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IIA-CIA-Part3 Free Certification Exam Material with 344 Q&As
IIA-CIA-Part3 exam is a challenging exam that requires candidates to have a strong foundation in business processes, financial management, risk management, and governance. Candidates are advised to prepare thoroughly for the exam by studying the official IIA-CIA-Part3 study materials, attending training courses, and taking practice exams. The IIA also provides online resources and study groups to help candidates prepare for the exam.
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IIA-CIA-Part3 exam is conducted by the Institute of Internal Auditors (IIA), which is a professional organization that represents internal auditors worldwide. To take the exam, candidates must have completed the IIA-CIA-Part1 and IIA-CIA-Part2 exams. The IIA-CIA-Part3 exam is a four-hour computer-based exam that consists of 100 multiple-choice questions. IIA-CIA-Part3 exam is designed to test the candidate's knowledge in four key areas: Business Acumen, Information Security, Information Technology, and Financial Management. Passing IIA-CIA-Part3 exam is an important step towards becoming a Certified Internal Auditor (CIA).
NEW QUESTION # 147
Organization X owns a 38 percent equity stake in Organization Y. Which of the following statements is true regarding the financial treatment for this relationship?
- A. X must consolidate the financial statements for both organizations
- B. Y should not be reported by X as X does not have a controlling interest
- C. Y should be listed as an investment asset on X's balance sheet
- D. Y should be reported as a footnote to X's financial statements
Answer: C
NEW QUESTION # 148
Which of the following criteria would be most useful to a sales department manager in evaluating the performance of the manager's customer-service group?
- A. Employees should maintain a positive attitude when dealing with customers.
- B. The customer is always right.
- C. Customer complaints should be processed promptly.
- D. All customer inquiries should be answered within 7 days of receipt.
Answer: D
Explanation:
A criterion that requires all customer inquiries to be answered within 7 days of receipt permits accurate measurement of performance. The quantitative and specific nature of the appraisal using this standard avoids the vagueness, subjectivity, and personal bias that may afflict other forms of personnel evaluations.
NEW QUESTION # 149
At the beginning of Year 1 a company began work on a 3-year construction contract.
This contract is accounted for by the percentage-of-completion method for financial accounting purposes and the completed-contract method for tax purposes. Dun l fig "(par 1, the company reported US $800,UUU of in from this contract. However, because of cost overruns incurred in Year 2 the company reported a US $500,000 loss from this contract. What should the company's Year 2 balance sheet include?
- A. Option A
- B. Option C
- C. Option D
- D. Option B
Answer: C
Explanation:
A deferred tax liability is recognized for the deferred tax consequences attributable to most taxable temporary differences. A deferred tax asset is recognized for the deferred tax consequences attributable to most deductible temporary differences but only to the probable that taxable profit will be available to permit the use of those amounts.
AL the end of Year the cumulative effect of the difference in accounting for financial reporting and tax purposes is a US $300.000$800,000 - $500,000) temporary difference Because this US $300,000 temporary difference will result in future taxable amounts, it is a taxable temporary difference for which a deferred tax liability is recognized.
The following relates to PLC for Year 1 and Year 2.
Profit before income taxes in Year 1 included rent income of US $80,000 that was not subject to income tax until its receipt in Year 2.
Lally was subject to an effective income tax rate of 40% in Year 1 and Year 2.
NEW QUESTION # 150
The EOQ economic order quantity) model calculates the cost-minimizing quantity of a product to order, based an a constant annual demand, carrying costs per unit per annum, and cost per order. For example, the EOQ is approximately 447 units if the annual demand is 10,000 units, carrying costs are US $1 per item per annum, and the cost of placing an order is US $10. What will the EOQ be if the demand falls to 5,000 units per annum and the carrying and ordering costs remain at US $1 and US $10, respectively?
- A. 0
- B. 1
- C. 2
- D. 3
Answer: A
Explanation:
The ECQ formula is
X = (2AD/K)1/2
NEW QUESTION # 151
Which line segment represents the reorder lead time?
- A. BC.
- B. AE.
- C. AF.
- D. AB.
Answer: A
Explanation:
The quantity of inventory on hand is represented by they axis and time by the axis. The reorder lead time is represented by the line segment BC. The diagram presented represents the economic circler quantity ECQ) model.
NEW QUESTION # 152
A cost-volume-profit model developed in a dynamic environment determined that the estimated parameters used may vary between limits. Subsequent testing of the model with respect to all possible values of the estimated parameters is termed:
- A. A sensitivity analysis.
- B. Statistical estimation.
- C. Statistical hypothesis testing.
- D. A time-series study.
