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

IIA IIA-CIA-PART3 Online Questions & Answers

• Question 781:

  A company produces water buckets with the following costs per bucket:

  Direct labor = $2 Direct material = $5 Fixed manufacturing = $3. 50 Variable manufacturing = $2. 50

  The water buckets are usually sold for $15. However, the company received a special order for 50,000 water buckets at $11 each.

  Assuming there is adequate manufacturing capacity and all other variables are constant, what is the relevant cost per unit to consider when deciding whether to accept this special order at the reduced price?

  A. $9.50
  B. $10.50
  C. $11
  D. $13
  B. $10.50

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  Explanation

• Question 782:

  Capital budgeting involves choosing among various capital projects to find the one(s) that will maximize a company's return on its financial investment. Which of the following parties approves the capital budget?

  A. Board of directors.
  B. Senior management.
  C. Chief financial officer.
  D. Accounting personnel.
  A. Board of directors.

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  Explanation

  Comprehensive and Detailed In-Depth Explanation:

  Capital budgeting involves long-term investment decisions, such as purchasing new equipment, expanding facilities, or launching new products. These strategic financial decisions require approval at the highest level of governance.

  The Board of Directors (Option A) is responsible for reviewing and approving capital budgets, ensuring alignment with corporate strategy.

  Senior management (Option B) and the CFO (Option C) contribute by evaluating proposals, but they typically do not have final approval authority.

  Accounting personnel (Option D) manage financial reporting but do not approve budgets.

  Thus, the Board of Directors (A) is the correct answer.

  IIA Financial Management - Capital Budgeting Approval Process

• Question 783:

  When examining an organization's strategic plan, an internal auditor should expect to find which of the following components?

  A. Identification of achievable goals and timelines.
  B. Analysis of the competitive environment.
  C. Plan for the procurement of resources.
  D. Plan for progress reporting and oversight.
  A. Identification of achievable goals and timelines.

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  Explanation

• Question 784:

  Which of the following statements is correct regarding corporate compensation systems and related bonuses?

  1. A bonus system should be considered part of the control environment of an organization and should be considered in formulating a report on internal control.

  2.

  Compensation systems are not part of an organization's control system and should not be reported as such.

  3.

  An audit of an organization's compensation system should be performed independently of an audit of the control system over other functions that impact corporate bonuses.

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

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  Explanation

• Question 785:

  Which of the following authentication device credentials is the most difficult to revoke when an employee's access rights need to be removed?

  A. A traditional key lock.
  B. A biometric device.
  C. A card-key system.
  D. A proximity device.
  C. A card-key system.

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  Explanation

• Question 786:

  A global firm

  A. Has achieved economies of scale in the firm's domestic market.
  B. Plans, operates, and coordinates business globally.
  C. Relies on indirect export.
  D. Tends to rely more on one product market.
  B. Plans, operates, and coordinates business globally.

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  Explanation

  According to Kotler, "Global firms plan, operate, and coordinate their activities on a worldwide basis." Thus, a global firm secures cost or product differentiation advantages not available to domestic firms.

• Question 787:

  A chief audit executive (CAE) is calculating the available internal audit resource hours while planning the annual internal audit plan. The CAE needs to calculate the total number of hours available for audits. Which of the following should be deducted in order to have time available only for engagements?

  A. Time spent on coaching the internal audit function on new engagement procedures
  B. Time spent on the preliminary risk assessment of the engagement
  C. Time spent for the documentation of supporting files for the engagement
  D. Time spent on reporting the results of the engagement
  A. Time spent on coaching the internal audit function on new engagement procedures

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  Explanation

  When calculating available audit hours, the CAE must exclude non-engagement activities such as administration, meetings, professional development, and staff coaching. These are essential but not directly part of engagement execution. Preliminary risk assessment (Option B), documentation (Option C), and reporting (Option D) are all integral steps of an engagement and should be included in engagement hours. Thus, only coaching time (Option A) should be deducted. Reference:

  IIA Practice Guide - Engagement Planning: Considerations for Resource Planning.

• Question 788:

  Which of the following should internal auditors be attentive of when reviewing personal data consent and opt-in/opt-out management process?

  A. Whether customers are asked to renew their consent for their data processing at least quarterly.
  B. Whether private data is processed in accordance with the purpose for which the consent was obtained.
  C. Whether the organization has established explicit and entitywide policies on data transfer to third parties.
  D. Whether customers have an opportunity to opt-out the right to be forgotten from organizational records and systems.
  B. Whether private data is processed in accordance with the purpose for which the consent was obtained.

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  Explanation

• Question 789:

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

  A. An identification with national perspectives even though the firm is genuinely international.
  B. Control and evaluation methods that are locally determined.
  C. Decision making concentrated in the central administrative authority.
  D. Little communication among subsidiaries.
  A. An identification with national perspectives even though the firm is genuinely international.

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  Explanation

  A geocentric attitude is truly internationally oriented while absorbing the best that various cultures offer. It is a completely balanced approach with full collaboration between central administrators and subsidiaries, control and evaluation methods that harmonize local and overall firm standards, and frequent communication in all directions (i.e., between central administrators and subsidiaries and among subsidiaries). Moreover, talent, not nationality, determines personnel decisions throughout the firm.

• Question 790:

  An organization with a stable rating, as assessed by international rating agencies, has issued a bond not backed by assets or collateral. Payments of the interests and the principal to bondholders are guaranteed by the organization. Which type of bond did the organization issue?

  A. A sinking fund bond.
  B. A secured bond.
  C. A junk bond.
  D. A debenture bond.
  D. A debenture bond.

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  Explanation