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Understanding IIA CIA Part 3 Exam Topics
- Financial management (20%)
- Information technology (20%)
- Business acumen (35%)
- Information security (25%)
What Do You Know About The Need For IIA CIA Part 3 Exam
The IIA CIA Exam has been created for the professionals who are willing to get the Certified Internal Auditor certificate. It is a detailed exam that has three parts and includes questions of different formats. Each part of the exam is aimed at finding out whether the applicants have mastered specific sets of knowledge, skills, and abilities in a particular domain. With the help of this certification, you can get a better job position and increase your salary.
TrainingDumps where we deliver certification questions with answers and explanations to help students obtain their certification by using our Online Web Simulator and Mobile App. Our IIA CIA Part 3 exam dumps are written by industry experts in the subject to ensure that all objectives of the exam are covered in depth.
Our mission is to build strong relationships with our customers and to ensure their success in achieving their Certified Internal Auditor Certification goals.
NEW QUESTION 47
If a manufacturer has established a limit on the number of defects that are tolerable in the final assembly of its product, which of the following quality control procedures should be employed?
I. Inspect completed goods for compliance with established tolerances.
II. Review sales returns for defects not detected during the final inspection process.
III. Compare materials and machinery specifications with original product designs.
IV.
Establish a quality circle that includes management and subordinates to discuss labor efficiency.
- A. I, III, and IV.
- B. I, II, and III.
- C. Ill and IV only.
- D. II and III only.
Answer: B
Explanation:
Inspecting goods after completion of the production process and counting defective goods returned by customers are product quality procedures. They measure the level of product conformance with customer expectations. Verifying materials and machinery specifications are process quality procedures because they emphasize the inputs to the process and the process itself.
NEW QUESTION 48
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 organized data to minimize useless information.
- B. The auditor eliminated duplicate information.
- C. The auditor made data usable for a specific purpose by ensuring that anomalies were Identified and corrected.
- D. The auditor ensured data fields were consistent and that data could be used for a specific purpose.
Answer: A
NEW QUESTION 49
Which of the following is an example of two-factor authentication?
- A. The user's key fob and a smart card.
- B. The user's fingerprint and a personal Identification number.
- C. The user's password and a separate passphrase.
- D. The user's facial geometry and voice recognition.
Answer: B
NEW QUESTION 50
Project B's internal rate of return is closest to:
- A. 15%
- B. 20%
- C. 18%
- D. 22%
Answer: B
Explanation:
Twenty percent is the rate of return that equates the cash inflows with the cash outflows. The present value of 20% for 5 years is .4019, which multiplied by US $9,950,000 equals US $3,998,905. Therefore, the net present value of the project approximates 0 using the 20% rate.
NEW QUESTION 51
The following facts are presented for an entity that uses the retail inventory method.
What is the forgone sales revenue from inventory shrinkage?
- A. US $3.500
- B. US $35.000
- C. US $5.000
- D. US $45.000
Answer: C
Explanation:
The retail inventory method converts ending inventory at retail to cost by applying a cost retail ratio. The advantage is that a physical inventory can be taken at retail without the necessity of counting individual items at cost. Because this method requires detailed inventory records to be kept at retail, lost sales revenue at retail) caused by inventory shrinkage can be calculated using the following retail data:
NEW QUESTION 52
Capital structure decisions involve determining the proportions of financing from:
- A. Short-term or long-term assets.
- B. Debt or equity.
- C. Short-term or long-term debt
- D. Retained earnings or ordinary stock.
Answer: B
Explanation:
The optimal capital structure minimizes the weighted average cost of capital and thereby maximizes the value of the entity's stock. Both debt and equity are factors in an entity's capital structure.
NEW QUESTION 53
Governments most likely restrict trade in the long run to:
I. Help foster new industries.
II. Protect declining industries.
III. Increase tax revenues.
IV.
Foster national security.
- A. I, II, and IV only
- B. II and III only
- C. I only
- D. I and II only
Answer: D
Explanation:
Governmental impediments to global competition are generally imposed for the announced purpose of protecting local entities and jobs and developing new industries.
They also may have the effect of raising revenue in the short run. In the long run, tax and revenues will decline because of reduced trade. Examples of governmental impediments are tariffs; duties; quotas; domestic content rules; preferences for local entities regarding procurement, taxes. R&D, labor regulations, and other operating rules; and laws e.g., anti bribery or tax) enacted by a national government that impede national entities from competing globally. These impediments are most likely when industries are viewed as crucial.
NEW QUESTION 54
Monitoring is an important component of internal control. Which of the following is not an example of monitoring?
- A. Data processing management regularly generates exception reports for unusual transactions or volumes of transactions and follows up with investigation as to causes.
