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IIA-CIA-Part3 Questions and Answers

Question # 6

An organization selected a differentiation strategy to compete at the business level. Which of the following structures best fits this strategic choice?

A.

Functional structure.

B.

Divisional structure.

C.

Mechanistic structure.

D.

Functional structure with cross-functional teams.

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Question # 7

An organization discovered fraudulent activity involving the employee time-tracking system. One employee regularly docked in and clocked out her co-worker friends on their days off, inflating their reported work hours and increasing their wages. Which of the following physical authentication devices would be most effective at disabling this fraudulent scheme?

A.

Face or finger recognition equipment,

B.

Radiofrequency identification chips to authenticate employees with cards.

C.

A requirement to clock in and clock out with a unique personal identification number.

D.

A combination of a smart card and a password to clock in and clock out.

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Question # 8

Which of the following accounting methods is an investor organization likely to use when buying 40 percent of the stock of another organization?

A.

Cost method.

B.

Equity method .

C.

Consolidation method.

D.

Fair value method.

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Question # 9

A clothing company sells shirts for $8 per shirt. In order to break even, the company must sell 25.000 shirts. Actual sales total S300.000. What is margin of safety sales for the company?

A.

$100.000

B.

$200,000

C.

$275,000

D.

$500,000

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Question # 10

On the last day of the year, a total cost of S 150.000 was incurred in indirect labor related to one of the key products an organization makes. How should the expense be reported on that year's financial statements?

A.

It should be reported as an administrative expense on the income statement.

B.

It should be reported as period cost other than a product cost on the management accounts

C.

It should be reported as cost of goods sold on the income statement.

D.

It should be reported on the balance sheet as part of inventory.

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Question # 11

A manager at a publishing company received an email that appeared to be from one of her vendors with an attachment that contained malware embedded in an Excel spreadsheet . When the spreadsheet was opened, the cybercriminal was able to attack the company's network and gain access to an unpublished and highly anticipated book. Which of the following controls would be most effective to prevent such an attack?

A.

Monitoring network traffic.

B.

Using whitelists and blacklists to manage network traffic.

C.

Restricting access and blocking unauthorized access to the network

D.

Educating employees throughout the company to recognize phishing attacks.

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Question # 12

Which of the following types of date analytics would be used by a hospital to determine which patients are likely to require remittance for additional treatment?

A.

Predictive analytics.

B.

Prescriptive analytics.

C.

Descriptive analytics.

D.

Diagnostic analytics.

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Question # 13

Which of the following statements distinguishes a router from a typical switch?

A.

A router operates at layer two. while a switch operates at layer three of the open systems interconnection model.

B.

A router transmits data through frames, while a switch sends data through packets.

C.

A router connects networks, while a switch connects devices within a network.

D.

A router uses a media access control address during the transmission of data, whie a switch uses an internet protocol address.

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Question # 14

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

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Question # 15

Which of the following is a characteristic of big data?

A.

Big data is often structured.

B.

Big data analytic results often need to be visualized.

C.

Big data is often generated slowly and is highly variable.

D.

Big data comes from internal sources kept in data warehouses.

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Question # 16

An internal auditor has requested the organizational chart in order to evaluate the control environment of an organization. Which of the following is a disadvantage of using the organizational chart?

A.

The organizational chart shows only formal relationships.

B.

The organizational chart shows only the line of authority.

C.

The organizational chart shows only the senior management positions.

D.

The organizational chart is irrelevant when testing the control environment.

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Question # 17

An organization and its trading partner rely on a computer-to-computer exchange of digital business documents. Which of the following best describes this scenario?

A.

Use of a central processing unit

B.

Use of a database management system

C.

Use of a local area network

D.

Use of electronic data Interchange

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Question # 18

When evaluating the help desk services provided by a third-party service provider which of the following is likely to be the internal auditor's greatest concern?

A.

Whether every call that the service provider received was logged by the help desk.

B.

Whether a unique identification number was assigned to each issue identified by the service provider

C.

Whether the service provider used its own facilities to provide help desk services

D.

Whether the provider's responses and resolutions were well defined according to the service-level agreement.

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Question # 19

Which of the following organization structures would most likely be able to cope with rapid changes and uncertainties?

A.

Decentralized

B.

Centralized

C.

Departmentalized

D.

Tall structure

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Question # 20

According to IIA guidance, which of the following best describes an adequate management (audit.) trail application control for the general ledger?

A.

Report identifying data that is outside of system parameters

B.

Report identifying general ledger transactions by time and individual.

C.

