ExamcollectionPass IIA-CIA-Part3 Real Exam Question Answers Updated [Jul 25, 2024]
Easily To Pass New IIA IIA-CIA-Part3 Dumps with 344 Questions
NEW QUESTION # 117
In Year 2, a manufacturing company instituted a total quality management (TQM) program producing the following report:
On the basis of this report, which one of the following statements is most likely true?
- A. An increase in inspection costs was solely responsible for the decrease in quality costs.
- B. An increase in prevention and appraisal costs resulted in a higher quality product and therefore resulted in a decrease in failure costs.
- C. Quality costs, such as scrap and rework, decreased by 48%.
- D. Quality costs, such as returns and repairs under warranty, decreased by 40%.
Answer: B
Explanation:
Prevention and appraisal costs increased substantially, but internal and external failure costs decreased. Thus, the soundest conclusion is that the increase in prevention and appraisal costs resulted in a higher-quality product.
NEW QUESTION # 118
A validation check used to determine if a quantity ordered field contains only numbers is an example of a(n):
- A. Audit trail control.
- B. Processing control.
- C. Data security control.
- D. Input control.
Answer: D
Explanation:
A validation check at data entry verifying that a quantity field contains only numbers is an example of a programmatic means of ensuring the accuracy of an input value. Thus, it is an input control.
NEW QUESTION # 119
According to the Standards, the internal audit activity must evaluate risk exposures relating to which of the following when examining an organization's risk management process?
1. Organizational governance.
2. Organizational operations.
3. Organizational information systems.
4. Organizational structure.
- A. 1 and 3 only
- B. 1, 2, and 3 only
- C. 2 and 4 only
- D. 1, 2, and 4 only
Answer: B
NEW QUESTION # 120
A chief executive officer (CEO) believes that a major competitor may be planning a new campaign. The CEO sends a questionnaire to key personnel asking for original thinking concerning what the new campaign may be The CEO selects the best possibilities and then sends another questionnaire asking for the most likely option. The process employed by the CEO is called the:
- A. Optimizing of expected payoffs.
- B. Delphi technique.
- C. Least squares technique.
- D. Maximum likelihood technique.
Answer: B
Explanation:
The Delphi technique is a forecasting or decision-making approach that attempts to avoid groupthink (the tendency of individuals to conform to what they perceive to be the consensus). The technique allows only written, anonymous communication among group members. Each member takes a position on the problem at hand. A summary of these positions is communicated to each member. The process is repeated for several iterations as the members move toward a consensus. Thus, the Delphi technique is a qualitative, not quantitative, technique.
NEW QUESTION # 121
To effect a business combination initiated on July 1, Year 1, Company P acquired all the outstanding ordinary shares of Company S for cash equal to the carrying amount of Company's net assets. The carrying amounts of Company S's assets and liabilities approximated their fair values, except that the carrying amount of its building was more than fair value. In preparing Company P's December 31, Year 1, consolidated income statement, what is the effect of recording the assets acquired and liabilities assumed at fair value and should goodwill amortization be recognized?
- A. Option C
- B. Option D
- C. Option A
- D. Option B
Answer: A
Explanation:
A business combination is accounted for as an acquisition regardless of the form of consideration given. Thus, assets acquired and liabilities assumed should be recorded at their fair values. The differences between fair values and carrying amounts will affect profit or loss when related expenses are incurred. The effect of recording the building at fair value in the consolidated balance sheet instead of its higher carrying amount on Company S's books will be to decrease future depreciation_ If the building is to be used, fair value is its current replacement cost for similar capacity unless expected use indicates a lower value to the acquirer. If the building is to be sold, it should be reported at fair value minus cost to sell. The excess of the sum of the consideration transferred, any noncontrolling interest, and any previously held equity interest over the acquisition-date fair value of the net assets acquired will be recognized as goodwill. This amount will be tested for impairment but not amortized.