- B. Management regularly compares divisional performance with budgets for the division.
- C. Data processing management regularly reconciles batch control totals for items processed with batch controls for items submitted.
- D. Management has asked internal auditing to perform regular audits of the controls over cash processing.
Answer: C
Explanation:
Monitoring assesses the quality of internal control over time. Management considers whether internal control is properly designed and operating as intended and modifies it to reflect changing conditions. Monitoring may be in the form of separate, periodic evaluations or of ongoing monitoring. Ongoing monitoring occurs as part of routine operations. It includes management and supervisory review, comparisons, reconciliations, and other actions by personnel as part of their regular activities. However, reconciling batch control totals is a processing control. This information is relevant to a theory of constraints TOC) analysis. A manufacturer that can sell all of its output produces its sole product using three operations. Each unit sells for US $120, and direct materials costing US $48 per unit are added at the start of the first operation. Other variable costs are immaterial. The following annual cost and capacity information is available concerning those operations:
NEW QUESTION 55
An audit of the electronic data interchange EDI) area of a banking group revealed the facts listed below. Which one indicates the need for improved internal control?
- A. The system employs message sequencing as a way to monitor data transmissions.
- B. Branch office employees may access the mainframe with a single call via modem.
- C. Employees may only access the computer system via an ID and an encrypted password.
- D. Certain types of transactions may only be made at specific terminals.
Answer: B
Explanation:
The system should employ automatic dial-back to prevent intrusion by unauthorized parties. This procedure accepts an incoming modem call, disconnects, and automatically dials back a prearranged number to establish a permanent connection for data transfer or inquiry.
NEW QUESTION 56
Which of the following is false with respect to client-server networks?
- A. The server customarily manages peripheral hardware and control.; a,::,:,,-. .;hared databases.
- B. A client-server network divides processing of an application between a client machine on a network and a server.
- C. A client-server network can cope with only 12 or fewer clients at a time.
- D. In a client-server network, many applications reside on the client computer.
Answer: C
Explanation:
A client-server network can cope with thousands of clients at a time. They can access the server over the Internet from any where at any time with no time-related charges.
NEW QUESTION 57
A company's product has an expected 4-year life cycle from research, development, and design through its withdrawal from the market. Budgeted costs are:
The company plans to produce 200,000 units and price the product at 125% of the wholelife unit cost. Thus, the budgeted unit selling price is:
- A. US $36
- B. US $15
- C. US $31
- D. US $45
Answer: D
Explanation:
Whole-life costs include after-purchase costs operating, support, repair, and disposal) incurred by customers as well as life-cycle costs R&D, design, manufacturing, marketing, distribution, and research). Hence, the budgeted unit whole-life cost is US $36 [($2,000,000
+ $3,000,000 + $1,200,000 + $1,000,000) - 200,000 units], and the budgeted unit selling price is US $45 $36 125CYo).
NEW QUESTION 58
In which product-mix pricing strategy is it appropriate for the seller to accept any price that exceeds the storage and deliver} casts for the product?
- A. Optional-product pricing.
- B. By-product pricing.
- C. Captive-product pricing.
- D. Product-bundle pricing.
Answer: B
Explanation:
A by-product is a product of relatively minor importance generated during the production of one or more other products. Its production entails no additional costs. Any amount received above the storage and delivery. casts for a by-product allows the seller to reduce the main product's price to make it more competitive.
NEW QUESTION 59
Under throughput costing, the only cost considered to be truly variable in the short run is:
- A. Direct labor.
- B. Direct materials.
- C. All manufacturing costs are considered variable.
- D. Manufacturing overhead.
Answer: B
Explanation:
Throughput costing, also called super variable costing, recognizes only direct materials costs as being truly van able and thus relevant to the calculation of throughput margin.
NEW QUESTION 60
Which of the following statements is correct regarding risk analysis?
- A. The highest risk assessment should always be assigned to the area with the highest probability of occurrence.
- B. The highest risk assessment should always be assigned to the area with the largest potential loss.
- C. The extent to which management judgments are required in an area could serve as a risk factor in assisting the auditor in making a comparative risk analysis.
- D. Risk analysis must be reduced to quantitative terms in order to provide meaningful comparisons across an organization.
Answer: C
NEW QUESTION 61
A widely used approach that managers use to recognize uncertainty about individual items and to obtain an immediate financial estimate of the consequences of possible prediction errors is:
- A. Expected value analysis.
- B. Learning curve analysis.
- C. Regression analysis.
- D. Sensitivity analysis.