Report comparing processing results with original Input

D.

Report confirming that the general ledger data was processed without error

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Question # 21

An organization's technician was granted a role that enables him to prioritize projects throughout the organization. Which type of authority will the technician most likely be exercising?

A.

Legitimate authority

B.

Coercive authority.

C.

Referent authority.

D.

Expert authority.

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Question # 22

Which of the following best describes a cyberattacK in which an organization faces a denial-of-service threat created through malicious data encryption?

A.

Phishing.

B.

Ransomware.

C.

Hacking.

D.

Makvare

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Question # 23

The internal audit activity has identified accounting errors that resulted in the organization overstating its net income for the fiscal year. Which of the following is the most likely cause of this overstatement?

A.

Beginning inventory was overstated for the year.

B.

Cost of goods sold was understated for the year.

C.

Ending inventory was understated for the year.

D.

Cost of goods sold was overstated for the year.

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Question # 24

Which of the following is an example of a contingent liability that a company should record?

A.

A potential assessment of additional income tax.

B.

Possible product warranty costs.

C.

The threat of a lawsuit by a competitor.

D.

The remote possibility of a contract breach.

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Question # 25

Which of the following actions should an internal auditor take to clean the data obtained for analytics purposes?

A.

Deploys data visualization tool.

B.

Adopt standardized data analysis software.

C.

Define analytics objectives and establish outcomes.

D.

Eliminate duplicate records.

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Question # 26

An organization had a gross profit margin of 40 percent in year one and in year two. The net profit margin was 18 percent in year one and 13 percent in year two. Which of the following could be the reason for the decline in the net profit margin for year two?

A.

Cost of sales increased relative to sales.

B.

Total sales increased relative to expenses.

C.

The organization had a higher dividend payout rate in year two.

D.

The government increased the corporate tax rate

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Question # 27

An organization is considering outsourcing its IT services, and the internal auditor as 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.

Loss of data privacy.

C.

Inadequate staffing.

D.

Violation of contractual terms.

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Question # 28

Management has decided to change the organizational structure from one that was previously decentralized to one that is now highly centralized. As such: which of the

following would be a characteristic of the now highly centralized organization?

A.

Top management does little monitoring of the decisions made at lower levels.

B.

The decisions made at the lower levels of management are considered very important.

C.

Decisions made at lower levels in the organizational structure are few.

D.

Reliance is placed on top management decision making by few of the organization's departments.

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Question # 29

What kind of strategy would be most effective for an organization to adopt in order to Implement a unique advertising campaign for selling identical product lines across all of its markets?

A.

Export strategy.

B.

Transnational strategy

C.

Multi-domestic strategy

D.

Globalization strategy

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Question # 30

Which of the following attributes of data are cybersecurity controls primarily designed to protect?

A.

Veracity, velocity, and variety.

B.

Integrity, availability, and confidentiality.

C.

Accessibility, accuracy, and effectiveness.

D.

Authorization, logical access, and physical access.

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Question # 31

If an organization has a high amount of working capital compared to the industry average, which of the following is most likely true?

A.

Settlement of short-term obligations may become difficult.

B.

Cash may be bed up in items not generating financial value.

C.

Collection policies of the organization are ineffective.

D.

The organization is efficient in using assets to generate revenue.

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Question # 32

According to Herzberg's Two-Factor Theory of Motivation, which of the following is a factor mentioned most often by satisfied employees?

A.

Security.

B.

Status.

C.

Recognition.

D.

Relationship with coworkers

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Question # 33

Which of the following physical access controls often functions as both a preventive and detective control?

A.

Locked doors.

B.

Firewalls.

C.

Surveillance cameras.

D.

Login IDs and passwords.

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Question # 34

When management uses the absorption costing approach, fixed manufacturing overhead costs are classified as which of the following types of costs?

A.

Direct, product costs.

B.

Indirect product costs.

C.

Direct period costs,

D.

Indirect period costs

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Question # 35

According to 11A guidance on IT, which of the following are indicators of poor change management?

1. Inadequate control design.

2. Unplanned downtime.

3. Excessive troubleshooting .

4. Unavailability of critical services.

A.

2 and 3 only.

B.

1, 2, and 3 only

C.

1, 3, and 4 only

D.

2, 3, and 4 only

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Question # 36

Which of the following is on advantage of a decentralized organizational structure, as opposed to a centralized structure?

A.

Greater cost-effectiveness

B.

Increased economies of scale

C.

Larger talent pool

D.

