[Nov 13, 2021] Get New IIA-CIA-Part3 Certification – Valid Exam Dumps Questions
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NEW QUESTION 204
To be more responsive to its customers, a bank wants a system that will permit account representatives to consolidate information about all the a-r-punts belonging to individual customers. Bank management is willing to experiment with different approach approaches because the requirements are evolving rapidly. The best development approach for this system is:
- A. Prototyping.
- B. System development life cycle model.
- C. Structured analysis and design technique.
- D. Hierarchy-input-process-output
Answer: A
Explanation:
Prototyping is an approach that involves creating a working model of the system requested, demonstrating it for the user, obtaining feedback. and making changes to the underlying code. This process repeats through several iterations until the user is satisfied with the system's functionality. Formerly, this approach was derided as being wasteful of resources and tending to produce unstable systems, but with vastly increased processing power and high-productivity development tools. prototyping can, in some cases, be an efficient means of systems development.
NEW QUESTION 205
Which of the following statements is true regarding outsourced business processes?
- A. The system of internal controls may be better and more efficient when the business process is outsourced compared to internally sourced.
- B. The key controls of outsourced business processes typically are more difficult to audit because they are designed and managed externally.
- C. Generally, independence is improved when the internal audit activity reviews outsourced business processes.
- D. Outsourced business processes should not be considered in the internal audit universe because the controls are owned by the external service provider.
Answer: A
NEW QUESTION 206
The practice of recording advanced payments from customers as liabilities is an application of the:
- A. Historic cost principle.
- B. Going concern assumption.
- C. Revenue recognition principle.
- D. Monetary unit assumption.
Answer: C
Explanation:
Since the amount received in cash has not yet been earned, it is appropriate to record the advance payment as a liability of the company. This is an example of the revenue recognition principle. Which states that revenue should not be recognized until it is earned.
NEW QUESTION 207
A retail organization mistakenly did not include S10.000 of inventory in the physical count at the end of the year. What was the impact to the organization's financial statements?
- A. Cost of sales is understated and net income is overstated.
- B. Cost of sales is overstated and net income is understated.
- C. Cost of sales and net income are understated
- D. Cost of sales and net income are overstated
Answer: A
NEW QUESTION 208
An internal auditor discovered that several unauthorized modifications were made to the production version of an organization's accounting application. Which of the following best describes this deficiency?
- A. Change controls weakness.
- B. Application controls weakness.
- C. Authorization controls weakness.
- D. Production controls weakness.
Answer: A
NEW QUESTION 209
An organization accumulated the following data for the prior fiscal year: Value of Percentage of
Quarter Output Produced Cost X
1 $4,750,000
2.9
2 $4,700,000
3.0
3 $4,350,000
3.2
4 $4,000,000
3.5
Based on this data, which of the following describes the value of Cost X in relation to the value of Output Produced?
- A. Cost X is a variable cost.
- B. Cost X and the value of Output Produced are unrelated.
- C. Cost X is a fixed cost.
- D. Cost X is a semi-fixed cost.
Answer: C
NEW QUESTION 210
An entity has 10.000 outstanding shares with a market value of US $25 each. It just paid a US $1 per share dividend. Dividends are expected to grow at a constant rate of 10%. If flotation costs are 5% of the selling price, the cost of new equity financing is calculated by the following formula.
- A. Option A
- B. Option B
- C. Option C
- D. Option D
Answer: C
Explanation:
The cost of new equity is calculated by adding the expected dividend yield, based on the net proceeds of the new issue, to the expected dividend growth rate. The expected dividend at the end of the period equals the dividend at time zero times one plus the expected dividend growth rate. Net proceeds received by the entity when issuing one ordinary share equals the market price of a share times one minus the flotation cost percentage. Flotation costs include items such as underwriting fees. printing, and advertising. The calculation of the cost of new equity is as follows:
NEW QUESTION 211
Which of the following COSO internal control framework components encompasses establishing structures, reporting lines, authorities, and responsibilities?
- A. Control activities.
- B. Information and communication.
- C. Monitoring.
- D. Control environment.
Answer: D
NEW QUESTION 212
The following information relates to the activity of the defined postemployment benefit plan of Twain Publishers, Ltd.
Twain's expense recognized in the income statement is
- A. US $120,000
- B. US $145,000
- C. US $135,000
- D. US $140,000
Answer: B
Explanation:
Components of the expense are current service cost, interest cost, the expected return on plan assets, service cost recognition in full of vested amounts and amortization of nonvested amounts), and amortization of actuarial loss. Current service cost interest cost the amortization of actuarial loss, and the past service cost increase the expense The expected return on plan assets decreases the expense.
NEW QUESTION 213
The capital budgeting model that is generally considered the best model for long-range decision making is the:
- A. Unadjusted rate of return model.
- B. Payback model.
- C. Accounting rate of return model.
- D. Discounted cash flow model.
Answer: D
Explanation:
The capital budgeting methods that are generally considered the best for long-range decision making are the internal rate of return and net present value methods. These are both discounted cash flow methods.
