2025 Realistic IIA-CIA-Part3 Dumps Questions To Gain Brilliant Result
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IIA-CIA-Part3 exam covers a wide range of topics related to business knowledge for internal auditing. These topics include organizational structure, strategic planning, financial management, risk management, and governance. IIA-CIA-Part3 exam is designed to test the candidate's ability to apply these concepts in real-world situations. Candidates who successfully pass the exam will be able to demonstrate their expertise in these areas and will be better equipped to handle the challenges of internal auditing.
NEW QUESTION # 225
If Projects A and B are mutually exclusive, which of the following statements is true?
- A. The company should undertake Project A only.
- B. The company should undertake both projects.
- C. The company should not undertake either project
- D. The company should undertake Project only.
Answer: D
Explanation:
For two mutually exclusive projects the company should undertake the project with the highest positive net present value Project B. has a higher NPV than Project A. The NPVs of both projects are calculated using the firm's 8% cost of capital as follows.
A company that annually reviews its investment opportunities and selects appropriate capital expenditures for the coming year is presented with two projects, called Project A and Project B. Best estimates indicate that the investment outlay for Project A is US $30,000 and for Project B. is US $1 million. The projects are considered to be equally risky. Project A is expected to generate cash inflows of US $40,000 at the end of each year for 2 years. Project B. is expected to generate cash inflows of US $700,000 at the end of the first year and US $500,000 at the end of the second year. The company has a cost of capital of 8%.
NEW QUESTION # 226
Which of the following describes a third-party network that connects an organization specifically with its trading partners?
- A. Metropolitan area network (MAN).
- B. Value-added network (VAN).
- C. Local area network (LAN).
- D. Wide area network (WAN).
Answer: B
NEW QUESTION # 227
An entity is currently being sued by a customer. A reliable estimate can be made of the costs that would result from a ruling unfavorable to the entity, and the amount involved is material. The entity's managers, lawyers, and auditors agree that the likelihood of an unfavorable ruling is remote. This contingent liability:
- A. Should be disclosed by an appropriation of retained earnings.
- B. Should be disclosed in a note.
- C. Need not be disclosed.
- D. Should be disclosed as a parenthetical comment in the balance sheet.
Answer: C
Explanation:
A contingent liability includes a present obligation for which an outflow of resources embodying economic benefits is not probable. A contingent liability is not recognized but is disclosed unless the possibility of the outflow is remote.
NEW QUESTION # 228
Which of the following differentiates a physical access control from a logical access control?
- A. Physical access controls include input processing and output controls, whereas logical access controls include locked doors and security guards.
- B. Physical access controls secure software and data internal to the IT system, whereas logical access controls secure tangible IT resources.
- C. Physical access controls include firewalls, user IDs, and passwords, whereas logical access controls include locks and security guards.
- D. Physical access controls secure tangible IT resources, whereas logical access controls secure software and data internal to the IT system.
Answer: D
Explanation:
Comprehensive and Detailed In-Depth Explanation:
Physical access controls are security measures designed to prevent unauthorized physical access to tangible IT resources, such as computer hardware, servers, and networking equipment. Examples include locks, security guards, and biometric access systems. In contrast, logical access controls protect access to software and data within the IT system, ensuring that only authorized users can interact with digital resources. These controls include mechanisms like user IDs, passwords, firewalls, and encryption. Option A accurately captures this distinction, whereas the other options either reverse the definitions or misclassify examples of physical and logical controls.
NEW QUESTION # 229
An organization prepares a statement of privacy to protect customers' personal information. Which of the following might violate the privacy principles?
- A. Customers reserve the right to reject sharing personal information with third parties.
- B. The organization performs regular maintenance on customers' personal information.
- C. The organization retains customers' personal information indefinitely.
- D. Customers can access and update personal information when needed.
Answer: C
NEW QUESTION # 230
Quality cost indices are often used to measure and analyze the cost of maintaining or improving the level of quality. Such indices are computed by dividing the total cost of quality over a given period by some measure of activity during that period for example, sales dollars). The following cost data are available for a company for the month of March. The company's quality cost index is calculated using total cost of quality divided by sales dollars.
Sales US $400,000
Direct materials cost 100,000
Direct labor cost 80,000
Testing and inspection cost 6,400 Scrap and rework cost 16,800
Quality planning cost 2,800
Cost of customer complaints and returns 4,000
The quality cost index for March is:
- A. 5.9%
- B. 6.5%
- C. 7.5%
- D. 22.0%
Answer: C
Explanation:
The total cost of quality equals the sum of prevention costs quality planning), appraisal casts testing and inspection), internal failure casts scrap and rework), and external failure casts customer complaints and returns), or U $30,000 $2,800 + $6,400 + $16,800 + $4,000). The quality cost index equals the total casts of quality divided by sales. Thus, the quality cast index for March is 7.5% U $80,000 - U $400,000).
NEW QUESTION # 231
Which of the following statements is true regarding an organization's inventory valuation1?
