[May 31, 2024] IIA-CIA-Part3 Exam Brain Dumps - Study Notes and Theory [Q171-Q188]

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[May 31, 2024] IIA-CIA-Part3 Exam Brain Dumps – Study Notes and Theory

Pass IIA IIA-CIA-Part3 Test Practice Test Questions Exam Dumps

IIA-CIA-Part3 exam is designed to test the candidate’s knowledge of business concepts and practices as they relate to internal auditing. IIA-CIA-Part3 exam covers a wide range of topics, including macro and microeconomics, financial statement analysis, budgeting and forecasting, risk management, and corporate governance.

Q171. Which of the following purchasing scenarios would gain the greatest benefit from implementing electronic data interchange?

A time-sensitive just-in-time purchase environment.

A large volume of custom purchases.

A variable volume sensitive to material cost.

A currently inefficient purchasing process.

Q172. The estimated demand for pretzels at the next home football game using a deterministic approach based on the most likely outcome is:

4,000 pretzels.

4,400 pretzels.

5,000 pretzels.

6,000 pretzels.

A deterministic approach assumes that a value is known with certainty. If that value is deemed to be the most likely outcome, assumed demand will be 5,000 pretzels,

The volume with the highest probability 35%). A beverage stand can sell either soft drinks or coffee on any given day. If the stand sells soft drinks and the weather i= hot, it will make US $2,600; if the weather is cold, the profit will be US $1,000. If the stand sells coffee and the weather is hot, it will make US $1,900: if the weather is cold, the profit will be US $2,000. The probability of cold weather on a given day at this time is 60°l%.

Q173. A learning curve of 80% assumes that the incremental unit time is reduced by 20% for each doubling of output. Also, direct labor cost is proportionate to time worked. What is the incremental direct labor cost of the 16th unit produced as an approximate percentage of the first unit produced?

41%

31%

51%

64%

The assumption is that the incremental unit time (time to produce the last unit) is reduced by 20% when production doubles. Thus, the labor cost of the sixteenth unit is 40.96% of that for the first unit (100% x 80% x 80% x 80% x 80%).

Q174. An internal auditor reviewed Finance Department records to obtain a list of current vendor addresses The auditor then compared the vendor addresses to a record of employee addresses maintained by the Payroll Department Which of the following types of data analysis did the auditor perform?

Duplicate testing.

Joining data sources

Gap analysis

Classification

Q175. Which of the following can be classified as debt investments?

Investments in the capital stock of a corporation

Acquisition of government bonds.

Contents of an investment portfolio,

Acquisition of common stock of a corporation

Q176. According to IIA guidance, which of the following links computers and enables them to -communicate with each other?

Application program code

Database system

Operating system

Networks

Q177. A company is formulating its plans for the coming year, including the preparation of its cash budget. Historically, 30% of the company’s sales are cash sales. The remaining 70% are credit sales with the following collection pattern:

Sales for the first 5 months of the coming year are forecast as follows:

For the month of April, the total cash receipts from sales and collections on account would be:

US$3,729,968

US$3,781,600

US$4,025,200

US$4,408,000

The cash receipts for April equal April’s cash sales (US $4,000,000 x 30% = US $1,200,000), 40% of April’s credit sales, and 58% of March’s credit sales. Consequently, total cash receipts equal US $3.781600 [$1,200,000 + ($4,000,000 x 40% x 70%) + ($3,600,000 x 58% x 70%)].

Q178. According to IIA guidance, which of the following statements is true with regard to workstation computers that access company information stored on the network?

Individual workstation computer controls are not as important as companywide server controls.

Particular attention should be paid to housing workstations away from environmental hazards.

Cybersecurity issues can be controlled at an enterprise level, making workstation level controls redundant.

With security risks near an all-time high, workstations should not be connected to the company network.

Q179. The average labor cost per unit for the first batch produced by a new process is US $120. The cumulative average labor cost after the second batch is US $72 per product. Using a batch size of 100 and assuming the learning curve continues, the total labor cost of four batches will be:

US$4,320

US$10,368

US$2,592

US$17,280

The learning curve reflects the increased rate at which people perform tasks as they gain experience. The time required to perform a given task becomes progressively shorter. Ordinarily, the curve is expressed in a percentage of reduced time to complete a task for each doubling of cumulative production. One common assumption in a learning curve model is that the cumulative average time (and labor cost) per unit is reduced by a certain percentage each time production doubles. Given a US $120 cost per unit for the first 100 units and a US $72 cost per unit when cumulative production doubled to 200 units, the learning curve percentage must be 60% (US $72 + $120). If production is again doubled to 400 units (four batches), the average unit labor cost should be US $43.20 ($72 x 60%). Hence, total labor cost for 400 units is estimated to be US $17,280 (400 units x $43.20).

Q180. The internal auditor of a bank has developed a multiple regression model that has been used for a number of years to estimate the amount of interest income from commercial loans. During the current year, the auditor applies the model and discovers that the r2 value has decreased dramatically, but the model otherwise seems to be working.
Which of the following conclusions is justified by the change?

Changing to a cross-sectional regression analysis should cause r2to increase.

