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IIA-CIA-Part3 exam is ideal for individuals who are interested in pursuing a career in internal auditing, particularly those who wish to specialize in business knowledge. IIA-CIA-Part3 exam provides an excellent opportunity for internal auditors to showcase their skills and knowledge in the field. Moreover, holders of the CIA certification enjoy many benefits, including enhanced professional recognition, improved job opportunities, and higher salaries.
IIA-CIA-Part3 Exam evaluates candidates' understanding of business management principles, governance, risk management, and communication skills. IIA-CIA-Part3 exam consists of 100 multiple-choice questions and lasts three hours. The questions are designed to test candidates' knowledge of the various aspects of business that internal auditors need to understand to be effective in their roles. IIA-CIA-Part3 exam is offered in English, Spanish, Portuguese, French, German, and Chinese.
IIA-CIA-Part3 certification exam is an excellent opportunity for internal auditors to demonstrate their knowledge of business concepts and principles. By passing IIA-CIA-Part3 exam, candidates can enhance their credibility and demonstrate their commitment to ongoing professional development. Additionally, the certification can lead to career advancement opportunities and higher salaries in the field of internal auditing.
NEW QUESTION # 230
In terms of international business strategy, which of the following is true regarding a multi-domestic strategy?
- A. It provides cost advantages, improves coordinated activities, and speeds product development.
- B. It is an effective strategy when large differences exist between countries.
- C. It uses the same products in all countries.
- D. It centralizes control with little decision-making authority given to the local level.
Answer: B
NEW QUESTION # 231
Which of me Wowing summarizes information about the cash receipts and cash payments for a specific time period?
- A. Income statement
- B. Owner's equity statement
- C. Statement of cash flows.
- D. Balance sheet
Answer: C
NEW QUESTION # 232
If RCF does not maintain a safety stock, the estimated total carrying costs for the computer chairs for the coming year based on their current schedule is:
- A. US $6,250
- B. US $5,000
- C. US $12,500
- D. US $4,000
Answer: A
Explanation:
Given four production runs and an annual demand of 5,000 units, each production run must generate 1,250 units. Inventory will total 1,250 units at the completion of each run but will decline to zero just prior to the next run. Thus, the average inventory is 625 units 1,250 - 2), and the total carrying cost is US $6,250 625 units x $10).
NEW QUESTION # 233
According to IIA guidance, which of the following statements is true regarding communication of engagement results?
- A. The engagement supervisor is responsible for communicating the final results to the chief audit executive and other parties who can ensure that the results are given due consideration
- B. Prior to releasing engagement results to parties outside of the organization, the audit committee must assess the potential risk to the organization, consult with senior management and/or legal counsel, and control dissemination by restricting the use of the results
- C. During an advisory engagement, if a significant governance issue is identified, it must be communicated to senior management and the board
- D. The audit committee is responsible for reviewing and approving the final engagement communication before issuance and for deciding to whom and how it will be disseminated
Answer: C
Explanation:
The IIA Standards require that significant governance, risk management, or control issues be communicated to senior management and the board, regardless of whether they arise from assurance or advisory engagements.
Option A is misleading, as it overstates the audit committee's role. Option C is incorrect because responsibility for final communication lies with the CAE, not the supervisor. Option D is also incorrect since the audit committee does not approve every report; that responsibility rests with internal audit leadership.
Reference:
IIA Standards - Standard 2440: Disseminating Results.
NEW QUESTION # 234
The investment opportunity schedule IOS) shows, in rank order, how much money the entity would invest at different rates of return. Such schedules can be drawn only for a set of projects that:
- A. Have the same investment cost.
- B. Have the same net present value.
- C. Are mutually exclusive.
- D. Are independent.
Answer: D
Explanation:
An IOS schedule is drawn for a set of independent projects. The decision to be made is whether to accept or reject each project without regard to other investment opportunities. Thus, the cash flows of one independent project are not influenced by those of another. Independence should be distinguished from mutual exclusivity.
Projects are mutually exclusive if acceptance of one requires rejection of the other.
An entity has the following three investment projects available:
The entity has a 4O f debt and 60 l equity capital structure. Each monetary unit of
investment funds will be raised in these proportions .40 of debt and .60 of equity). The
marginal cost of financing increases with the amount of new funds raised, as follows:
These investment opportunities and financing costs are shown in the graph below.
MCC=Marginal cost of capital IOS=Investment opportunity schedule
NEW QUESTION # 235
A corporation had profit for the year of US $101,504 and a simple capital structure consisting of the following ordinary shares outstanding:
What was the corporation's basic earnings per share rounded to the nearest cent)?
- A. US $3.20
- B. US $2.90
- C. US $3.45
- D. US $3.26
Answer: A
Explanation:
BEPS equals profit or loss attributable to ordinary equity holders divided by the weighted-average number of ordinary shares outstanding. The latter is calculated as follows:
C:\Documents and Settings\usernwz1\Desktop\1.PNG Accordingly, BEPS is US $3.20 $101,504 profit - 31,720 shares).
NEW QUESTION # 236
According to IIA guidance, whose input must be considered when developing the annual internal audit plan?
