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

IIA IIA-CIA-PART3 Online Questions & Answers

• Question 671:

  The audit committee of a global corporation has mandated a change in the organization's business ethics policy. Which of the following approaches describes the best way to accomplish the policy's diffusion worldwide?

  A. Deploy the policy in the corporate headquarters' language, so everyone gets an unfiltered version simultaneously.
  B. Introduce the policy region by region, using any lessons learned to change the subsequent version of the policy for the next area.
  C. Consult with legal and operational management in each affected country to ensure the final version can be implemented globally, following audit committee approval.
  D. Send the board-approved version of the policy to each country's senior leadership, and empower them to tailor the policy to the local language and culture.
  C. Consult with legal and operational management in each affected country to ensure the final version can be implemented globally, following audit committee approval.

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  Explanation

• Question 672:

  A firm sells its product in a foreign market for a much higher price than in the firm's home market. The reason is most likely:

  A. Price elasticity of demand.
  B. Dumping.
  C. Gray market activity.
  D. Price escalation.
  D. Price escalation.

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  Explanation

  Price escalation is caused by an accumulation of additional costs, e.g., currency fluctuations; transportation expenses; profits earned by importers, wholesalers, and retailers; and import duties.

• Question 673:

  Monopolistic competition is characterized by

  A. A relatively large group of sellers who produce differentiated products.
  B. A relatively small group of sellers who produce differentiated products.
  C. A monopolistic market where the consumer is persuaded that there is perfect competition.
  D. A relatively large group of sellers who produce a homogeneous product.
  A. A relatively large group of sellers who produce differentiated products.

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  Explanation

  Monopolistic competition is characterized by a large number of firms offering differentiated products. Entry into the market is relatively easy, firms have some price control, and substantial non price competition exists, such as advertising.

• Question 674:

  Which of the following best illustrates the meaning of fair value?

  A. Unrealized gains or losses of the investment portfolio.
  B. The difference between the total cost of securities and their market cost.
  C. The price for which a security could be sold at normal market conditions.
  D. The original cost of a security plus revenues it has earned.
  C. The price for which a security could be sold at normal market conditions.

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  Explanation

• Question 675:

  In some organizations, first-line supervisors withhold or alter unfavorable information that the supervisors do not want higher management to know. This selective withholding of information is widely known as:

  A. Selective reception.
  B. Filtering.
  C. Regulating information flow.
  D. Perceptual defense.
  B. Filtering.

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  Explanation

  Communication within an organization must be clear, appropriate, and properly transmitted. Distortion can be unintentional e.g., a phone line going dead), or it may follow from deliberate filtering either by the sender or an intermediary. The auditor should watch for indications that first-line or lower-level management is "filtering" out bad news or covering up irregularities.

• Question 676:

  Refer to the exhibit.

  

  If the profit margin of an organization decreases, and all else remains equal, which of the following describes how the "Funds Needed" line in the graph below will shift?

  A. The "Funds Needed" line will remain pointed upward, but will become less steep.
  B. The "Funds Needed" line will remain pointed upward, but will become more steep.
  C. The "Funds Needed" line will point downward with a minimal slope.
  D. The "Funds Needed" line will point downward with an extreme slope.
  B. The "Funds Needed" line will remain pointed upward, but will become more steep.

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  Explanation

• Question 677:

  Which of the following is true of bond financing, compared to common stock, when all other variables are equal?

  A. Lower shareholder control.
  B. Lower indebtedness.
  C. Higher company earnings per share.
  D. Higher overall company earnings.
  A. Lower shareholder control.

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  Explanation

• Question 678:

  Which of the following network types should an organization choose if it wants to allow access only to its own personnel?

  A. An extranet
  B. A local area network.
  C. An intranet
  D. The internet
  B. A local area network.

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  Explanation

• Question 679:

  Which of the following best describes the use of predictive analytics?

  A. A supplier of electrical parts analyzed all instances where different types of spare parts were out of stock prior to scheduled deliveries of those parts.
  B. A supplier of electrical parts analyzed sales, applied assumptions related to weather conditions, and identified locations where stock levels would decrease more quickly.
  C. A supplier of electrical parts analyzed all instances of a part being out of stock prior to its scheduled delivery date and discovered that increases in sales of that part consistently correlated with stormy weather.
  D. A supplier of electrical parts analyzed sales and stock information and modeled different scenarios for making decisions on stock reordering and delivery.
  D. A supplier of electrical parts analyzed sales and stock information and modeled different scenarios for making decisions on stock reordering and delivery.

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  Explanation

• Question 680:

  Which of the following best describes the chief audit executive's responsibility for assessing the organization's residual risk?

  A. Create an action plan to mitigate the risk
  B. Incorporate management acceptance of risk in the workpapers as internal audit evidence
  C. Report deviations immediately to the board
  D. Communicate the matter with senior management
  D. Communicate the matter with senior management

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  Explanation

  The CAE's role is to provide assurance that risks are identified and managed appropriately. When residual risk appears to exceed the organization's tolerance, the CAE should first communicate the matter with senior management to discuss

  the issue and understand management's acceptance of risk. Only if the risk remains unresolved should it be escalated to the board.

  Option A is management's responsibility, not internal audit's. Option B is incomplete as evidence alone does not fulfill the communication requirement. Option C is premature because immediate escalation to the board skips management

  dialogue.

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