Answer: D
Explanation:
Sensitivity analysis determines how a result varies with changes in a given variable or parameter in a mathematical decision model. For example, in a present value analysis, a manager might first calculate the net present value or internal rate of return assuming that a new asset has a 10-year life. The NPV or IRR can then be recalculated using a 5-year life to determine how sensitive the result is to the change in the assumption. An international not for- profit organization finances medical research. The majority of its revenue and support comes from fund-raising activities, investments, and specific grants from an initial sponsoring corporation. The organization has been in operation over 15 years and has a small internal audit department. The organization has just finished a major fundraising drive that raised US $500 million for the current fiscal period. The following are selected data from recent financial statements US dollar figures in millions):
NEW QUESTION 62
An organization with global headquarters in the United States has subsidiaries in eight other nations. If the organization operates with an ethnocentric attitude, which of the following statements is true?
- A. There is a significant amount of collaboration between headquarters and subsidiaries.
- B. People of local nationality are developed for the best positions within their own country
- C. Standards used for evaluation and control are determined at local subsidiaries, not set by headquarters.
- D. Orders, commands and advice are sent to the subsidiaries from headquarters.
Answer: D
NEW QUESTION 63
The chief audit executive (CAE) has embraced a total quality management approach to improving the internal audit activity's (lAArs) processes. He would like to reduce the time to complete audits and improve client ratings of the IAA.
Which of the following staffing approaches is the CAE most likely lo select?
- A. Assign a team of personnel who have different specialties to each audit and empower Team members to participate fully in key decisions
- B. Assign a team with a trained audit manager to plan each audit and distribute field work tasks to various staff auditors.
- C. Assign a team of personnel who have similar specialties to specific engagements that would benefit from those specialties and limit Key decisions to the senior person.
- D. Assign a team to each audit, designate a single person to be responsible for each phase of the audit, and limit decision making outside of their area of responsibility.
Answer: C
NEW QUESTION 64
A retail company determines its selling price by marking up variable costs 60%. In addition, the company uses frequent selling price markdowns to stimulate sales. If the markdowns average 10%, what is the company's contribution margin ratio?
- A. 37.5%
- B. 30.6%
- C. 27.5%
- D. 41.7%
Answer: B
Explanation:
The contribution margin equals revenues minus variable costs. The CMR equals the UCM divided by the selling price. For example, if variable costs average US $10 per unit, the average selling price is US $16 $1.60 x $10). However, the 10% markdown implies that the actual average selling price is US $14.40 .90 x $16). The CMR is therefore 30.6% [ US $14.40 - $10.00) - $14.40]. A company that sells its single product for US $40 per unit uses cost-volume-profit analysis in its planning. The company's after-tax profit for the past year was US $1,188,000 applying an effective tax rate of 40%. The projected costs for manufacturing and selling its single product in the coming year are listed.
NEW QUESTION 65
What must be monitored in order to manage risk of consumer product inventory obsolescence?
1. Inventory balances.
2. Market share forecasts.
3. Sales returns.
4. Sales trends.
- A. 1, 2, and 3 only
- B. 4 only
- C. 1 and 4 only
- D. 1 only
Answer: C
NEW QUESTION 66
The value of the domestic currency in relation to foreign currencies is:
- A. Set along with the value of other currencies held by the International Monetary Fund.
- B. Determined directly by the price of gold because the value of the domestic currency is tied to the price of gold.
- C. Determined by the forces of supply and demand on the foreign exchange markets.
- D. Set by the domestic government in consultation with foreign governments.
Answer: C
Explanation:
Exchange rates are determined by the forces of supply and demand on the exchange markets. Often other forces try to intervene in this process of exchange rate determination, but these reflect only short-run policies. An example of this type of policy would be government or central bank intervention in the international money markets.
NEW QUESTION 67
The leadership of an organization encourages employees to form voluntary problem-solving groups whereby several employees from the same work area meet regularity during work hours to discuss improvements and creative ways to reduce costs. Which of the following best describes this approach?
- A. Self-managed teams
- B. Open-book management
- C. Quality control circles
- D. Cross-functional teams
Answer: A
NEW QUESTION 68
In which type of business environment are price cutting strategies and franchising strategies most appropriate?
- A. Competitive, embryonic.
- B. Mature, fragmented.
- C. Fragmented, decline.
- D. Embryonic, focused.
Answer: B
NEW QUESTION 69
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Prerequisites of IIA CIA Part 3 Exam
IIA CIA Part 3 Prerequisites - Bachelor's degree from an accredited college or university or a non-U.S. equivalent, at least five years of professional experience in internal auditing, and have attained the age of 21. Or have a combination of education and/or professional experience that provides for the same level of knowledge.
IIA CIA Experience Requirements - At least two years of professional experience in internal auditing, governance, risk management, control, or related experience in one or more areas examined by the CIA exam.
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