- A. External auditors
- B. Internal assurance providers
- C. Operational management
- D. The CEO
Answer: B
Explanation:
When developing the annual internal audit plan, the CAE must consider input from senior management, the board, and other internal assurance providers to ensure coordination and avoid duplication of efforts. While operational management, external auditors, and the CEO may also provide input, IIA Standards emphasize coordination with internal assurance providers as a mandatory step.
Reference:
IIA Standards - Standard 2050: Coordination and Reliance.
NEW QUESTION # 237
Which of the following is a distinguishing feature of managerial accounting, which is not applicable to financial accounting?
- A. Managerial accounting uses general accepted accounting principles.
- B. Managerial accounting uses double-entry accounting and cost data.
- C. Managerial accounting involves decision making based on predetermined standards.
- D. Managerial accounting involves decision making based on quantifiable economic events.
Answer: C
NEW QUESTION # 238
An inventory planning method that minimizes inventories by arranging to have raw materials and subcomponents arrive immediately preceding their use is called:
- A. A. just-in-time inventory system.
- B. An economic order quantity model.
- C. A master budgeting system.
- D. safety stock planning system.
Answer: A
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 # 239
Which of the following most appropriately describes the classification and behavior of shipping costs?
- A. Option A
- B. Option C
- C. Option B
- D. Option D
Answer: C
Explanation:
Using the high-low method, the variable and fixed costs for shipping can be calculated. The difference in cost levels divided by the difference in unit volume equals the variable cost per unit of US $1.40 [ $1 14,000 $93,000) - 70,000 - 55,000)]. The variable cost for 70,000 units is US $98,000 70,000 x $1 40). Subtracting the variable cost from total shipping cost results in the fixed cost of US $16,000 $114,000 - $98,000). A company wants to determine its marketing costs for budgeting purposes. Activity measures and costs incurred for 4 months of the current year are presented in the table below. Advertising is considered to be a discretionary cost. Salespersons are paid monthly salaries plus commissions. The sales force was increased from 20 to 21 individuals during the month of May.
NEW QUESTION # 240
Which of the following cybersecurity-related activities is most likely to be performed by the second line of defense?
- A. Deploy intrusion detection systems and conduct penetration testing
- B. implement vulnerability management with internal and external scans.
- C. Monitor incidents, key risk indicators, and remediation
- D. Administer security procedures, training, and testing.
Answer: D
NEW QUESTION # 241
Making segment disclosures is an advantage to a company because it.
- A. Facilitates evaluation of company management by providing l data on particular segments.
- B. Provides competitors with comparative information on the company's performance.
- C. Eliminates the interdependence of segments.
- D. Masks the effect of intersegment transfers.
Answer: A
Explanation:
Segment reporting is an aspect of responsibility accounting. It facilitates evaluation of company management and of the quality of the economic Investment in particular segments.
NEW QUESTION # 242
According to IIA guidance on IT, which of the following best describes a logical access control?
- A. Monitor access to the data center with closed circuit camera surveillance.
- B. Require complex passwords to be established and changed quarterly
- C. Require swipe cards to control entry into secure data centers.
- D. Maintain current role definitions to ensure appropriate segregation of duties
Answer: D
Explanation:
Logical access controls are security measures that restrict electronic access to systems, applications, and data based on user roles and permissions. These controls ensure that only authorized personnel have access to specific functions or information.
* Logical access controls enforce role-based access management, ensuring users only have permissions aligned with their job functions.
* Proper role definitions help prevent fraud and unauthorized access by enforcing segregation of duties (SoD).
* The IIA's GTAG 4 - Management of IT Auditing highlights logical access as a core security control that supports SoD.
* A. Require complex passwords to be established and changed quarterly # Incorrect. While strong passwords are an access control measure, they are not a comprehensive logical access control (they are part of authentication mechanisms).
* B. Require swipe cards to control entry into secure data centers. # Incorrect. Swipe card access is a physical access control, not a logical access control.
* C. Monitor access to the data center with closed-circuit camera surveillance. # Incorrect. CCTV surveillance is also a physical security control, not a logical access control.
* IIA GTAG 4 - Management of IT Auditing emphasizes that logical access controls should be role- based and support segregation of duties.
* IIA Standard 2110 - Governance states that organizations should maintain appropriate access controls to protect sensitive information.
* NIST SP 800-53 (Security and Privacy Controls for Federal Information Systems) identifies logical access control as a fundamental cybersecurity measure.
Why Option D is Correct?Explanation of the Other Options:IIA References & Best Practices:Thus, the correct answer is D. Maintain current role definitions to ensure appropriate segregation of duties.
NEW QUESTION # 243
Which of the following would be of greatest concern to an auditor reviewing a policy regarding the sale of a company's used personal computers to outside parties?
- A. Whether there is terminal emulation software on the computer.
- B. Whether all software on the computer is properly licensed.
- C. Whether deleted files on the hard disk drive have been completely erased.
- D. Whether the computer has viruses.
Answer: C
Explanation:
While most delete programs erase file pointers, they do not remove the underlying data. The company must use special utilities that fully erase the data. This is important because of the potential for confidential data on the microcomputers.