NEW QUESTION 214
Which of the following statements is true regarding the roles and responsibilities associated with a corporate social responsibility (CSR) program?
- A. The internal audit activity is responsible for ensuring that CSR principles are integrated into the organization's policies and procedures.
- B. Management has overall responsibility for the effectiveness of governance, risk management, and internal control processes associated with the CSR program.
- C. Every employee has a responsibility for ensuring the success of the organization's CSR objectives.
- D. The board has overall responsibility for the internal control processes associated with the CSR program.
Answer: C
NEW QUESTION 215
Which of the following is not a barrier to effective communication?
- A. Similar frames of reference.
- B. Filtering.
- C. Communication overload.
- D. Lack of source credibility.
Answer: A
NEW QUESTION 216
Most large-scale computer systems maintain at least three program libraries: production library for running programs); source code library maintains original source coding); and test library for programs which are being changed). Which of the following statements is correct regarding the implementation of sound controls over computer program libraries?
- A. Only the program librarian should be allowed to make changes to the production library.
- B. Users should have access to the test library to determine whether all changes are properly made.
- C. The computer operator should have access to both the production library and the source code library to assist in diagnosing computer crashes.
- D. Only programmers should have access to the production library.
Answer: A
Explanation:
The program librarian is accountable for, and has custody of, the programs in the production library.
NEW QUESTION 217
Business process reengineering is most likely to:
- A. Implement modern information systems technology to eliminate some controls.
- B. Improve existing procedures.
- C. Be applied within individual departments.
- D. Apply a continuous improvement model.
Answer: A
Explanation:
Reengineering and TQM techniques eliminate many traditional controls. They exploit modern technology to improve productivity and decrease the number of clerical workers. Thus, controls should be automated and self-correcting and require minimal human intervention. Moreover, auditors must be prepared to encounter and use) new technologies.
The emphasis therefore shifts to monitoring so management can determine when an
operation may be out of control and corrective action is needed.
NEW QUESTION 218
The most important component of quality control is:
- A. Ensuring goods and services conform to the design specifications.
- B. Conforming with ISO-9000 specifications.
- C. Satisfying upper management.
- D. Determining the appropriate timing of inspections.
Answer: A
Explanation:
The intent of quality control is to ensure that goods and services conform to the design
specifications. Whether the focus is on feed forward, feedback, or concurrent control, the emphasis is on ensuring product or service conformity.
NEW QUESTION 219
Based on test results, an IT auditor concluded that the organization would suffer unacceptable loss of data if there was a disaster at its data center. Which of the following test results would likely lead the auditor to this conclusion?
- A. Critical systems have been backed up more frequently than required.
- B. Critical system backup tapes are taken off site less frequently than required
- C. Requested backup tapes were not returned from the offsite vendor in a timely manner.
- D. Returned backup tapes from the offsite vendor contained empty spaces.
Answer: C
NEW QUESTION 220
Quality control programs employ many tools for problem definition and analysis. A scatter diagram is one of these tools. The objective of a scatter diagram is to:
- A. Show frequency distribution in graphic form.
- B. Display a population of items for analysis.
- C. Divide a universe of data into homogeneous groups.
- D. Show the vital trend and separate trivial items.
Answer: B
Explanation:
The objective of a scatter diagram is to depict degrees of correlation. Each observation is represented by a dot on a graph corresponding to specific values of x (the independent variable) and)/(the dependent variable).
NEW QUESTION 221
Which of the following price adjustment strategies encourages prompt payment?
- A. Quantity discounts.
- B. Seasonal discounts.
- C. Cash discounts.
- D. Functional discounts.
Answer: C
NEW QUESTION 222
Which of the following authentication controls combines what a user knows with the unique characteristics of the user respectively?
- A. Password and token
- B. Voice recognition and token.
- C. Fingerprint and voice recognition
- D. Password and fingerprint.
Answer: D
NEW QUESTION 223
Product-quality-related costs are part of a total quality control program. A product-quality related cost incurred in detecting individual products that do not conform to specifications is an example of a n)
- A. Appraisal cost.
- B. Prevention cost.
- C. Opportunity cost.
- D. External failure cost.
Answer: A
Explanation:
Quality-related costs can be subdivided into four categories: external failure costs, internal failure costs, prevention costs, and appraisal costs. Appraisal costs embrace such activities as statistical quality control programs, inspection, and testing. Thus, the cost of detecting nonconforming individual products is an appraisal cost.
NEW QUESTION 224
User acceptance testing is more important in an object-oriented development process than in a traditional environment because of the implications of the:
- A. Inheritance of properties in hierarchies.
- B. Lack of a tracking system for changes.
- C. Absence of traditional design documents.
- D. Potential for continuous monitoring.
Answer: A
Explanation:
In object-oriented development, all objects in a class inherit the properties of higher classes in the hierarchy. Thus, changes in one object may affect many other objects, and the extent and effects of errors significantly increase. Testing one object provides no assurance that the objects are properly coordinated. Accordingly, user acceptance testing to verify correct functioning of the whole system becomes more important.
NEW QUESTION 225
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