Strong internal controls

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Question # 37

An organization that relies heavily on IT wants to contain the impact of potential business disruption to a period of approximately four to seven days. Which of the following

business recovery strategies would most efficiently meet this organization's needs?

A.

A recovery strategy whereby a separate site has not yet been determined, but hardware has been reserved for purchase and data backups.

B.

A recovery strategy whereby a separate site has been secured and is ready for use, with fully configured hardware and real-time synchronized data

C.

A recovery strategy whereby a separate site has been secured and the necessary funds for hardware and data backups have been reserved.

D.

A recovery strategy whereby a separate site has been secured with configurable hardware and data backups.

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Question # 38

A new manager received computations of the internal fate of return regarding the project proposal. What should the manager compare the computation results to in order to determine whether the project is potentially acceptable?

A.

Compare to the annual cost of capital

B.

Compare to the annual interest data.

C.

Compare to the required rate of return.

D.

Compare to the net present value.

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Question # 39

An internal auditor is assigned to perform data analytics. Which of the following is the next step the auditor should undertake after she has ascertained the value expected from the review?

A.

Normalize the data,

B.

Obtain the data

C.

Identify the risks.

Analyze the data.

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Question # 40

Which of the following statements is true regarding a project life cycle?

A.

Risk and uncertainty increase over the life of the project.

B.

Costs and staffing levels are typically high as the project draws to a close.

C.

Costs related to making changes increase as the project approaches completion.

D.

The project life cycle corresponds with the life cycle of the product produced by or modified by the project.

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Question # 41

Which of the following statements Is true regarding the use of centralized authority to govern an organization?

A.

Fraud committed through collusion is more likely when authority is centralized.

B.

Centralized managerial authority typically enhances certainty and consistency within an organization.

C.

When authority is centralized, the alignment of activities to achieve business goals typically is decreased.

D.

Using separation of duties to mitigate collusion is reduced only when authority is centralized.

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Question # 42

For employees, the primary value of implementing job enrichment is which of the following?

A.

Validation of the achievement of their goals anti objectives

B.

Increased knowledge through the performance of additional tasks

C.

Support for personal growth and a meaningful work experience

D.

An increased opportunity to manage better the work done by their subordinates

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Question # 43

A multinational organization allows its employees to access work email via personal smart devices. However, users are required to consent to the installation of mobile device management (MDM) software that will remotely wipe data in case of theft or other incidents. Which of the following should the organization ensure in exchange for the employees' consent?

A.

That those employees who do not consent to MDM software cannot have an email account.

B.

That personal data on the device cannot be accessed and deleted by system administrators.

C.

That monitoring of employees' online activities is conducted in a covert way to avoid upsetting them.

D.

That employee consent includes appropriate waivers regarding potential breaches to their privacy.

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Question # 44

Which of the following job design techniques would most likely be used to increase employee motivation through job responsibility and recognition?

A.

Job complicating

B.

Job rotation

C.

Job enrichment

D.

Job enlargement

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Question # 45

Which of the following should be established by management during implementation of big data systems to enable ongoing production monitoring?

A.

Key performance indicators.

B.

Reports of software customization.

C.

Change and patch management.

D.

Master data management

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Question # 46

Which of the following best describes the purpose of fixed manufacturing costs?

A.

To ensure availability of production facilities.

B.

To decrease direct expenses related to production.

C.

To incur stable costs despite operating capacity.

D.

To increase the total unit cost under absorption costing

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Question # 47

Which of the following types of budgets will best provide the basis for evaluating the organization's performance?

A.

Cash budget.

B.

Budgeted balance sheet.

C.

Selling and administrative expense budget.

D.

Budgeted income statement.

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Question # 48

Which of the following controls would be the most effective in preventing the disclosure of an organization's confidential electronic information?

A.

Nondisclosure agreements between the firm and its employees.

B.

Logs of user activity within the information system.

C.

Two-factor authentication for access into the information system.

D.

limited access so information, based on employee duties

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Question # 49

Which of the following controls is the most effective for ensuring confidentially of transmitted information?

A.

Firewall.

B.

Antivirus software.

C.

Passwords.

D.

Encryption.

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Question # 50

When determining the level of physical controls required for a workstation, which of the following factors should be considered?

A.

Ease of use.

B.

Value to the business.

C.

Intrusion prevention.

D.

Ergonomic model.

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Question # 51

A small chain of grocery stores made a reporting error and understated its ending inventory. What effect would this have on the income statement for the following year?

A.

Net income would be understated.

B.

Net income would not be affected.

C.

Net income would be overstated.

D.

Net income would be negative.

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