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IIA IIA-CIA-Part3: Business Knowledge for Internal Auditing exam is a certification offered by the Institute of Internal Auditors (IIA). Business Knowledge for Internal Auditing certification is designed to test the knowledge and competency of internal auditors in areas such as business acumen, financial management, and strategic planning. Passing IIA-CIA-Part3 exam is an excellent way to demonstrate one's expertise in these areas and to advance in the field of internal auditing.
NEW QUESTION # 151
According to IIA guidance, which of the following is a broad collection of integrated policies, standards, and procedures used to guide the planning and execution of a project?
- A. Project portfolio.
- B. Project management methodologies
- C. Project development
- D. Project governance.
Answer: D
NEW QUESTION # 152
Which of the following is an example of a physical control?
- A. Keeping an offsite backup of the organization's critical data.
- B. Performing business continuity and disaster recovery planning.
- C. Establishing a physical security policy and promoting it throughout the organization.
- D. Providing fire detection and suppression equipment.
Answer: C
NEW QUESTION # 153
A major justification for investments in computer-integrated manufacturing (CIM) projects is:
- A. Reduction in the costs of spoilage, reworked units, and scrap.
- B. Lower carrying amount and depreciation expense for factory equipment.
- C. Stabilization of market share.
- D. Increased working capital.
Answer: A
Explanation:
Automating and computerizing production processes requires a substantial investment in fixed assets and an increase in risk because of greater fixed costs. CIM also necessitates an increase in software costs and extensive worker retraining. However, the costs of spoilage, rework, and scrap are reduced along with labor costs. The qualitative advantages of CIM are increased flexibility, shorter manufacturing lead time, quicker development of new products, better product delivery and service, faster response to market changes, and improved competitiveness.
NEW QUESTION # 154
International marketing activities often begin with:
- A. Standardization.
- B. Global marketing.
- C. Domestic marketing.
- D. Limited exporting.
Answer: D
NEW QUESTION # 155
If a supervisor fails to give an employee a negative evaluation because of fear of damaging a good working relationship, this is known as the:
- A. Contrast error.
- B. Regency effect.
- C. Leniency error.
- D. Halo effect.
Answer: C
Explanation:
A leniency error is a manager's failure to give a negative evaluation because of fear of damaging a good working relationship with an employee.
NEW QUESTION # 156
In PERT, slack is the:
- A. Path that has the largest amount of time associated with it.
- B. Uncertainty associated with time estimates.
- C. Number of days an activity can be delayed without forcing a delay for the entire project.
- D. Difference between the latest starting time and earliest finishing time.
Answer: C
Explanation:
Slack is the amount of time that commencement of an activity can be delayed without forcing a delay of the entire project.
NEW QUESTION # 157
Which of the following standards would be most useful in evaluating the performance of a customer- service group?
- A. Customer complaints should be processed promptly.
- B. The average time per customer inquiry should be kept to a minimum.
- C. Employees should maintain a positive attitude when dealing with customers.
- D. All customer inquiries should be answered within seven days of receipt.
Answer: D
NEW QUESTION # 158
Quality costing is similar in service and manufacturing organizations. Nevertheless, the differences between these organizations have certain implications for quality management. Thus,
- A. Poor service is less likely to result in loss of customers than a faulty product.
- B. Quality improvements resulting in more efficient use of labor time are more likely to be accepted by employees in service organizations.
- C. External failure costs are relatively greater in service organizations.
- D. Direct labor costs are usually a higher percentage of total costs in manufacturing organizations.
Answer: C
Explanation:
External failure costs arise when problems occur after delivery. They occur because products or services are nonconforming or otherwise do not satisfy customers. External failure costs in service enterprises are even more important than in manufacturing environments. Faulty goods sometimes maybe reworked or replaced to a customer's satisfaction, but poor service tends to result in a loss of customers.
NEW QUESTION # 159
According to IIA guidance, which of the following corporate social responsibility (CSR) activities is appropriate for the internal audit activity to perform?
- A. Determine the optimal amount of resources for the organization to invest in CSR.
- B. Determine whether the organization has an appropriate policy governing its CSR activities.
- C. Align CSR program objectives with the organization's strategic plan.
- D. Integrate CSR activities into the organization's decision-making process.
Answer: B
NEW QUESTION # 160
If a bank's activities are categorized under such departments as community banking, institutional banking, and agricultural banking, what kind of departmentalization is being utilized?
- A. Customer departmentalization.
- B. Functional departmentalization.
