Latest Apr-2023 IIA-CIA-Part3 Dumps PDF And Certification Training
Check your preparation for IIA IIA-CIA-Part3 On-Demand Exam
Understanding IIA CIA Part 3 Exam Topics
- Financial management (20%)
- Information security (25%)
- Business acumen (35%)
- Information technology (20%)
NEW QUESTION 156
Management of a bookkeeping company observed that the average time spent to perform identical tasks using a new software package decreases as the number of tasks performed increases. The following information on the use of the new software was collected.
If this learning effect continues, what is the average time to perform each of the first eight tasks?
- A. 8.1 minutes.
- B. 7.29 minutes.
- C. 5.90 minutes.
- D. 6.56 minutes.
Answer: B
Explanation:
Learning curves reflect the increased rate at which people perform tasks as they gain experience. The time required to perform a given task becomes progressively shorter. This technique is applicable only to the early stages of production or to any new task. One common assumption is that the cumulative average time per unit is reduced by a fixed percentage each time cumulative production is doubled. Based on the given data, this company has a 90% learning curve (90% x 10 minutes = 9 minutes, and 90% x 9 minutes =
8.1 minutes). Accordingly, the cumulative average time to perform eight tasks is 7.29 minutes (90% x 8.1 minutes).
NEW QUESTION 157
Technological uncertainty, subsidy, and spin-offs are usually characteristics of:
- A. Emerging industries.
- B. Fragmented industries.
- C. Mature industries.
- D. Declining industries.
Answer: A
NEW QUESTION 158
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. A hierarchical database model is adopted so that multiple users can be served at the same time.
- B. End users have their read-only applications approved by the information systems department before accessing the database.
- C. End-user applications are developed on personal computers before being implemented on the mainframe.
- D. Concurrency update controls are in place.
Answer: D
NEW QUESTION 159
General sales taxes tend to be regressive with respect to income because:
- A. A smaller portion of a lower income person's income is subject to the tax.
- B. A larger portion of a lower income person's income is subject to the tax.
- C. The tax claims an increasing amount of income as income rises.
- D. The tax rate is higher for person with lower income.
Answer: B
Explanation:
A sales tax is regressive with respect to income even though the rate is the same regardless of the buyer's income. The reason is that a greater percentage of a low-income individual's income is exposed to the tax. A higher-income individual should be able to save more and therefore shield a greater percentage of his/her income from the tax.
NEW QUESTION 160
The head of the research arid development department at a manufacturing organization believes that his team lacks expertise in some areas, and he decides to hire more experienced researchers to assist in the development of a new product. Which of the following variances are likely to occur as the result of this decision?
1. Favorable labor efficiency variance.
2. Adverse labor rate variance.
3. Adverse labor efficiency variance.
4. Favorable labor rate variance.
- A. 2 and 3
- B. 3 and A
- C. 1 and 2
- D. 1 and 4
Answer: C
NEW QUESTION 161
All of the following are alternative marketable securities suitable for investment except:
- A. Convertible bonds.
- B. Commercial paper.
- C. U.S. Treasury bills.
- D. Eurodollars.
Answer: A
Explanation:
Marketable securities are near-cash items used primarily for short-term investment. Examples include U.S. Treasury bills, Eurodollars. commercial paper, money-market mutual funds with portfolios of short-term securities, bankers' acceptances, floating rate preference stock, and negotiable CDs of U.S. banks. A convertible bond is not a shortterm investment because its maturity date is usually more than one year in the future and its price can be influenced substantially by changes in interest rates or by changes in the investee's stock price.
NEW QUESTION 162
The measurement date in accounting for shares issued to employees in share option plans accounted for in accordance with the fair value method prescribed by FRS 2 is:
- A. The date the entity forgoes alternative use of the shares to be sold under option
- B. The date on which the options are exercised by the employees.
- C. The date on which options are granted to specified employees.
- D. The earliest date on which both the number of shares to be issued and the option price are known.
Answer: C
Explanation:
Under the fair-value-based method prescribed by IFRS 2, compensation expense is measured at the grant date. This expense is based on the fair value of the award at that date and recognized over the sting period, the period over which the vesting conditions are expected to be satisfied.
NEW QUESTION 163
The average collection period for an entity measures the number of days:
- A. For a typical check to "clear" through the banking system.
- B. Beyond the end of the credit period before a typical customer payment is received.
- C. Before a typical account becomes delinquent.
- D. After a typical credit sale is made until the entity receives the payment.
Answer: D
Explanation:
The average collection period measures the number of days between the date of sale and the date of collection. It should be related to an entity's credit terms. For example, an entity that allows terms of 2/15, net 30, should have an average collection period of somewhere between 15 and 30 days.
NEW QUESTION 164
Which of the following should software auditors do when reporting internal audit findings related to enterprisewide resource planning?
- A. Draft separate audit reports for business and IT management.
- B. Include technical details to support IT issues.
- C. Conned IT audit findings to business issues.
- D. Include an opinion on financial reporting accuracy and completeness.
Answer: C
NEW QUESTION 165
Setting the introductory price of a new product relatively high is:
- A. Pricing by intermediaries.
- B. Price skimming.
- C. Market-based pricing.
- D. Penetration pricing.
Answer: B
Explanation:
Price skimming is the practice of setting an introductory price relatively high to attract buyers who are not concerned about price and to recover research and development costs rather quickly. The opposite approach is to use penetration pricing, which involves setting a relatively low price to gain deep market penetration quickly.
NEW QUESTION 166
Which of the following statements regarding database management systems is not correct?
- A. The data within the database management system can only be manipulated directly by the database management system administrator.
