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

IIA IIA-CIA-PART3 Online Questions & Answers

• Question 901:

  Gray market activity is in essence a form of arbitrage. To prevent this activity by their distributors, multinational firms:

  A. Raise prices charged to lower-cost distributors. II. Police the firms' distributors. III. Change the product.
  B. I only.
  C. I and II only.
  D. II and Ill only.
  E. I, II, and Ill.
  D. II and Ill only.

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  Explanation

  In a gray market, products imported from one country to another are sold by persons trying to make a profit from the difference in retail prices between the two countries. These activitiesclearly lower the profits in some markets of the multinational firm that was the initial seller. One response is to monitor the practices of distributors and retaliate if necessary. A second response is to charge higher prices to the low-cost distributors to reduce their incentives to participate in a gray market. A third response is to differentiate products sold in different countries, e.g., by adapting the product or offering distinct service features.

• Question 902:

  The sole internal auditor of a municipality wants to implement proper supervision over internal audit workpapers. Which of the following would be the most appropriate?

  A. According to the Global Internal Audit Standards, in this situation the internal auditor can perform a self-review of selected workpapers
  B. Request each engagement client to conduct a review of a sample of workpapers at the end of the engagement
  C. Ask the board or management to sign off on workpapers
  D. Engage peer reviewers from other organizations with legal precautions in place
  D. Engage peer reviewers from other organizations with legal precautions in place

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  Explanation

  The Global Internal Audit Standards require that workpapers be properly supervised and reviewed to ensure quality and compliance. A sole auditor cannot perform a meaningful self-review (Option A). Having clients review workpapers

  (Option B) compromises independence. Having management or the board sign off (Option C) is also inappropriate as it undermines audit objectivity.

  The most suitable solution is to arrange for peer reviews from external auditors or other organizations, with confidentiality and legal safeguards in place. This provides independent oversight while maintaining audit quality.

  IIA Standards - Standard 1312: External Assessments; Practice Guide - Quality Assurance and Improvement Program.

• Question 903:

  A network organizational structure is one in which:

  A. An employee reports to two bosses.
  B. Authority and responsibility are concentrated at the top of the organization.
  C. Labor is specialized.
  D. Major business functions are subcontracted to third-party providers.
  D. Major business functions are subcontracted to third-party providers.

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  Explanation

  The subcontracting of major business functions to others is a feature of network structures.

• Question 904:

  An organization's internal audit activity performed an engagement regarding recent contract bidding. Who should the internal audit activity meet with in order to obtain reliable and relevant information about potential questionable practices related to the contract bidding?

  A. Senior management, to obtain an understanding about the justification for contract bidding
  B. Personnel responsible for the organization's fraud and ethics hotline, to obtain information related to contract bidding
  C. Potential vendors, to obtain information about the bid packages related to contract bidding
  D. Contracting department personnel, to obtain information related to contract bidding practices
  D. Contracting department personnel, to obtain information related to contract bidding practices

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  Explanation

• Question 905:

  Which of the following is true regarding the use of remote wipe for smart devices?

  A. It can restore default settings and lock encrypted data when necessary
  B. It enables the erasure and reformatting of secure digital (SD) cards
  C. It can delete data backed up to a desktop for complete protection if required
  D. It can wipe data that is backed up via cloud computing
  C. It can delete data backed up to a desktop for complete protection if required

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  Explanation

• Question 906:

  A manager believes that positive employee attitudes are extremely important. The manager cooperates with employees in solving problems. A likely effect on employee behavior of this leadership style is:

  A. Mistrust of the manager.
  B. A lack of extraordinary performance.
  C. High employee turnover.
  D. Increased employee creativity.
  D. Increased employee creativity.

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  Explanation

  When a manager works to maintain a positive attitude among employees and cooperates with them in problem solving, employees are likely to be more motivated, confident, and creative. This leadership style should also improve communication and decrease absenteeism.

• Question 907:

  Alternative work schedules for employees are said to increase the efficiency of business operations. Alternative work schedules are consistent with the underlying concepts of which theory?

  A. Motivation-hygiene theory.
  B. Theory X.
  C. Equity theory.
  D. Cognitive evaluation theory.
  A. Motivation-hygiene theory.

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  Explanation

  Herzberg's two-factor theory of human behavior postulates two classes of factors:motivational and hygiene. Hygiene factors dissatisfiers) include those factors whose presence will not especially motivate people but whose absence will lead to diminished motivation. These factors are extrinsic to the work itself. They include status, interpersonal relations, and alternative work schedules. Hygiene factors such as work schedules need to be adequate so that workers will have little dissatisfaction. The absence of motivational factors satisfiers) will not diminish performance, but their addition or availability will motivate employees. Intrinsic to the work itself, they include achievement, advancement, and recognition.

• Question 908:

  Which of the following intangible assets is considered to have an indefinite life?

  A. Underground oil deposits.
  B. Copyright.
  C. Trademark.
  D. Land.
  C. Trademark.

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  Explanation

• Question 909:

  According to IIA guidance, which of the following corporate social responsibility (CSR) activities is appropriate for the internal audit activity to perform?

  A. Determine the optimal amount of resources for the organization to invest in CSR.
  B. Align CSR program objectives with the organization's strategic plan.
  C. Integrate CSR activities into the organization's decision-making process.
  D. Determine whether the organization has an appropriate policy governing its CSR activities .
  D. Determine whether the organization has an appropriate policy governing its CSR activities .

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  Explanation

• Question 910:

  A flat organization structure is one with relatively few levels of hierarchy and is characterized by wide spans of management control. A tall organization has many levels of hierarchy and narrow spans of control. Which of the following situations is consistent with a flat organization structure?

  A. Tasks require little direction and control of subordinates.
  B. Work areas are geographically dispersed.
  C. Tasks are highly complex and varied.
  D. Subordinates perform distinctly different tasks.
  A. Tasks require little direction and control of subordinates.

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  Explanation

  Flat structures have the advantages of fast information flow from the top to the bottom of the organization and increased employee satisfaction. Tall structures are faster and more effective at problem resolution because of the increased frequency of interaction between superior and subordinate and the greater order imposed by the hierarchy. For a flat structure to be successful, employees must be able to work without supervision much of the time because a manager with many employees has little time for each one.