  C. High information flow in multiple directions.
  D. Relatively little decision making by the central administrative authority.
  D. Relatively little decision making by the central administrative authority.

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  Explanation

  A polycentric attitude assumes that cultural differences require local managers to make most decisions because they are more knowledgeable about local conditions than are central administrators. Thus, development of local managerial talent is crucial. Another result is that foreign operating performance is primarily evaluated based on results. As a consequence,methods, training, and incentives vary significantly among subsidiaries. Furthermore, control is predominantly local, the firm is identified with the nationality of the host nation, and relatively little communication occurs with central administration or among subsidiaries. One disadvantage is that local operations may have inefficiencies because of duplication of activities. Another disadvantage is loss of goal congruence between local entities and the firm as a whole. Advantages are more capable and motivated local managers, better results in local markets, local development of new product ideas, and stronger support by host governments.