- B. The database management system acts as a layer between the application software and the operating system.
- C. Applications pass on the instructions for data manipulation which are then executed by the database management system.
- D. Database management systems handle data manipulation inside the tables, rather than it being done by the operating system itself in files.
Answer: A
NEW QUESTION 167
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.
Sales US $400,000
Direct materials cost 100,000
Direct labor cost 80,000
Testing and inspection cost 6,400 Scrap and rework cost 16,800
Quality planning cost 2,800
Cost of customer complaints and returns 4,000
The quality cost index for March is:
- A. 5.9%
- B. 6.5%
- C. 22.0%
- D. 7.5%
Answer: D
Explanation:
The total cost of quality equals the sum of prevention costs quality planning), appraisal casts testing and inspection), internal failure casts scrap and rework), and external failure casts customer complaints and returns), or U $30,000 $2,800 + $6,400 + $16,800 + $4,000). The quality cost index equals the total casts of quality divided by sales. Thus, the quality cast index for March is 7.5% U $80,000 - U $400,000).
NEW QUESTION 168
In an organization that produces chocolate, the leadership team decides that the organization will open a milk production facility for its milk chocolate. Which of the following strategies has the organization chosen?
- A. Differentiation.
- B. Vertical integration.
- C. Focus.
- D. Unrelated diversification.
Answer: B
NEW QUESTION 169
Which of the following is likely to be a benefit of electronic data interchange EDI)?
- A. Improved business relationships with trading partners.
- B. Decreased requirements for backup and contingency planning.
- C. Increased transmission speed of actual documents.
- D. Decreased liability related to protection of proprietary business data.
Answer: A
Explanation:
Electronic data interchange is the electronic transfer of documents between businesses. EDI was developed to enhance just-in-time JIT) inventory management. Advantages include speed, reduction of clerical errors, and elimination of repetitive clerical tasks and their costs. Improved business relationships result because of the mutual benefits conferred by EDI. Accordingly, some organizations require EDI.
NEW QUESTION 170
The balanced scorecard approach differs from traditional performance measurement approaches because it adds which of the following measures?
1. Financial measures
2. Internal business process measures.
3. Client satisfaction measures
4. Innovation and learning measures
- A. 3 and 4 only.
- B. 2, 3, and 4 only
- C. 1 only.
- D. 2 and 4 only.
Answer: B
NEW QUESTION 171
According to IIA guidance, which of the following statements is true regarding analytical procedures?
- A. Analytical procedures are intended primarily to ensure the accuracy of the information being examined.
- B. Analytical procedures can be used to identify unexpected differences but cannot be used to identify the absence of differences
- C. Data relationships are assumed to exist and to continue where no known conflicting conditions exist.
- D. Data relationships cannot include comparisons between operational and statistical data
Answer: C
NEW QUESTION 172
Capacity overbuilding is most likely to occur when management is focused on which of the following?
- A. Finance.
- B. Production.
- C. Diversification.
- D. Marketing.
Answer: B
NEW QUESTION 173
A large hospital has an existing contract with a vendor in another country to provide software support and maintenance of the hospital's patient records information system. From the hospital management's perspective, which of the following controls would be most effective to address privacy risks related to this outsourcing arrangement^
- A. Include a "right to audit" clause in the contract and impose detailed security obligations on the outsourced vendor
- B. Conduct periodic reviews of the privacy policy to ensure that the existing policy meets current legislation requirements in both regions.
- C. Develop an incident monitoring and response plan to track breaches from internal and external sources
- D. Implement mandatory privacy training for management to help with identifying privacy risks when outsourcing services
Answer: B
NEW QUESTION 174
One company executive has expressed concern about the operating loss that has occurred in Product Line 2 and has suggested that Product Line 2 be discontinued. If Product Line 2 is dropped, the manager of the line would be retained and assigned other duties with the company, but the other employees would not be retained. Management has indicated that the nature of the company's advertising might change with the elimination of Product Line 2, but the total dollar amount would not change. If Product Line 2 were to be dropped, the operating income of the company would:
- A. Increase by US $50,000
- B. Decrease by US $234,0
- C. Decrease by US $94,00
- D. Increase by US $416,000
Answer: B
Explanation:
The operating income will decrease. Product Line 2 income will be lost, but only the traceable costs of commissions, cost of sales, and salaries will be avoided. Accordingly, the decrease will be US $234,000 [$-700.000 + $14,000 + $420,000 + $32,000)]. The other shared costs will have to be absorbed by the two remaining product lines. The segmented income statement for a retail company with three product lines is presented below:
The company buys the goods in the three product lines directly from manufacturers' representatives. Each product line is directed by a manager whose salary is included in the administrative expenses. Administrative expenses are allocated to the three product lines equally because the administration is spread evenly among the three product lines.
Salaries represent payments to the workers in each product line and therefore are traceable costs of each product line. Advertising promotes the entire company rather than the individual product lines. As a result, the advertising is allocated to the three product lines in proportion to the sales revenue. Commissions are paid to the salespersons in each product line based on 2% of gross sales. Rent represents the cost of the retail store and warehouse under a lease agreement with 5 years remaining. The product lines share the retail and warehouse space, and the rent is allocated to the three product lines based on the square footage occupied by each of the product lines.
NEW QUESTION 175
Which of the following situations best applies to an organisation that uses a project, rather than a process, to accomplish its business activities?
- A. A city department sets up a new firefighter training program.
- B. A manufacturing organization acquires component parts from a contracted vendor
- C. Clothing company designs, makes, and sells a new item.
- D. A commercial construction company is hired to build a warehouse.
Answer: D
NEW QUESTION 176
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