- C. Product departmentalization.
- D. Process departmentalization.
Answer: A
NEW QUESTION # 161
Which of the following refers to taxes that do not necessarily take a larger absolute share of an increase in income?
- A. Progressive.
- B. Regressive.
- C. Proportional
- D. Flat.
Answer: B
Explanation:
Regressive taxes are those for which the average tax rate falls as income rises. They take a smaller percentage of income as income rises, so they will not necessarily take a larger absolute amount of income as income rises.
NEW QUESTION # 162
Which of the following is a false statement about a database management system application environment?
- A. Data are used concurrently by multiple users.
- B. Data definition is independent of any one program.
- C. The physical structure of the data is independent of user needs.
- D. Data are shared by passing files between programs or systems.
Answer: D
Explanation:
In this kind of system, applications use the same database There is no need to pass files between applications.
NEW QUESTION # 163
The arrival time follows which probability distribution?
- A. Poisson
- B. Binomial
- C. Chi-Square
- D. Exponential
Answer: A
Explanation:
Queuing models assume that arrivals follow a Poisson process: the events arrivals) are independent, any number of events must be possible in the interval of time, the probability {of an event is proportional to the length of the interval, and the probability {of more than one event is negligible if the interval is sufficiently} small. If is the average number of events in a given interval, k is the number of events, and e is the natural logarithm 2.71828...), the probability of k is.
f K) = k e - k !
A bank has two drive-in lanes to serve customers: one attached to the bank itself and one on an island. One teller serves bath stations. The bank is interested in determining the average waiting times of customers and has developed a model based on random numbers. The two key factors are the time between successive car arrivals and the time customers wait in line.
Assume that the analysis begins with cars just arriving at bath service windows bath requiring 3 minutes of service time. Car 1 is the attached window attached to the bank unless that window has more cars waiting than the island window. The lone teller will always serve the car that arrived first. If two cars arrive simultaneously, the one at the attached window will be served before the one at the island.
NEW QUESTION # 164
The errors cause the reported profit for the year ending Deg-ember 31. Year 4, to be:
- A. Overstated by US $72,000.
- B. Overstated by US $65,000.
- C. Understated by US $28,000.
- D. Understated by US $45,000.
Answer: B
Explanation:
The effect of the understatement of the Year 3 year-end inventory beginning inventory for Year 4) was to overstate Year 4 profit by US $40,000. The reason is that beginning inventory is a component of cost of sales. The overstatement of the December 3 1, Year
4. Inventory overstated Year 4 net income by US $15,000 because the amounts in ending inventory are excluded from cost of sales. The understatement of Year 3 depreciation expense a nominal account) has no effect on Year 4 net income. Finally, the failure to accrue US $10,000 of expenses for Year 4 overstated Year 4 net income. The net effect of these Err-ors was a US $65,000$40,000 + $15,000 + $0 + $10,000) overstatement.
An audit of an entity has revealed the following four errors that have occurred but have not been corrected:
1.Inventory at December 31, Year 3: US $40,000, understated
2.Inventory at December 31. Year 4: US $15,000. overstated
3.Depreciation Ur Year 3: US $7,000. understated
4.Accrued expenses at December 31, Year 4: US $10,000, understated
NEW QUESTION # 165
Which of the following actions should an internal auditor take to clean the data obtained for analytics purposes?
- A. Eliminate duplicate records.
- B. Define analytics objectives and establish outcomes.
- C. Deploys data visualization tool.
- D. Adopt standardized data analysis software.
Answer: A
NEW QUESTION # 166
If the exchange rate has changed from 1 local currency unit LCU) to 5 foreign currency units FCUs) to a rate of 1 LCU to 5.5 FCUs,
- A. The LCU has depreciated by 10%.
- B. The FCU has appreciated by 20%.
- C. The LCU has appreciated by 10%.
- D. The FCU has depreciated by 20%.
Answer: C
Explanation:
If the exchange rate changes from 1 LCU to 5 FCUs to 1 LCU to 5.5 FCUs, the LCU has appreciated by 10% [(5.5 - 5) 5].
NEW QUESTION # 167
Actual and projected sales of an entity for September and October are as follows:
All credit sales are collected in the month following the month in which the sale is made.
The September 30 cash balance is US $23,000. Cash disbursements in October are projected to be US $94,000. To maintain a minimum cash balance of US $15,000 on October 31, the entity will need to borrow:
- A. US $16,000
- B. US $0 B US $6,000 C US $11,000
Answer: A
Explanation:
This entity will collect US $80,000$50,000 from September credit sales + $30,000 from October cash sales) in October. To reach its targeted cash balance on October 31, it will have to borrow US $6,000.