Regression analysis is no longer an appropriate technique to estimate interest income.

Some new factors not included in the model are causing interest income to change.

A linear regression analysis would increase the model’s reliability.

The coefficient of determination (r2) is the amount of variation in the dependent variable (interest income) that is explained by the independent variables. In this case, less of the change in interest income is explained by the model. Thus, some other factor must be causing interest income to change. This change merits audit investigation.

Q181. The Eastern division, it sells goods internals to the Western division of the company. The quoted external price in industry publications from a supplier material near Eastern in US $ 200 per ton plus transportation. It costs US $ 20 per ton to transport the goods to Western Eastern’s actual market cost per ton to buy the direct materials to make the transferred product is US $100. Actual per ton direct labor is US $50. Other actual costs of storage and handling are US $40. The company president select a US $220 transfer price. This is an example of:

Market-bas, d transfer pricing.

Cost-based transfer pricing.

Negotiated transfer pricing.

Bost-plus-20% transfer pricing.

A transfer price is the price charged by one segment of an organization for a product or service supplied to another segment of the same organization. The three basic criteria that the transfer pricing system in a decentralized company should satisfy are to 1) provide information allowing central management to evaluate divisions with respect to total company profit and each division’s contribution to profit. 2) stimulate each manager’s efficiency without losing each division’s autonomy, and 3) motivate each divisional manager to achieve his/her own profit goal in a manner contributing to the company’s success. Because the US $220 transfer price selected is based on the quoted external price market), it is an example of market-based transfer pricing.

Q182. Which of the following is a direct effect of imposing a protective tariff on an imported product?

Lower domestic prices on the imported item.

Lower domestic consumption of the item.

Reduced domestic production of the item.

Higher sales revenues for foreign producers of the item.

A protective tariff adds to the purchase price of imported goods. If an imported good’s sales price is higher than a comparable, less expensive domestic good, consumers will purchase the domestic good. Thus, the direct effect of imposing a protective tariff on an imported good is lower domestic consumption.

Q183. Unfortunately, the company has not revised its contingency plan since the time when its data processing was mostly centralized at headquarters. The existing plan is likely to be out of date because of:

Changes in equipment, data, and software.

Inadequate processing capability at headquarters.

Lack of arrangements for a backup site for headquarters.

Personnel turnover at regional centers.

When a company decentralizes its information processing, many changes in equipment, data, and software occur as a result of the different processing methods. Since the company has not revised its contingency plan since the time processing was centralized, the plan is most likely out of date as a result of the changes in equipment, data, and software.

Q184. Which of the following describes a typical desktop workstation used by most employees in their daily work?

Workstation contains software that prevents unauthorized transmission of information into and out of the organization’s network.

Workstation contains software that controls information flow between the organization’s network and the Internet.

Workstation contains software that enables the processing of transactions and is not shared among users of the organization’s network.

Workstation contains software that manages user’s access and processing of stored data on the organization’s network.

Q185. When assessing the adequacy of a risk mitigation strategy, an internal auditor should
consider which of the following?
1.Management’s tolerance for specific risks.
2.The cost versus benefit of implementing a control.
3.Whether a control can mitigate multiple risks.
4.The ability to test the effectiveness of the control.

1, 2, and 3

1, 2, and 4

1, 3, and 4

2, 3, and 4

Q186. Which of the following techniques is the most relevant when an internal auditor conducts a valuation of an organization’s physical assets?

Observation.

Inspection.

Original cost.

Vouching.

Q187. With regard to project management when of the following statements about prefect crashing is true?

It leads to an increase in risk and often results in rework

It is an optimization technique where activities are performed in parallel rather than sequentially

It involves a revaluation of protect requirements and/or scope.

It is a compression technique in which resources are added to the protect

Q188. Which of the following statements is correct regarding risk analysis?

The extent to which management judgments are required in an area could serve as a risk factor in assisting the auditor in making a comparative risk analysis.

The highest risk assessment should always be assigned to the area with the largest potential loss.

The highest risk assessment should always be assigned to the area with the highest probability of occurrence.

Risk analysis must be reduced to quantitative terms in order to provide meaningful comparisons across an organization.

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Introduction of IIA CIA Part 3 Exam

The Certified Internal Auditor (CIA) is an advanced professional certification for internal auditors. It is a globally recognized certification and is based on the International Professional Practices Framework (IPPF) of the IIA. The CIA exam consists of three parts. Part 1 covers the foundations of internal auditing, Part 2 covers business knowledge for internal auditing, and Part 3 covers internal audit practices. This article discusses the topic matter covered in Part 3 of the CIA exam. It also provides a sample question and answer to help candidates better prepare for this exam. The IIA CIA part 3 exam dumps are also one of the most complete study guides available. You will learn all the required topics and get a full understanding of them.

IIA-CIA-Part3 certification exam is an important milestone for internal auditors seeking to demonstrate their knowledge and skills in the area of business knowledge. IIA-CIA-Part3 exam covers a broad range of topics related to business and requires a deep understanding of how businesses operate and how the internal audit function can add value. Achieving the certification demonstrates a commitment to professional development and can lead to increased career opportunities and higher salaries.

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