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IIA IIA-CIA-Part3-3P - CIA Exam Part Three: Business Knowledge for Internal Auditing

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Total 488 questions

Which of the following would not impair the objectivity of internal auditor?

A.

Management assurance on risks.

B.

Implementing risk responses on behalf of management.

C.

Providing assurance that risks assessed are correctly evaluated.

D.

Setting the risk appetite.

The activity that involves a trial run of a product in a typical segment of the market before proceeding to a national launch is referred to as:

A.

Test marketing

B.

Experimentation

C.

Segmentation

D.

Positioning

Which of the following is the most likely reason an organization may decide to undertake a stock split?

A.

To keep stock price constant.

B.

To keep shareholders' equity constant.

C.

To increase shareholders' equity.

D.

To enhance the stock liquidity.

In an analysis of alternative credit-management policies, which of the following components will cause the net present value of receivables on credit sales to increase, if everything else remains constant?

A.

A tougher collections policy that reduces the bad debt loss ratio.

B.

A higher cost per unit sold.

C.

A longer average collection period.

D.

An increase in the cost of capital.

An internal auditor discovered that several unauthorized modifications were made to the production version of an organization's accounting application. Which of the following best describes this deficiency?

A.

Production controls weakness.

B.

Application controls weakness.

C.

Authorization controls weakness.

D.

Change controls weakness.

Which of the following statements is true regarding the roles and responsibilities associated with a corporate social responsibility (CSR) program?

A.

The board has overall responsibility for the internal control processes associated with the CSR program.

B.

Management has overall responsibility for the effectiveness of governance, risk management, and internal control processes associated with the CSR program.

C.

The internal audit activity is responsible for ensuring that CSR principles are integrated into the

organization's policies and procedures.

D.

Every employee has a responsibility for ensuring the success of the organization's CSR objectives.

Which of the following is a key characteristic of a zero-based budget?

A.

A zero-based budget provides estimates of costs that would be incurred under different levels of activity.

B.

A zero-based budget maintains focus on the budgeting process.

C.

A zero-based budget is prepared each year and requires each item of expenditure to be justified.

D.

A zero-based budget uses input from lower-level and middle-level managers to formulate budget plans.

Which is the least effective form of risk management?

A.

Systems-based preventive control.

B.

People-based preventive control.

C.

Systems-based detective control.

D.

People-based detective control.

Organizations use matrix management to accomplish which of the following?

A.

To improve the chain of command.

B.

To strengthen corporate headquarters.

C.

To focus better on a single market.

D.

To increase lateral communication.

Which of the following phases of a business cycle are marked by an underuse of resources?

1) The trough.

2) The peak.

3) The recovery.

4) The recession.

A.

1 and 3 only

B.

1 and 4 only

C.

2 and 3 only

D.

2 and 4 only