NEW QUESTION # 168
The following account balances represent the December 31 balance sheet of an entity. The quick ratio for this year is:
- A. 0.82
- B. 1.42
- C. 0.97
- D. 1.08
Answer: C
Explanation:
The acid test quick) ratio equals quick assets cash, financial assets held for trading, and accounts receivable) divided by current liabilities. Quick assets total US $206,500 $27,500 cash + $64,000 financial assets held for trading + $115,000 net accounts receivable). Given current liabilities of US $213,500 $67,000 accounts payable + $54,000 current notes payable + $70,000 income taxes payable + $22,500 other current liabilities), the quick ratio is 0.967 US $206,500 + $213,500).
NEW QUESTION # 169
An attacker, posing as a bank representative, convinced an employee to release certain, financial information that ultimately resulted in fraud. Which of the following best describes this cybersecurity risk?
- A. Pharming,
- B. Phishing.
- C. Shoulder suiting
- D. Social engineering.
Answer: B
NEW QUESTION # 170
Which of the following financial instruments should be recorded at fair market value on the financial statements?
- A. Bonds to be held for sale in the short term.
- B. Bonds to be held to maturity.
- C. Notes receivable in the short term
- D. Accounts receivable in the short term
Answer: A
NEW QUESTION # 171
Which of the following statements is true regarding cost-volume-profit analysis?
- A. Contribution margin is the amount remaining from sales revenue after fixed expenses have been deducted.
- B. Following breakeven, net operating income will increase by the excess of fixed costs less the variable costs per units sold.
- C. Breakeven point is the amount of units sold to cover variable costs.
- D. Breakeven occurs when the contribution margin covers fixed costs.
Answer: A
Explanation:
Explanation/Reference: https://courses.lumenlearning.com/acctmgrs/chapter/5-3-the-contribution-margin-income- statement/#:~:text=The%20contribution%20margin%20represents%20sales,%2C%20the%20name%
20contribution%20margin
NEW QUESTION # 172
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.
The quality cost index for March is:
- A. 6.5
- B. 5.9
- C. 7.5
- D. 22.0
Answer: C
Explanation:
The total cost of quality equals the sum of prevention costs (quality planning), appraisal costs (inspection and testing), internal failure costs (scrap and rework), and external failure costs (customer complaints and returns), or US $30,000 ($2,800 + $6,400 + $16,800 + $4,000). Thus, the quality cost index for March is 7.5 [(US $30,000 - US $400,000) x 100].
NEW QUESTION # 173
Company P, which produces computers, uses a target pricing and costing approach. The following is Company P's costs and revenues for the year just ended:
Company P plans to increase sales of computers to 15,000 in the next year by reducing the unit price to US $1,250. If Company P wishes to achieve a unit target operating income of 10%, by what amount must it reduce the full cost per unit?
- A. US $250
- B. US $100
- C. US $225
- D. US $125
Answer: C
Explanation:
Unit target operating income is US $125 10% $1,250 target price). Thus, the unit target full cost is US $1,125 $I,250 $125). The current full cost per unit is US $1,350 [($8,000,000 cost of goods sold + $5,500,000 operating costs excluding production) - 10,000 units sold], so the necessary reduction in full cost per unit is US $225 $1,350 - $1 .125).
NEW QUESTION # 174
When would a contract be dosed out?
- A. When there is a force majenre.
- B. When the termination clause is enacted.
- C. When there's a dispute between the contracting parties
- D. When ail contractual obligations have been discharged.
Answer: D
NEW QUESTION # 175
The chart displays the:
- A. Median of each computer complaint.
- B. Absolute frequency of each computer complaint.
- C. Arithmetic mean of each computer complaint.
- D. F elative frequency of each computer complaint.
Answer: B
Explanation:
This Pareto diagram depicts the frequencies of complaints in absolute terms. It displays the actual number of each type of complaint. The chart does not display arithmetic means, relative frequencies, or medians of each type of complaint.
NEW QUESTION # 176
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IIA-CIA-Part3 exam, also known as Business Knowledge for Internal Auditing, is one of the exams required to become a certified internal auditor. It focuses on the knowledge and skills needed for internal auditors to understand business operations and financial management principles. IIA-CIA-Part3 exam is an essential part of the certification process for internal auditors as it tests their ability to apply their knowledge to real-world business scenarios.
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