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IIA IIA-CIA-PART3-3P - Questions & Answers

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Question 1
Single choice

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

Question 2
Single choice

In mergers and acquisitions, which of the following is an example of a horizontal combination?

A.

Dairy manufacturing company taking over a large dairy farm.

B.

A movie producer acquires movie theaters.

C.

A petroleum processing company acquires an agro-processing firm.

D.

A baker taking over a competitor.

Question 3
Single choice

According to Porter, which of the following is associated with fragmented industries?

A.

Weak entrance barriers.

B.

Significant scale economies.

C.

Steep experience curve.

D.

Strong negotiation power with suppliers.

Question 4
Single choice

The economic order quantity can be calculated using the following formula:

Which of the following describes how the optimal order size will change if the annual demand increases by 36 percent?

A.

Decrease by about 17 percent.

B.

Decrease by about 7 percent.

C.

Increase by about 7 percent.

D.

Increase by about 17 percent.

Question 5
Single choice

An organization is considering mirroring the customer data for one regional center at another center. A disadvantage of such an arrangement would be:

A.

Lack of awareness of the state of processing.

B.

Increased cost and complexity of network traffic.

C.

Interference of the mirrored data with the original source data.

D.

Confusion about where customer data are stored.

Question 6
Single choice

A chief audit executive (CAE) was asked to participate in the selection of an external auditor.

Which of the following would not be a typical responsibility for the CAE?

A.

Evaluate the proposed external auditor fee.

B.

Recommend criteria to be used in the selection process.

C.

Develop appropriate performance metrics.

D.

Monitor the work of the external auditors.

Question 7
Single choice

Which of the following price adjustment strategies encourages prompt payment?

A.

Cash discounts.

B.

Quantity discounts.

C.

Functional discounts.

D.

Seasonal discounts.

Question 8
Single choice

Presented below are partial year-end financial statement data (000 omitted from dollar amounts) for companies A and B:

If company A has a quick ratio of 2:1, then it has an accounts receivable balance of:

A.

$100

B.

$200

C.

$300

D.

$500

Question 9
Single choice

Which of the following is an example of a risk avoidance response?

A.

Buying an insurance policy to protect against loss events.

B.

Hedging against natural gas price fluctuations.

C.

Selling a non-strategic business unit.

D.

Outsourcing a high risk process to a third party.

Question 10
Single choice

Which of the following techniques would be least effective in resolving the conflict created by an internal audit client's perception of the audit report as a personal attack on his management performance?

A.

The auditor should focus on the audit client as a person and understand him, rather than just concentrating on the problem.

B.

The auditor should make recommendations based on objective criteria, rather than based on a subjective assessment.

C.

The auditor should explore alternative solutions to address the audit problem, so the audit client has options.

D.

The auditor should take a flexible position on the recommendations and focus on resolving the issue by addressing the interests of the people concerned.

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