NEW QUESTION # 244
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 there are means of monitoring the efficiency of the outsourced process.
- B. Ensuring that the vendor has complete management control of the outsourced process.
- C. Ensuring that there are means of monitoring the effectiveness of the outsourced process.
- D. Ensuring that payments to the vendor are appropriate and timely for the services delivered.
Answer: C
NEW QUESTION # 245
Costs incurred by a manufacturer-lesser to negotiate a finance lease are:
- A. Allocated over the economic life of the leased asset.
- B. Deferred and allocated over the term of the lease in proportion to the recognition of rental income.
- C. Expensed when selling profit is recognized.
- D. Added to the gross investment in the lease.
Answer: C
Explanation:
The initial direct cost of negotiating and arranging a finance lease, e.g., commissions and legal fees, are included in the leas, receivable and allocated over the lease term.
However, similar costs of a manufacturer- or dealer-lesser incurred in negotiating and arranging a lease are excluded from initial direct costs. Thus, they are expensed when the soiling profit is recognized normally the start of the lease term IAS 17).
NEW QUESTION # 246
Which of the following statements is true regarding activity-based costing (ABC)?
- A. The primary disadvantage of an ABC costing system is less accurate product costing.
- B. An ABC costing system is similar to conventional costing systems in how it treats the allocation of manufacturing overhead.
- C. An ABC costing system may be used with either a job order or a process cost accounting system.
- D. An ABC costing system uses a single unit-level basis to allocate overhead costs to products.
Answer: C
Explanation:
Activity-Based Costing (ABC) is a cost allocation method that assigns overhead costs based on activities that drive costs rather than using a single volume-based measure like labor hours or machine hours. It provides a more accurate allocation of indirect costs to products or services.
* ABC Costing and Its Flexibility (Correct Answer: C)
* ABC can be applied to both job order costing (which tracks costs for individual products or projects) and process costing (which tracks costs across continuous production processes).
* IIA Standard 2120 - Risk Management suggests that internal auditors evaluate whether cost allocation methodologies align with business objectives and financial accuracy.
* ABC improves cost accuracy by assigning overhead to specific activities, making it useful in different costing systems.
* Why the Other Options Are Incorrect:
* A. "ABC is similar to conventional costing in how it treats overhead allocation." (Incorrect)
* Traditional costing allocates overhead based on a single cost driver, such as direct labor or machine hours.
* ABC allocates overhead based on multiple activity drivers, making it more precise.
* B. "ABC uses a single unit-level basis to allocate overhead." (Incorrect)
* ABC does not rely on a single unit-level measure.
* Instead, it uses multiple cost drivers at different levels (unit-level, batch-level, product- level, and facility-level).
* D. "The primary disadvantage of ABC is less accurate product costing." (Incorrect)
* ABC is actually more accurate than traditional costing in assigning overhead costs.
* The primary disadvantages of ABC are its complexity and cost of implementation, not reduced accuracy.
* IIA Standard 2120 - Risk Management (Assessing the appropriateness of costing methodologies)
* IIA Standard 2130 - Compliance (Ensuring financial management practices align with standards)
* IIA Standard 2210 - Engagement Objectives (Evaluating financial controls and cost allocation methods) Step-by-Step Justification:IIA References for This Answer:Thus, the best answer is C. An ABC costing system may be used with either a job order or a process cost accounting system, as ABC is flexible and can be applied in both costing environments.
NEW QUESTION # 247
A firm ships its product to a foreign subsidiary and charges a price that may increase import duties but lower the income taxes paid by the subsidiary. The most likely reason for these effects is that the:
- A. Price is an arm's-length price.
- B. Transfer price is too low.
- C. Price is a cost-plus price.
- D. Transfer price is too high.
Answer: D
Explanation:
A transfer price is the price charged by one subunit of a firm to another. When the subsidiary-buyer is in a foreign country, the higher the transfer, the higher the potential tariffs. However, the tax levied on a subsequent sale by the subsidiary will be lower because of its higher acquisition cost.
NEW QUESTION # 248
Which of me following storage options would give the organization the best chance of recovering data?
- A. Encrypted physical copies of the data and their encryption keys are stored together at the organization and are readily available upon request
- B. Encrypted physical copies of the data are stored separately from their encryption keys and both are held in secure locations a few hours away from me organization
- C. Encrypted copies of the data are stored in a separate secure location a few hours away while the encryption keys are stored at the organization and are readily available
- D. Encrypted reports on usage and database structure changes are stored on a cloud-based. secured database that is readily accessible
Answer: C
NEW QUESTION # 249
An Internal auditor is using data analytics to focus on high-risk areas during an engagement. The auditor has obtained data and is working to eliminate redundancies in the dat a. Which of the following statements is true regarding this scenario?
- A. The auditor is normalizing data in preparation for analyzing it.
- B. The auditor is reviewing trio data prior to defining the question
- C. The auditor is cleaning the data in preparation for determining which processes may be involves .
- D. The auditor is analyzing the data in preparation for communicating the results,
Answer: A
NEW QUESTION # 250
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