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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 are appropriate reasons for internal auditors to document processes as part of an audit engagement?

1) To determine areas of primary concern.

2) To establish a standard format for process mapping.

3) To define areas of responsibility within the organization.

4) To assess the performance of employees.

A.

1 and 2 only

B.

1 and 3 only

C.

2 and 3 only

D.

2 and 4 only

Which of the following are the most appropriate measures for evaluating the change in an organization's liquidity position?

A.

Times interest earned, return on assets, and inventory turnover.

B.

Accounts receivable turnover, inventory turnover in days, and the current ratio.

C.

Accounts receivable turnover, return on assets, and the current ratio.

D.

Inventory turnover in days, the current ratio, and return on equity.

Which of the following activities most significantly increases the risk that a bank will make poor-quality loans to its customers?

A.

Borrowers may not sign all required mortgage loan documentation.

B.

Fees paid by the borrower at the time of the loan may not be deposited in a timely manner.

C.

The bank's loan documentation may not meet the government's disclosure requirements.

D.

Loan officers may override the lending criteria established by senior management.

Which of the following statements is true regarding outsourced business processes?

A.

Outsourced business processes should not be considered in the internal audit universe because the controls are owned by the external service provider.

B.

Generally, independence is improved when the internal audit activity reviews outsourced business processes.

C.

The key controls of outsourced business processes typically are more difficult to audit because they are designed and managed externally.

D.

The system of internal controls may be better and more efficient when the business process is

outsourced compared to internally sourced.

Which of the following is useful for forecasting the required level of inventory?

1) Statistical modeling.

2) Information about seasonal variations in demand.

3) Knowledge of the behavior of different business cycles.

4) Pricing models linked to seasonal demand.

A.

1 and 2 only

B.

2 and 3 only

C.

1, 2, and 3 only

D.

1, 2, 3, and 4

An organization is projecting sales of 100,000 units, at a unit price of $12. Unit variable costs are $7. If fixed costs are $350,000, what is the projected total contribution margin?

A.

$350,000

B.

$500,000

C.

$850,000

D.

$1,200,000

An organization uses a database management system (DBMS) as a repository for data. The DBMS, in turn, supports a number of end-user developed applications which were created using fourth-generation programming languages. Some of the applications update the database. Which of the following is the most important control related to the integrity of the data in the database?

A.

End users have their read-only applications approved by the information systems department before accessing the database.

B.

Concurrency update controls are in place.

C.

End-user applications are developed on personal computers before being implemented on the

mainframe.

D.

A hierarchical database model is adopted so that multiple users can be served at the same time.

Which of the following IT strategies is most effective for responding to competitive pressures created by the marketplace?

A.

Promote closer linkage between organizational strategy and information.

B.

Provide users with greater online access to information systems.

C.

Enhance the functionality of application systems.

D.

Expand the use of automated controls.

Which of the following costs would be incurred in an inventory stockout?

A.

Lost sales, lost customers, and backorder.

B.

Lost sales, safety stock, and backorder.

C.

Lost customers, safety stock, and backorder.

D.

Lost sales, lost customers, and safety stock.

During a review of a web-based application used by customers to check the status of their bank accounts, it would be most important for the internal auditor to ensure that:

A.

Access to read application logs is restricted to authorized users.

B.

Account balance information is encrypted in the database.

C.

The web server used to host the application is located in a physically secure area.

D.

Sensitive data, such as account numbers, are submitted using encrypted communications.