Answer: A
Explanation:
After a problem has been formulated into any mathematical model, it may be subjected to sensitivity analysis. Sensitivity analysis examines how the model's outcomes change as the parameters change.
NEW QUESTION # 153
Which of the following are typical responsibilities for operational management within a risk management program?
1. Implementing corrective actions to address process deficiencies.
2. Identifying shifts in the organization's risk management environment.
3. Providing guidance and training on risk management processes.
4. Assessing the impact of mitigation strategies and activities.
- A. 1 and 2 only
- B. 3 and 4 only
- C. 2 and 3 only
- D. 1 and 4 only
Answer: D
NEW QUESTION # 154
Which of the following responsibilities would ordinary fall under the help desk function of an organization?
- A. Physical hosting of mainframes and distributed servers
- B. End-to -end security architecture design.
- C. Management of infrastructure services, including network management.
- D. Maintenance service items such as production support.
Answer: C
NEW QUESTION # 155
An organization is considering the outsourcing of its business processes related to payroll and information technology functions. Which of the following is the most significant area of concern for management regarding this proposed agreement?
- A. Ensuring that payments to the vendor are appropriate and timely for the services delivered.
- B. Ensuring that there are means of monitoring the efficiency of the outsourced process.
- C. Ensuring that there are means of monitoring the effectiveness of the outsourced process.
- D. Ensuring that the vendor has complete management control of the outsourced process.
Answer: C
NEW QUESTION # 156
Which of the following situations best illustrates a "false positive" in the performance of a spam filter?
- A. The spam filter removed Incoming communication that included certain keywords and domains.
- B. The spam filter routed to the "junk|r folder a newsletter that appeared to include links to fake websites.
- C. The spam filter deleted commercial ads automatically, as they were recognized as unwanted.
- D. The spam filter blocked a fitness club gift card that coworkers sent to an employee for her birthday.
Answer: D
NEW QUESTION # 157
A characteristic of the basic economic order quantity EOQ) model is that it:
- A. Should not be used in conjunction with computerized perpetual inventory systems.
- B. Is relatively insensitive to error.
- C. Should not be used when carrying costs are large in relation to procurement costs.
- D. Is used when product demand, lead-time, and ordering costs are uncertain.
Answer: B
Explanation:
The basic EOQ model equals the square root of the quotient of 1) the product of twice the demand times the cost per order, ) divided by the periodic carrying cost. Hence, the model is relatively insensitive to error. A given percentage error in a value results in a lower percentage change in the EOQ.
NEW QUESTION # 158
An organization decided to install a motion detection system in its warehouse to protect against after-hours theft. According to the COSO enterprise risk management framework, which of the following best describes this risk management strategy?
- A. Reduction.
- B. Elimination.
- C. Sharing.
- D. Avoidance.
Answer: A
NEW QUESTION # 159
Governments most likely restrict trade in the long run to:
I. Help foster new industries.
II. Protect declining industries.
III. Increase tax revenues.
IV.
Foster national security.
- A. I only
- B. I and II only
- C. II and III only
- D. I, II, and IV only
Answer: B
Explanation:
Governmental impediments to global competition are generally imposed for the announced purpose of protecting local entities and jobs and developing new industries.
They also may have the effect of raising revenue in the short run. In the long run, tax and revenues will decline because of reduced trade. Examples of governmental impediments are tariffs; duties; quotas; domestic content rules; preferences for local entities regarding procurement, taxes. R&D, labor regulations, and other operating rules; and laws e.g., anti bribery or tax) enacted by a national government that impede national entities from competing globally. These impediments are most likely when industries are viewed as crucial.
NEW QUESTION # 160
Residual income is often preferred over return on investment ROI as a performance evaluation because
- A. Average investment is employed with residual income while year-end investment is employed with ROI.
- B. Residual income is a measure over time while ROI represents the results for a single time period.
- C. The imputed interest rate used in calculating residual income is more easily derived than the target rate that is compared to the calculated ROI.
- D. Residual income concentrates on maximizing absolute amounts of income rather than a percentage return as with ROI.
Answer: D
Explanation:
Residual income concentrates on earnings in excess of the minimum desired return. With ROI, a segment may reject a project that exceeds Beds the minimum return if the project will decrease the segment's overall ROI. For example, a project that earns an ROI of 22%, which is greater than the target rate of 20%, might be rejected if the segment is currently earning 25%. because the project will decrease the segments ROI. This would not occur if performance was measured using residual income.
NEW QUESTION # 161
To remove the effect of seasonal variation from a time series, original data should be:
- A. Divided by the seasonal factor.
- B. Increased by the seasonal factor.
