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IIA-CIA-Part3 exam is designed to test candidates' knowledge and understanding of business concepts and their application in internal auditing. It covers topics such as business ethics, financial management, organizational structure, risk management, and governance. IIA-CIA-Part3 exam is divided into four sections, each with its own set of learning objectives and exam questions.
NEW QUESTION # 87
Conformance is how well a product and its components meet applicable standards.
According to the robust quality concept,
- A. Units are acceptable if their characteristics lie within an acceptable range of values.
- B. Every unit should reach a target value.
- C. A certain percentage of defective units is acceptable.
- D. The goal is for all units to be within specifications.
Answer: B
Explanation:
Conformance is how well a product and its components meet applicable standards. The traditional view is that conforming products are those with characteristics that lie within an acceptable specified range of values that includes a target value. This view also regarded a certain percentage of defective nonconforming) units as acceptable. The traditional view was superseded by the zero-defects approach that sought to eliminate all nonconforming output.
An extension of this approach is the robust quality concept. Its goal is to reach the target value in every case. The reason is that hidden quality costs occur when output varies from the target even though the units are within specifications.
NEW QUESTION # 88
A large retail customer made an offer to buy 10,000 units at a special price of $7 per unit. The manufacturer usually sells each unit for $10. Variable manufacturing costs are $5 per unit and fixed manufacturing costs are
$3 per unit. For the manufacturer to accept the offer, which of the following assumptions needs to be true?
- A. Fixed and variable manufacturing costs are less than the special offer selling price.
- B. Costs related to accepting this offer can be absorbed through the sale of other products.
- C. The manufacturer can fulfill the order without expanding the capacities of the production facilities.
- D. The manufacturer's production facilities are currently operating at full capacity.
Answer: B
NEW QUESTION # 89
The process model used in a theory of constraints (TOC) analysis is called:
- A. Materials requirements planning.
- B. Lean production.
- C. Drum-buffer-rope.
- D. Just-in-time.
Answer: C
Explanation:
Production flow through a constraint is managed using the drum-buffer-rope (DBR) system. The drum (i.e. the beat to which a production process marches) is the bottleneck operation. The constraint sets the pace for the entire process. The buffer is a minimal amount of work-in-process input to the drum that is maintained to ensure that it is always in operation. The rope is the sequence of activities preceding and including the bottleneck operation that must be coordinated to avoid inventory buildup.
NEW QUESTION # 90
In terms of international business strategy, which of the following is true regarding a multi-domestic strategy?
- A. It provides cost advantages, improves coordinated activities, and speeds product development.
- B. It uses the same products in all countries.
- C. It centralizes control with little decision-making authority given to the local level.
- D. It is an effective strategy when large differences exist between countries.
Answer: D
NEW QUESTION # 91
The following transactions and events occurred during the year:
- $300,000 of raw materials were purchased, of which $20,000 were returned because of defects
- $600,000 of direct labor costs were incurred.
- S750.000 of manufacturing overhead costs were incurred.
What is the organization's cost of goods sold for the year?
- A. $1,610.000
- B. $1.480.000
- C. $1650 000
- D. $1 500 000
Answer: D
NEW QUESTION # 92
In mergers and acquisitions, which of the following is an example of a horizontal combination?
- A. A movie producer acquires movie theaters.
- B. A petroleum processing company acquires an agro-processing firm.
- C. A baker taking over a competitor.
- D. Dairy manufacturing company taking over a large dairy farm.
Answer: C
NEW QUESTION # 93
An entity had 1.000 units of opening inventory that cost US $10 per unit On May 1. 1 .000 units were purchased at a cost of US $11 each and on September 1 another 1.000 units were purchased at a cost of US $12 each. If 2.000 units were sold during the year the company will report cost of goods sold of List A if the List B method of inventory valuation is used.
- A. Option C
- B. Option D
- C. Option B
- D. Option A
Answer: A
Explanation:
Under FIFO, the first items purchased are presumed to be the first sold. Given that 3,000 units were available and 2.000 units were sold. FIFO cost of goods sold must have been US $21.000 [(1,000 $10) BI T1,000 $11) May 1 purchase].
NEW QUESTION # 94
Which of the following is considered to be a server in a local area network LAN)?