NEW QUESTION # 122
On January 1, Year 1, International Entity entered into an equity-settled share-based payment transaction with its senior executives. This award of 1,000 share options has a 4year vesting period. The market prices of the options and the related shares on the grant date are US $20 and US $80, respectively. The exercise price is US $85. Assuming that the vesting conditions were not met for 100 of the options because of unexpected events in Year 4, the entry to debit option expense at:
- A. December 31, Year 2. is for US $ 5,000
- B. January 1, Year 1, is for US $ 20,000
- C. December 31. Year 3, is for US $ 4,000
- D. December 31. Year 4. is for US $ 5,000
Answer: A
Explanation:
The fair value of each share option is determined at the measurement date, which is the grant date for transactions with employees and others providing 1 similar services thus, the fair value of each share option was set at its market price of US $20 on January 1 Year 1 The periodic expense varies only with the expected number of equity instruments expected to vest. Because the events causing 100 options not b. vest occurred unexpectedly in Year 4, the entity presumably at each balance sheet date for the first 3 years of the vesting period that all options would vest. Total expected expense was thereof US $20,000, and the proportional expense recognize each of the first 3 years was US $5,000 [(1,000 options x $20) / 4 years.
NEW QUESTION # 123
A measure that describes the risk of an investment project relative to other investments in general is the:
- A. Standard deviation.
- B. Coefficient of variation.
- C. Expected return
- D. Beta coefficient
Answer: D
Explanation:
The required rate of return on equity capital in the Capital Asset Pricing Model is the risk-free rate, plus the product of the market risk premium times the beta coefficient. The market risk premium is the amount above the risk-free rate that will induce investment in the market The beta coefficient of an individual share is the correlation between the volatility price variation) of the stock market and that of the price of the individual share. For example. if an individual share goes up 15% and the market only 10%. beta is 1.5.
NEW QUESTION # 124
According to IIA guidance on IT. which of the following plans would pair the identification of critical business processes with recovery time objectives?
- A. The business impact analysis plan
- B. The business continuity management charter.
- C. The business case for business continuity planning
- D. The business continuity risk assessment plan
Answer: A
NEW QUESTION # 125
Company A is a producer of citrus flavored dessert products. Its most popular product is its key, lime pies, which are made with many fine ingredients, including egg yolks. Company A also sells the egg whites that are left over from its production process. These egg whites are sold at any price that is greater than the cost of storing and delivering them. What is the pricing of the egg whites?
- A. Product-bundle pricing.
- B. By-product pricing.
- C. Captive-product pricing.
- D. Value pricing.
Answer: B
Explanation:
By-product pricing usually sots prices at any amount in excess of storing and delivering byproducts.
Such prices allow the seller to reduce the costs and therefore the prices of the main products.
NEW QUESTION # 126
Which of the following statements is correct regarding corporate compensation systems and related bonuses?
1. A bonus system should be considered part of the control environment of an organization and should be considered in formulating a report on internal control.
2. Compensation systems are not part of an organization's control system and should not be reported as such.
3. An audit of an organization's compensation system should be performed independently of an audit of the control system over other functions that impact corporate bonuses.
- A. 1 only
- B. 3 only
- C. 2 and 3 only
- D. 2 only
Answer: A
NEW QUESTION # 127
If the probability of hot weather, given a hot weather forecast, is 50%, how much would the vendor be willing to pay for the forecast?
- A. US $600
- B. US $1,000
- C. US $500
- D. US $300
Answer: D
Explanation:
If the weather is hot and coffee is served, the vendor earns US $1,900. If the vendor knows the weather will be hot, she would sell soft drinks and make U $2,500, a US $600 increase.
Thus, the vendor should be willing to pay up to U $600 for perfect information regarding hot weather. However, if the forecasts are only 50% accurate, the information is not perfect. Accordingly, the vendor should be willing to pay only U $300 the U $600 potential increase
in profits 50%) for the sometimes accurate forecasts.
NEW QUESTION # 128
An organization uses the management-by-objectives method, whereby employee performance is based on defined goals Which of the following statements is true regarding this approach?
- A. It is a more successful approach when adopted by mechanistic organizations
- B. It is more successful when goal-setting is performed not only by management, but by an team members, including lower-level staff.
- C. It is particularly successful in environments that are prone to having poor employer-employee relations
- D. It is particularly helpful to management when the organization is facing rapid change
Answer: B
NEW QUESTION # 129
A brand manager in a consumer food products organization suspected that several days of the point-of-sale data on the spreadsheet from one grocery chain were missing. The best approach for detecting missing rows in spreadsheet data would be to:
- A. Sort on product identification code and identify missing product identification codes.
- B. Compare product identification codes for consecutive periods.
- C. Review store identification code and identify missing product identification codes.
- D. Compare product identification codes by store for consecutive periods.
