UPDATED [Sep 22, 2022] Pass CIA Exam Part Three: Business Knowledge for Internal Auditing Exam with Latest Questions
IIA-CIA-Part3-3P Exam Practice Questions prepared by IIA Professionals
NEW QUESTION 154
An internal auditor reviews a data population and calculates the mean, median, and range.
What is the most likely purpose of performing this analytic technique?
- A. To determine whether duplicates in the data inflate the range.
- B. To identify whether the population contains outliers.
- C. To inform the classification of the data population.
- D. To determine the completeness and accuracy of the data.
Answer: B
NEW QUESTION 155
When is an organic organizational structure likely to be more successful than a mechanistic organizational structure?
- A. When an organization is infrequently affected by technological advances
- B. When an organization is subjected to strong political and social pressures
- C. When a manufacturer has reliable resources and suppliers
- D. When a manufacturing organization has stable demand for its products.
Answer: A
NEW QUESTION 156
An organization's board of directors is particularly focused on positioning the organization as a leader in the industry and beating the competition.
Which of the following strategies offers the greatest alignment with the board's focus?
- A. Increasing investment in research and development for a new product.
- B. Relocating the organization's manufacturing to another country.
- C. Increasing the diversity of strategic business units.
- D. Divesting product lines expected to have negative profitability.
Answer: C
NEW QUESTION 157
An organization is considering outsourcing its IT services, and the internal auditor is assessing the related risks. The auditor grouped the related risks into three categories:
Risks specific to the organization itself.
Risks specific to the service provider.
Risks shared by both the organization and the service provider.
Which of the following risks should the auditor classify as specific to the service provider?
- A. Unexpected increases in outsourcing costs.
- B. Inadequate staffing.
- C. Loss of data privacy.
- D. Violation of contractual terms.
Answer: C
NEW QUESTION 158
Which is the least effective form of risk management?
- A. People-based detective control.
- B. People-based preventive control.
- C. Systems-based detective control.
- D. Systems-based preventive control.
Answer: A
NEW QUESTION 159
According to MA guidance, which of the following best describes an adequate management (audit) trail application control for the general ledger?
- A. Report confirming that the general ledger data was processed without error.
- B. Report identifying general ledger transactions by time and individual
- C. Report comparing processing results with original input
- D. Report identifying data that is outside of system parameters
Answer: B
NEW QUESTION 160
In order to provide useful information for an organization's risk management decisions, which of the following factors is least important to assess?
- A. The risk levels of current and future events.
- B. The underlying causes of the risk.
- C. The potential for eliminating risk factors.
- D. The impact of the risk on the organization's objectives.
Answer: C
NEW QUESTION 161
Presented below are partial year-end financial statement data (000 omitted from dollar amounts) for companies A and B:
If company A has a quick ratio of 2:1, then it has an accounts receivable balance of:
- A. $100
- B. $300
- C. $200
- D. $500
Answer: A
NEW QUESTION 162
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 uses raw materials and components from more than one country.
- D. A multinational company operates outside of its country of origin.
Answer: D
NEW QUESTION 163
Which of the following data analytics tools would be applied by an internal audit activity positioned at the lowest level of maturity?
- A. Workflow and data capture technology
- B. Software integrated with central data warehouse
- C. Data visualization applications.
- D. Spreadsheets.
Answer: D
NEW QUESTION 164
The head of the research and development department at a manufacturing organization believes that his team lacks expertise in some areas, and he decides to hire more experienced researchers to assist in the development of a new product. Which of the following variances are likely to occur as the result of this decision?
1) Favorable labor efficiency variance.
2) Adverse labor rate variance.
3) Adverse labor efficiency variance.
4) Favorable labor rate variance.
- A. 2 and 3.
- B. 1 and 2.
- C. 1 and 4.
- D. 3 and 4.
Answer: B
NEW QUESTION 165
Which of the following statements about mentoring is true?
1) Mentoring can be used effectively for increasing employee retention
2) Mentoring can be used effectively in reducing employees frustration.
3) Mentoring can be used effectively for increasing organization communication.
4) Mentoring can be used effectively as a short term activity consisting of instruction and training
- A. 1,2. 3, and 4
- B. 1. 2 and 4 only
- C. 1, 3. and 4 only.