- A. The cabling that physically interconnects the nodes of the LAN.
- B. A device that stores program and data files for users of the LAN.
- C. A device that connects the LAN to other networks.
- D. A workstation that is dedicated to a single user on the LAN.
Answer: B
Explanation:
A file server is a computer in a network that operates as a librarian. It stores programs and data files for users of the LAN and manages access to them.
NEW QUESTION # 95
Quality control programs employ many tools for problem definition and analysis. A scatter diagram is one of these tools. The objective of a scatter diagram is to:
- A. Show frequency distribution in graphic form.
- B. Show the vital trend and separate trivial items.
- C. Display a population of items for analysis.
- D. Divide a universe of data into homogeneous groups.
Answer: C
Explanation:
The objective of a scatter diagram is to depict degrees of correlation. Each observation is represented by a dot on a graph corresponding to specific values of x (the independent variable) and)/(the dependent variable).
NEW QUESTION # 96
Which of the following is a logical access control designed to enhance the security of a computer-based application system?
- A. User accounts will be locked alter three unsuccessful attempts to access the system
- B. Users will be assigned rights to access the system based on their job responsibilities
- C. Users will not be allowed to use any of their last five passwords to access the system
- D. Users will automatically lose access to the system after 15 minutes of inactivity
Answer: C
NEW QUESTION # 97
A small furniture-manufacturing firm with 100 employees is located in a two-story building and does not plan to expand. The furniture manufactured is not special-ordered or custom-made. The most likely structure for this organization would be:
- A. Functional departmentalization.
- B. Divisional organization.
- C. Matrix organization.
- D. Product departmentalization.
Answer: A
NEW QUESTION # 98
Which of the following best describes the concept of relevant cost?
- A. A past cost that differs among alternatives.
- B. A future cost that differs among alternatives.
- C. A past cost that is the same among alternatives.
- D. A future cost that is the same among alternatives.
Answer: B
NEW QUESTION # 99
Correlation is a term frequently used in conjunction with regression analysis and is measured by the value of the coefficient of correlation, r. The best explanation of the value r is that it:
- A. Ranges in size from negative infinity to positive infinity.
- B. Is always positive.
- C. Is a measure of the relative relationship between two variables.
- D. Interprets variances in terms of the independent variable.
Answer: C
Explanation:
The coefficient of correlation r) measures the strength of the linear relationship between the dependent and independent variables. The magnitude of r is independent of the scales of measurement of x and y. The coefficient lies between -1.0 and +1.0. A value of zero indicates no linear relationship between the x and y variables. A value of +1.0 indicates a perfectly direct relationship, and a value of-1.0 indicates a perfectly inverse relationship.
NEW QUESTION # 100
Price skimming involves:
- A. Setting a high introductory price.
- B. Setting a low introductory price.
- C. Using markups tied closely to the price paid for a product.
- D. Setting different freight charges for customers in different zones.
Answer: A
Explanation:
Price skimming is used when a new product is introduced at the highest price possible given the benefits of the product. For market skimming to work, the product must appear to be worth its price, the costs of producing a small volume cannot be so high that they eliminate the advantage of charging more, and competitors cannot enter the market and undercut the price.
NEW QUESTION # 101
How will profit or loss be affected by the amortization of a premium on bonds payable?
- A. Interest expense is decreased, so profit or loss is increased
- B. Interest expense is increased, so profit or loss is decreased
- C. Interest income is increased, so profit or loss is increased. D Interest income is decreased, so profit or loss is decreased.
Answer: A
Explanation:
The entry is to debit interest expense, debit bond premium, and credit cash paid. Thus, the amortization of a premium on bonds payable reduces the interest expense, thereby increasing profit or loss.
NEW QUESTION # 102
All of the following are generally included in a cost-of-quality report except:
- A. Supplier evaluations.
- B. Lost contribution margin.
- C. Warranty claims.
- D. Design engineering.
Answer: B
Explanation:
A cost-of-quality report includes most costs related to quality, specifically the costs of prevention, appraisal, internal failure, and external failure.
NEW QUESTION # 103
The costs of quality that are incurred in detecting units of product that do not conform to product specifications are referred to as:
- A. Appraisal costs.