Answer: D
NEW QUESTION # 130
If an entity employs the sum-of-the-years'-digits SYD method of depreciation for an asset with an estimated useful life of 4 years, the percentage of the total depreciable cost that will be expensed in the third year is:
- A. 25%
- B. 20%
- C. 10%
- D. 70%
Answer: B
Explanation:
Under the SYD method, the amount of the depreciable cost that is expensed each year is the remaining useful life at the beginning of that year divided by the sum of the years of useful life. For the third year, the portion expensed is 20% [2 .1 + 2 + 3 + 4)].
NEW QUESTION # 131
An entity sells 1,500 units of a particular item each year and orders the items in equal quantities of 500 units at a price of US $5 per unit. No safety stocks are held. If the entity has a cost of capital of 1 2%, its annual opportunity cost of carrying inventory is:
- A. U5 $900
- B. U5 $300
- C. U5 $150
- D. U5 $180
Answer: C
Explanation:
The annual opportunity cost of carrying inventory equals the average inventory level times the cost per unit of inventory times the cost of capital. The average inventory level is the order quantity divided by 2. Thus, the annual opportunity cost of carrying inventory is US $150 [(500 units - 2) x $5 x .12].
NEW QUESTION # 132
Which of the following actions would best address a concern that data uploaded from a desktop computer may be erroneous?
- A. The mainframe computer should subject the data to the same edits and validation routines that online data entry would require.
- B. The mainframe computer should be backed up on a regular basis.
- C. Users should be required to review a random sample of processed data.
- D. Two persons should be present at the desktop computer when it is uploading data.
Answer: A
Explanation:
The same edits and validation routines used for online data entry should be applied to data
uploaded from a desktop computer. This could help prevent data errors.
NEW QUESTION # 133
In production management, product breakdown into component parts and lead times for procuring these parts is necessary for:
- A. An ABC system.
- B. An economic order quantity (EOQ) system.
- C. A materials requirements planning (MRP) system.
- D. A critical path method (CPM) system.
Answer: C
Explanation:
Materials requirements planning (MRP) is usually considered a computer-based information system designed to plan and control raw materials used in a production setting. It assumes that estimated demand for materials is reasonably accurate and that suppliers can deliver based upon this accurate schedule. It is crucial that delivery delays be avoided because, under MRP, production delays are almost unavoidable if the materials are not on
hand. An MRP system uses a parts list, often called a bill of materials, and lead times for each type of material to obtain materials just as they are needed for planned production.
NEW QUESTION # 134
Program documentation is a control designed primarily to ensure that:
- A. No one has made use of the computer hardware for personal reasons.
- B. Programs do not make mathematical errors.
- C. Programs are kept up to date and perform as intended.
- D. Programmers have access to production programs.
Answer: C
Explanation:
Complete, up-to-date documentation of all programs and associated operating procedures is necessary for efficient operation of a computer installation. Maintenance of programs is important to provide for continuity and consistency of data processing services to users. Program documentation the program run manual) consists of problem statements, systems flowcharts, operating instructions, record layouts, program flowcharts, program listings, test data, and approval and change sheets.
NEW QUESTION # 135
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. Restricting access and blocking unauthorized access to the network
- B. Educating employees throughout the company to recognize phishing attacks.
- C. Monitoring network traffic.
- D. Using whitelists and blacklists to manage network traffic.
Answer: B
NEW QUESTION # 136
Which audit approach should be employed to test the accuracy of information housed in a database on an un-networked computer?
- A. Evaluate compliance with the organization's change management process.
- B. Use a test program to simulate the normal data entering process.
- C. Submit batches of test transactions through the current system and verify with expected results.
- D. Select a sample of records from the database and ensure it matches supporting documentation.
Answer: D
NEW QUESTION # 137
Suppose that an entity has paid one of its liabilities t ice during the year in error The effects of this mistake would be?
- A. Assets and profit and equity} are understated, and liabilities are overstated.
- B. Assets Liabilities, and equity are understated.
- C. Assets and liabilities are understated.
- D. Assets, net income, and equity are unaffected
Answer: C
Explanation:
When a liability is paid, an entry debiting accounts payable and crediting cash is made. If an entity erroneously pays a liability twice, the accounts payable and cash accounts will be understated by the amount of the liability. Hence, assets and liabilities will be understated.
NEW QUESTION # 138
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