- C. Reduced by the seasonal factor.
- D. Multiplied by the seasonal factor.
Answer: A
Explanation:
Seasonal variations are common in many businesses. To remove the effect of seasonal variation from a time series, the original data (with the four trends) is divided by the seasonal norm.
NEW QUESTION # 162
Which of the following is not a potential area of concern when an internal auditor places reliance on spreadsheets developed by users?
- A. Ability to meet user needs.
- B. Hidden data columns or worksheets.
- C. Interface with corporate systems.
- D. Increasing complexity over time.
Answer: A
NEW QUESTION # 163
Setting the introductory price of a new product relatively high is:
- A. Market-based pricing.
- B. Pricing by intermediaries.
- C. Penetration pricing.
- D. Price skimming.
Answer: D
Explanation:
Price skimming is the practice of setting an introductory price relatively high to attract buyers who are not concerned about price and to recover research and development costs rather quickly. The opposite approach is to use penetration pricing, which involves setting a relatively low price to gain deep market penetration quickly.
NEW QUESTION # 164
The average collection period for an entity measures the number of days:
- A. For a typical check to "clear" through the banking system.
- B. Before a typical account becomes delinquent.
- C. Beyond the end of the credit period before a typical customer payment is received.
- D. After a typical credit sale is made until the entity receives the payment.
Answer: D
Explanation:
The average collection period measures the number of days between the date of sale and the date of collection. It should be related to an entity's credit terms. For example, an entity that allows terms of 2/15, net 30, should have an average collection period of somewhere between 15 and 30 days.
NEW QUESTION # 165
The following information and diagram apply to a project:
The earliest completion time for the project is:
- A. 11 days.
- B. 15 days.
- C. 20 days.
- D. 14 days.
Answer: B
Explanation:
The two paths through the network are A-C-E (5+4 + 6= 15days) and B-D-E (3 + 2 + 6 = 11 days). The critical or longest path is thus A-C-E. Hence, the earliest completion time is 15 days.
NEW QUESTION # 166
Which of the following should software auditors do when reporting internal audit findings related to enterprise wide resource planning?
- A. Include technical details to support IT issues
- B. Connect IT audit findings to business issues
- C. Include an opinion on financial reporting accuracy and completeness
- D. Draft separate audit reports for business and IT management
Answer: D
NEW QUESTION # 167
Which of the following are typical responsibilities for operational management within a risk
management program?
1.Implementing corrective actions to address process deficiencies.
2.Identifying shifts in the organization's risk management environment.
3.Providing guidance and training on risk management processes.
4.Assessing the impact of mitigation strategies and activities.
- A. 1 and 2 only
- B. 3 and 4 only
- C. 2 and 3 only
- D. 1 and 4 only
Answer: D
NEW QUESTION # 168
Consolidated financial statements are typically prepared when one entity has a majority voting interest in another unless:
- A. The fiscal year-ends of the two entities are more than 3 months apart.
- B. The subsidiary is a financial institution.
- C. Control does not rest with the majority owners.
- D. The two entities are in unrelated industries, such as manufacturing and real estate.
Answer: C
Explanation:
Consolidation normally is required when one entity owns, directly or indirectly, more than 50% of the outstanding voting interests of another entity. However, a majority owned subsidiary is not consolidated if control does not rest with the majority owners.
NEW QUESTION # 169
Which of the following statements is true regarding a bring-your-own-device (BYOD) environment?
- A. There is a greater need for organizations to rely on users to comply with policies and procedures.
- B. Incident response times are less critical in the BYOD environment, compared to a traditional environment
- C. With fewer devices owned by the organization, there is reduced need to maintain documented policies and procedures.
- D. There is greater sharing of operational risk in a BYOD environment
Answer: A
NEW QUESTION # 170
Which of the following risks is not greater in an electronic funds transfer EFT environment than in a manual system using paper transactions?
- A. Duplicate transaction processing.
- B. Inadequate backup and recovery capabilities.
- C. Unauthorized access and activity.
- D. Higher cost per transaction.
Answer: D
Explanation:
EFT is a service provided by financial institutions worldwide that is based on EDI technology. EFT transaction costs are lower than for manual systems because documents and human intervention are eliminated from the transactions process.
NEW QUESTION # 171
The Entity has dividend-payout ratio of:
- A. 19.6%
- B. 40.0%
- C. 28.6%
- D. 50.0%
Answer: D
Explanation:
The dividend-payout ratio is the ratio of dividends paid to profit for the period. Hence, it equals 50.0% US $100 dividends $200 profit). An entity's financial statements for the current year are presented below:
NEW QUESTION # 172
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