- B. Internal failure costs.
- C. Preventive costs.
- D. External failure costs.
Answer: A
Explanation:
The Categories of quality costs include conformance costs (prevention and appraisal) and nonconformance costs(internal failure and external failure).appraisal costs embrace such activities as statistical quality control programs. inspection, and testing. thus, the cost of detecting nonconfoming products is an appraisal cost. listed below are costs of quality that a manufacturing company has incurred throughout its operations, the company plans to prepare a report that classified these costs into the following four categories: preventive costs, appraisal costs, internal failure costs, and external failure costs.
NEW QUESTION # 104
A manufacturer is considering using bar code identification for recording information on parts used by the manufacturer. A reason to use bar codes rather than other means of identification is to ensure that:
- A. Vendors use the same identification methods.
- B. The movement of parts is easily and quickly recorded.
- C. The movement of all parts is recorded.
- D. Vendors use the same part numbers.
Answer: B
Explanation:
Bar code scanning is a form of optical character recognition. Bar codes are a series of bars of different widths that represent critical information about the item. They can be read and the information can be instantly recorded using a scanner. Thus, bar coding records the movement of parts with minimal labor costs.
NEW QUESTION # 105
As it relates to the data analytics process, which of the following best describes the purpose of an internal auditor who cleaned and normalized cate?
- A. The auditor eliminated duplicate information.
- B. The auditor made data usable for a specific purpose by ensuring that anomalies were Identified and corrected.
- C. The auditor organized data to minimize useless information.
- D. The auditor ensured data fields were consistent and that data could be used for a specific purpose.
Answer: C
NEW QUESTION # 106
Which of the following is the first step an internal audit activity should undertake when executing a data analytics process'?
- A. Analyze possible and available sources of raw data
- B. Conduct a risk assessment regarding the effectiveness of the data analytics process.
- C. Define the purpose and the anticipated value
- D. Select data for cleaning and normalization procedures.
Answer: A
NEW QUESTION # 107
Which of the following "families" of controls is not described in The IIA's Global Technology Audit Guide (GTAG) 1, titled information Technology Controls?
- A. Feedback, concurrent, and feedforward controls.
- B. Preventive, detective, and corrective controls.
- C. IT general and application controls.
- D. Governance, management, and technical controls.
Answer: A
Explanation:
Feedback, concurrent, and feed forward controls are not referenced in GTAG 1.
NEW QUESTION # 108
Which of the following job design techniques would most likely be used to increase employee motivation through job responsibility and recognition?
- A. Job complicating
- B. Job enrichment
- C. Job rotation
- D. Job enlargement
Answer: B
NEW QUESTION # 109
Organizations mat adopt just-in-time purchasing systems often experience which of the following?
- A. A greater need for inspection of goods as the goods arrive.
- B. A slight increase in carrying costs.
- C. A greater need for linkage with a vendor s computerized order entry system.
- D. An increase in the number of suitable suppliers
Answer: C
NEW QUESTION # 110
Responsibility for the control of end-user computing EUC) exists at the organizational, departmental, and individual user level. Which of the following should be a direct responsibility of the individual users?
- A. Physical security of equipment.
- B. Taking equipment inventories.
- C. Acquisition of hardware and software.
- D. Strategic planning of end-user computing.
Answer: A
Explanation:
EUC involves user-created or user-acquired systems that are maintained and operated outside of traditional information systems controls. In this environment, an individual user is ordinarily responsible for the physical security of the equipment s)he uses.
NEW QUESTION # 111
Tie-in sales e.g., the sale of camera and film together) most likely are legal if:
- A. The tie-in is necessary to assure product quality.
- B. Used by all entities in an industry.
- C. The tying product is patented.
- D. Used to facilitate price discrimination.
Answer: A
Explanation:
Tie-in sales involve a seller's requirement that the buyer purchase another distinct product to obtain the first. They are usually prohibited under antitrust law unless a small entity is attempting to enter a market or the tie-in is needed to protect the entity's goodwill e.g., by maintaining a certain quality standard). Tie-in sales requirements are usually illegal if the seller has enough market power to restrict competition.
NEW QUESTION # 112
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