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IIA-CIA-Part3 Practice Questions

Internal Audit Function

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Question # 151

How can the concept of relevant cost help management with behavioral analyses?

Options:

A.  

It explains the assumption mat both costs and revenues are linear through the relevant range

B.  

It enables management to calculate a minimum number of units to produce and sell without having to incur a loss.

C.  

It enables management to predict how costs such as the depreciation of equipment will be affected by a change in business decisions

D.  

It enables management to make business decisions, as it explains the cost that will be incurred for a given course of action

Discussion 0
Question # 152

What would be the most relevant risk related to a bring-your-own-device policy?

Options:

A.  

Data leakage due to the devices having access to the network.

B.  

Lack of understanding of the technology and concept of the tool.

C.  

Missing noncurrent assets capitalization.

D.  

Financial losses due to smart device theft.

Discussion 0
Question # 153

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

Options:

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.

Discussion 0
Question # 154

Which of the following performance measures includes both profits and investment base?

Options:

A.  

Residual income

B.  

A flexible budget

C.  

Variance analysis.

D.  

A contribution margin income statement by segment.

Discussion 0
Question # 155

When granting third parties temporary access to an entity ' s computer systems, which of the following is the most effective control?

Options:

A.  

Access is approved by the supervising manager.

B.  

User accounts specify expiration dates and are based on services provided.

C.  

Administrator access is provided for a limited period.

D.  

User accounts are deleted when the work is completed.

Discussion 0
Question # 156

At one organization, the specific terms of a contract require both the promisor end promise to sign the contract in the presence of an independent witness.

What is the primary role to the witness to these signatures?

Options:

A.  

A witness verifies the quantities of the copies signed.

B.  

A witness verifies that the contract was signed with the free consent of the promisor and promise.

C.  

A witness ensures the completeness of the contract between the promisor and promise.

D.  

A witness validates that the signatures on the contract were signed by tire promisor and promise.

Discussion 0
Question # 157

Which of the following situations best applies to an organization that uses a project, rather than a process, to accomplish its business activities?

Options:

A.  

A clothing company designs, makes, and sells a new item

B.  

A commercial construction company is hired to build a warehouse

C.  

A city department sets up a new firefighter training program

D.  

A manufacturing organization acquires component parts from a contracted vendor

Discussion 0
Question # 158

Which of the following is a disadvantage of selecting a commercial software package rather than developing an application internally?

Options:

A.  

Lack of flexibility.

B.  

Incompatibility with client/server technology.

C.  

Employee resistance to change.

D.  

Inadequate technical support.

Discussion 0
Question # 159

Which of the following statements about slack time and milestones are true?

    Slack time represents the amount of time a task may be delayed without delaying the entire project.

    A milestone is a moment in time that marks the completion of the project ' s major deliverables.

    Slack time allows the project manager to move resources from one task to another to ensure that the project is finished on time.

    A milestone requires resource allocation and needs time to be completed.

Options:

A.  

1 and 4 only

B.  

2 and 3 only

C.  

1, 2, and 3 only

D.  

1, 2, 3, and 4

Discussion 0
Question # 160

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

Options:

A.  

Greater cost-effectiveness

B.  

Increased economies of scale

C.  

Larger talent pool

D.  

Strong internal controls

Discussion 0
Question # 161

During which phase of the contracting process are contracts drafted for a proposed business activity?

Options:

A.  

Initiation phase.

B.  

Bidding phase.

C.  

Development phase.

D.  

Management phase.

Discussion 0
Question # 162

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?

Options:

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.

Discussion 0
Question # 163

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?

Options:

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.

Discussion 0
Question # 164

Which of the following is a result of implementing an e-commerce system that relies heavily on electronic data interchange (EDI) and electronic funds transfer (EFT) for purchasing and billing?

Options:

A.  

Higher cash flow and treasury balances.

B.  

Higher inventory balances.

C.  

Higher accounts receivable.

D.  

Higher accounts payable.

Discussion 0
Question # 165

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?

Options:

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

Discussion 0
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