- D. 1 2. and 3 only.
Answer: D
NEW QUESTION 166
An organization has started allowing employees to use their personal smart devices to accept vendor payments. What should the organization's bring-your-own-device (BYOD) policy include to specifically address security and privacy required by the Payment Card Data Security Standard (PCI DSS)?
- A. Mobile applications
- B. Backups and transfers
- C. Data storage.
- D. Approved devices
Answer: C
NEW QUESTION 167
During a review of the accounts payable process, an internal auditor gathered all of the vendor payment transactions for the past 24 months. The auditor then used an analytics tool to identify the top five vendors that received the highest sum of payments.
Which of the following analytics techniques did the auditor apply?
- A. Process analysis.
- B. Process mining.
- C. Data analysis.
- D. Data mining.
Answer: A
NEW QUESTION 168
An internal auditor computed that one of the organization's accounting divisions is processing 30 travel reports per hour while another accounting division is processing 22 travel reports per hour.
Which of the following efficiency measures did the internal auditor most likely employ?
- A. Productivity rate.
- B. Asset efficiency rate.
- C. Resource utilization rate.
- D. Operating rate.
Answer: A
NEW QUESTION 169
Which of the following devices best controls both physical and logical access to information systems?
- A. Biometric lock.
- B. Plenum.
- C. Identification card.
- D. Electromechanical lock.
Answer: A
NEW QUESTION 170
Which of the following would not impair the objectivity of internal auditor?
- A. Implementing risk responses on behalf of management.
- B. Management assurance on risks.
- C. Setting the risk appetite.
- D. Providing assurance that risks assessed are correctly evaluated.
Answer: D
NEW QUESTION 171
An organization accomplishes its goal to obtain a 40 percent share of the domestic market, but is unable to get the desired return on investment and output per hour of labor. Based on this information the organization is most likely focused on which of the following?
- A. Effectiveness and not efficiency.
- B. Capital investment and not marketing
- C. Efficiency and not input economy.
- D. Marketing and not capital investment.
Answer: A
NEW QUESTION 172
Which of the following is an example of a nonfinancial internal failure quality cost?
- A. Foregone contribution margin on lost sales.
- B. Decreasing gross profit margins over time.
- C. Excessive time to convert raw materials into finished goods.
- D. Defective units shipped to customers.
Answer: C
NEW QUESTION 173
Which of the following is a key characteristic of a zero-based budget?
- A. A zero-based budget provides estimates of costs that would be incurred under different levels of activity.
- B. A zero-based budget is prepared each year and requires each item of expenditure to be justified.
- C. A zero-based budget uses input from lower-level and middle-level managers to formulate budget plans.
- D. A zero-based budget maintains focus on the budgeting process.
Answer: B
NEW QUESTION 174
An internal auditor is investigating a potential fraudulent activity. What is the first test the auditor should perform on the transaction data under scrutiny?
- A. Verification of the completeness and integrity of the obtained data.
- B. Calculation of statistical parameters to identify outliers requiring further scrutiny.
- C. Digital analysis for statistically unlikely occurrences that may indicate system tampering.
- D. Detailed review of the data contents to strategize the best analytical techniques.
Answer: A
NEW QUESTION 175
Which of the following is a major advantage of decentralized organizations, compared to centralized organizations?
- A. Decentralized organizations streamline organizational structure.
- B. Decentralized organizations tend to be less expensive to operate.
- C. Decentralized organizations are more focused on organizational goals.
- D. Decentralized organizations tend to be more responsive to market changes.
Answer: D
NEW QUESTION 176
Which of the following statements accurately describes the responsibility of the internal audit activity (IAA) regarding IT governance?
1) The IAA does not have any responsibility because IT governance is the responsibility of the board and senior management of the organization.
2) The IAA must assess whether the IT governance of the organization supports the organization's strategies and objectives.
3) The IAA may assess whether the IT governance of the organization supports the organization's strategies and objectives.
4) The IAA may accept requests from management to perform advisory services regarding how the IT governance of the organization supports the organization as strategies and objectives.
- A. 1 only
- B. 3 and 4
- C. 4 only
- D. 2 and 4
Answer: D
NEW QUESTION 177
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