IIA-CIA-Part3 Actual Questions - Instant Download 344 Questions
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The IIA-CIA-Part3 exam is a computer-based exam that consists of 100 multiple-choice questions, and candidates have up to 2.5 hours to complete the exam. The exam is divided into six domains, each of which covers specific business knowledge areas that are relevant to internal audit activities. These domains include business acumen, information technology, financial management, global business environment, organizational structure and business processes, and risk management.
NEW QUESTION # 161
Which statement best describes total quality management TOM)?
- A. TOM emphasizes better statistical quality control techniques.
- B. TOM emphasizes reducing the cast of inspection.
- C. TOM emphasizes doing each job right the first time.
- D. TOM emphasizes encouraging crass-functional teamwork.
Answer: C
Explanation:
TOM establishes quality as an organizational objective and views it as a major component of the organization's service to its customers. It emphasizes employee training and commitment, product/service design and production, and customer service. Ordinarily, the quality of a product or service is as important to customers as cast and timeliness. Superior product quality is not attained merely through more inspection, better statistical quality control, and cross-functional teamwork. Manufactures must make fundamental changes in the way they produce products and do each jab right the first time.
NEW QUESTION # 162
An inventory planning method that minimizes inventories by arranging to have raw materials and subcomponents arrive immediately preceding their use is called:
- A. An economic order quantity model.
- B. safety stock planning system.
- C. A. just-in-time inventory system.
- D. A master budgeting system.
Answer: C
Explanation:
JIT is a manufacturing philosophy popularized by the Japanese that combines purchasing, production, and inventory control. As with MFP, minimization of inventory is a goal; however, JIT also encompasses changes in the production process itself. An emphasis on quality and a "pull" of materials related to demand are key differences between JIT and MFP.
The factory is organized so as to bring materials and tools close to the point of use rather than keeping them in storage areas. A key element of the JIT system is reduction or elimination of waste of materials, labor, factory space, and machine usage. Minimizing inventory is the key to reducing waste. V1lhen a part is needed on the production line, it arrives just in time, not before. Daily deliveries from suppliers are the ultimate objective, and some Japanese users have been able to get twice-daily deliveries.
NEW QUESTION # 163
According to IIA 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 comparing processing results with original Input
- C. Report identifying general ledger transactions by time and individual.
- D. Report identifying data that is outside of system parameters
Answer: C
NEW QUESTION # 164
Which of the following purchasing scenarios would gain the greatest benefit from implementing electronic data interchange?
- A. A currently inefficient purchasing process.
- B. A large volume of custom purchases.
- C. A time-sensitive just-in-time purchase environment.
- D. A variable volume sensitive to material cost.
Answer: C
NEW QUESTION # 165
An internal auditor performed a review of IT outsourcing and found that the service provider was failing to meet the terms of the service level agreement. Which of the following approaches is most appropriate to address this concern?
- A. The organization should ensure that there is a clear management communication strategy and path for evaluating and reporting on all outsourced services concerns.
- B. The organization should review the skill requirements and ensure that the service provider is maintaining sufficient expertise and retaining skilled resources.
- C. The organization should proactively monitor the performance of the service provider, escalate concerns, and use penalty clauses in the contract where necessary.
- D. The organization should work with the service provider to review the current agreement and expectations relating to objectives, processes, and overall performance.
Answer: C
NEW QUESTION # 166
Which of the following statements is true regarding a bring-your-own-device (BYOD) environment?
- A. With fewer devices owned by the organization, there is reduced need to maintain documented policies and procedures.
- B. There is a greater need Kr organizations to rely on users to comply with policies and procedures.
- C. There is greater sharing of operational risk in a BYOD environment.
- D. Incident response times are less critical in the BYOD environment. compared to a traditional environment
Answer: B
NEW QUESTION # 167
Which adjusting entry should be used at year-end to account for interest expense on the long-term debt?
- A. Interest expense US $100,000 Interest payable US $100,000
- B. Interest payable US $100,000 Interest expense US $100,000
- C. Interest expense US $50,000 Cash US $50,000
- D. Interest expense US $50,000 Interest payable US $50,000
Answer: D
Explanation:
The debt was issued on July 1 and has been outstanding for only 6 months. Interest expense equals the face amount of the debt multiplied by the interest rate and the fraction of the year the debt was outstanding [US $1.000.000 x 10% x6 - 12) = US $50,000].
Because interest is payable on July1 6 months' interest is accrued and expensed in the current period. The payable is also recognized in the current period. Thus, the adjusting entry should be
Interest expense US $50,000 Interest payable US $50.000
Copper Co. had the pre-closing trial balance at December 31 shown below. Additional information: The balance of opening inventory was US $140,000. The long-term debt pays interest at a rate of 10% per annum, payable every 12 months. The debt was issued on July 1 of the current year and originally had 5 years to maturity. The assets classified as property, plant, and equipment have a 10-year estimated useful life and were 1 year old at the start of the current year Straight-line depreciation is used.
NEW QUESTION # 168
Which of the following types of analytics focuses less on analysis and more on condensing data into mote meaningful pieces of information?
- A. Diagnostic analytics
- B. Predictive analytics
- C. Descriptive analytics
- D. Prescriptive analytics
Answer: D
NEW QUESTION # 169
The bullwhip, or whiplash, effect on inventories begins when retailers face uncertain demand from consumers caused by randomness in buying habits. It can be avoided by:
- A. Shortages that may lead to rationing by suppliers or manufacturers and hoarding by manufacturers or retailers.