- A. The valuation will be correct if the inventory includes goods received on consignment from another organization
- B. The valuation will be incorrect it the inventory includes goods in transit shipped FOB shipping point from another organization
- C. The valuation will be incorrect it the inventory includes goods m transit shipped free on board (FOB) destination to another organization
- D. The valuation will be correct it the inventory includes goods sent on consignment to another organization
Answer: A
NEW QUESTION # 232
Project B's internal rate of return is closest to:
- A. 20%
- B. 18%
- C. 15%
- D. 22%
Answer: A
Explanation:
Twenty percent is the rate of return that equates the cash inflows with the cash outflows. The present value of 20% for 5 years is .4019, which multiplied by US $9,950,000 equals US $3,998,905. Therefore, the net present value of the project approximates 0 using the 20% rate.
NEW QUESTION # 233
Management is pondering the following question:
"How does our organization compete?"
This question pertains to which of the following levels of strategy?
- A. Corporate-level strategy.
- B. Business-level strategy,
- C. Functional-level strategy
- D. DepartmentsHevet strategy
Answer: B
NEW QUESTION # 234
Application control objectives do not normally include assurance that:
- A. Review and approval procedures for new systems are set by policy and adhered to.
- B. Processing results are received by the intended user.
- C. Authorized transactions are completely processed once and only once.
- D. Transaction data are complete and accurate.
Answer: A
Explanation:
Application controls provide reasonable assurance that the recording, processing, and reporting of data are properly performed. Review and approval procedures for new systems are among the general controls known as system software acquisition and maintenance controls.
NEW QUESTION # 235
A company with many branch stores has decided to use its best-performing store as a benchmark organization for the purpose of analyzing the accuracy and reliability of branch store financial reporting.
Which one of the following is the most likely measure to be included in a financial benchmark?
- A. High turnover of employees.
- B. High level of employee participation in setting budgets.
- C. High number of suppliers.
- D. High amount of bad debt write-offs.
Answer: D
Explanation:
Internal benchmarking is the application of best practices in one part of the organization (e.g., a high-performing branch store) to its other parts (other branches). This process requires, among other things, use of quantitative and qualitative measures. A key indicator for financial performance measurement is the amount of bad debt write-offs. A high level of bad debt write-offs could indicate fraud, which would compromise the accuracy and reliability of financial reports. Bad debt write-offs may result from recording fictitious sales.
NEW QUESTION # 236
Which of the following is based on the concept that there is not one best leadership style and that successful leadership depends on a match between the leader, the situation, and the subordinate?
- A. Life cycle model
- B. Contingency theory
- C. Attribute theory.
- D. Path goal model
Answer: B
NEW QUESTION # 237
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 case for business continuity planning
- C. The business continuity risk assessment plan
- D. The business continuity management charter
Answer: A
Explanation:
Reference: IIA Business Knowledge for Internal Auditing, Business Continuity Planning section.
NEW QUESTION # 238
According to the COSO enterprise risk management (ERM) framework, which of the following is not a typical responsibility of the chief risk officer?
- A. Establishing risk category definitions and a common risk language for likelihood and impact measures.
- B. Defining ERM roles and responsibilities.
- C. Providing the board with an independent, objective risk perspective on financial reporting.
- D. Guiding integration of ERM with other management activities.
Answer: C
NEW QUESTION # 239
If the bank uses the minimax regret criterion for selecting the location of the branch, it will select:
- A. L5.
- B. L3.
- C. L1.
- D. L2.
Answer: D
Explanation:
Under the minimax regret criterion, the decision maker selects the choice that minimizes the maximum regret (opportunity cost). The maximum regret for each location is determined from the opportunity loss matrix.
NEW QUESTION # 240
Which of the following statements best describes the frameworks set forth by the International Standards Organization?
- A. Practical guidance and benchmarks for all organizations that use information systems.
- B. Bridging the gaps among control requirements, technical issues, and business risks.
- C. Frameworks and guidance on enterprise risk management, internal control, and fraud deterrence.
- D. Globally accepted standards for industries and processes.
Answer: D
NEW QUESTION # 241
Which of the following is considered a physical security control?
- A. Transaction logs are maintained to capture a history of system processing.
- B. System servers are secured by locking mechanisms with access granted to specific individuals.
- C. Failed system login attempts are recorded and analyzed to identify potential security incidents.
- D. System security settings require the use of strong passwords and access controls.
Answer: B
NEW QUESTION # 242
Two major retail companies, both publicly traded and operating in the same geographic area, have recently merged. The companies are approximately the same size and have audit departments. Company A has little EDI experience. Company B has invested heavily in information technology and has EDI connections with its major vendors. Which of the following is the least important risk factor considering the ability to integrate the two companies' computer systems?
- A. The number of programmers and systems analysts employed by each company.
- B. The size of company databases and the number of database servers used.
- C. The compatibility of existing operating systems and database structures.
- D. The extent of EDI connections with vendors.
Answer: A
Explanation:
The number of systems personnel employed may reflect differences in operating philosophy (outsourcing vs. in-house development of applications). However, the number of personnel in each company is a less serious concern than the compatibility of hardware and software.
NEW QUESTION # 243
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IIA-CIA-Part3 exam is a computer-based test that consists of 100 multiple-choice questions. Candidates have 2.5 hours to complete the exam, and they must score at least 600 out of 800 to pass. IIA-CIA-Part3 exam is offered at Pearson VUE testing centers around the world and can be taken in English, Spanish, Portuguese, or Chinese.
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