- B. Changes in price that may encourage purchases in anticipation of future increases.
- C. Sharing of information and coordination among the organizations in the supply chain.
- D. The need to purchase or manufacture goods in cost-efficient batches.
Answer: C
Explanation:
Sharing information about sales, inventory, pricing, advertising campaigns, and sales forecasts by all functions and organizations in the supply chain moderates demand uncertainty for all parties. The desired results are (1) minimization of inventories held by suppliers, manufacturers, and retailers; (2) avoidance of stock outs; (3) fewer rush orders; and (4) production as needed by retailers.
NEW QUESTION # 170
A small client recently put its cash disbursements system on a server. About which of the following internal control features would an auditor most likely be concerned?
- A. Programming of the applications are in Visual Basic rather than Java.
- B. Only one employee has the password to gain access to the cash disbursement system.
- C. The server is operated by employees who have cash custody responsibilities.
- D. There are restrictions on the amount of data that can be stored and on the length of time that data can be stored.
Answer: C
Explanation:
Segregation of duties is a basic category of control activities AU 319). Functions are incompatible if a person is in a position both to perpetrate and conceal fraud or errors.
Hence, the duties of authorizing transactions, recording transactions, and custody of assets should be assigned to different people. Those employees that operate the server may be able to override the controls to change records to conceal a theft of cash.
NEW QUESTION # 171
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. 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.
- B. Introduce the policy region by region, using any lessons learned to change the subsequent version of the policy for the next area.
- C. Deploy the policy in the corporate headquarters' language, so everyone gets an unfiltered version simultaneously.
- D. Consult with legal and operational management in each affected country to ensure the final version can be implemented globally, following audit committee approval.
Answer: D
NEW QUESTION # 172
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 point downward with a minimal slope.
- B. The "Funds Needed" line will remain pointed upward, but will become more steep.
- C. The "Funds Needed" line will remain pointed upward, but will become less steep.
- D. The "Funds Needed" line will point downward with an extreme slope.
Answer: B
NEW QUESTION # 173
A bank plans to open a branch in one of five locations (labeled L1, L2, L3, L4, L5). Demand for bank services may be high, medium, or low at each of these locations Profits for each location-demand combination are presented in the payoff matrix.
If the bank uses the minimax regret criterion for selecting the location of the branch. it will select:
- A. L2.
- B. L3.
- C. L5.
- D. LI
Answer: A
Explanation:
Under the minimax regret criterion, the decision maker selects the choice that minimizes the maximum regret (opportunity cost). The maximum regret for each location is determined from the opportunity loss matrix.
NEW QUESTION # 174
An entity has US $400 of current assets, composed of US $200 of cash, US $100 of accounts receivable, and US $100 of inventory. The entity has US $200 of long-term debt, US $100 of accounts payable, and US $75 of notes payable. The notes payable are due in 6 months. The acid-test ratio, to two decimal places, is:
- A. 0.80
- B. 1.29
- C. 1.71
- D. 2.29
Answer: C
Explanation:
The acid-test ratio equals current assets US $400) minus inventories US $100), divided by current liabilities US $100 + $75 = US $175), or 1.71.
NEW QUESTION # 175
Both users and management approve the initial proposal, design specifications, conversion plan, and testing plan of an information system. This is an example of:
- A. Data security controls.
- B. Computer operations controls.
- C. Hardware controls.
- D. Implementation controls.
Answer: D
Explanation:
Implementation controls occur in the systems development process at various points to ensure that implementation is properly controlled and managed.
NEW QUESTION # 176
The ABC Company manufactures components for use in producing one of its finished products. When 12,000 units are produced, the full cost per unit is US $35, separated as follows: The XYZ Company has offered to sell 12,000 components to ABC for US $37 each. If ABC accepts the offer, some of the facilities currently being used to manufacture the components can be rented as warehouse space for US $40,000. However, US $3 of the fixed overhead currently applied to each component would have to be covered by ABC's other products. What is the differential cost to the ABC Company of purchasing the components from the XYZ Company?
- A. US $24,000
- B. US $8,000
- C. US $20,000
- D. US $44,000
Answer: C
Explanation:
Differential incremental) cost is the difference in total cost between two decisions. The relevant costs do not include unavoidable costs, such as the US $3 of fixed overhead. It would cost ABC an additional US $20,000 to purchase, rather than manufacture, the components.
The segmented income statement for a retail company with three product lines is presented below:
The company buys the goods in the three product lines directly from manufacturers' representatives. Each product line is directed by a manager whose salary is included in the administrative expenses. Administrative expenses are allocated to the three product lines equally because the administration is spread evenly among the three product lines.
Salaries represent payments to the workers in each product line and therefore are traceable costs of each product line. Advertising promotes the entire company rather than the individual product lines. As a result, the advertising is allocated to the three product lines in proportion to the sales revenue. Commissions are paid to the salespersons in each product line based on 2% of gross sales. Rent represents the cost of the retail store and warehouse under a lease agreement with 5 years remaining. The product lines share the retail and warehouse space, and the rent is allocated to the three product lines based on the square footage occupied by each of the product lines.
NEW QUESTION # 177
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The IIA-CIA-Part3 exam is a computer-based test that consists of 100 multiple-choice questions. Candidates have 2.5 hours to complete the exam, and they must score at least 600 out of 800 to pass. The exam is offered at Pearson VUE testing centers around the world and can be taken in English, Spanish, Portuguese, or Chinese.
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