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IIA-CIA-Part3 Business Knowledge for Internal Auditing Questions and Answers

Questions 4

Which of the following controls would be the most effective in preventing the disclosure of an organization's confidential electronic information?

Options:

A.

Nondisclosure agreements between the firm and its employees.

B.

Logs of user activity within the information system.

C.

Two-factor authentication for access into the information system.

D.

limited access so information, based on employee duties

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Questions 5

According to IIA guidance on IT, which of the following best describes a situation where data backup plans exist to ensure that critical data can be restored at some point in the future, but recovery and restore processes have not been defined?

Options:

A.

Hot recovery plan

B.

Warm recovery plan

C.

Cold recovery plan

D.

Absence of recovery plan

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Questions 6

Which of the following is true of bond financing, compared to common stock, when alJ other variables are equal?

Options:

A.

Lower shareholder control

B.

lower indebtedness

C.

Higher company earnings per share.

D.

Higher overall company earnings

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Questions 7

Which of the following is a likely result of outsourcing?

Options:

A.

Increased dependence on suppliers.

B.

Increased importance of market strategy.

C.

Decreased sensitivity to government regulation

D.

Decreased focus on costs

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Questions 8

An organization's board of directors is particularly focused on positioning, the organization as a leader in the industry and beating the competition. Which of the following strategies offers the greatest alignment with the board's focus?

Options:

A.

Divesting product lines expected to have negative profitability.

B.

Increasing the diversity of strategic business units.

C.

Increasing investment in research and development for a new product.

D.

Relocating the organization's manufacturing to another country.

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Questions 9

What is the primary purpose of an Integrity control?

Options:

A.

To ensure data processing is complete, accurate, and authorized.

B.

To ensure data being processed remains consistent and intact.

C.

To monitor the effectiveness of other controls

D.

To ensure the output aligns with the intended result.

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Questions 10

An organization produces products X and Y. The materials used for the production of both products are limited to 500 Kilograms

(kg ) per month. All other resources are unlimited and their costs are fixed. Individual product details are as follows in order to maximize profit, how much of product Y should the organization produce each month?

$10 $13

2 kg

70 units

6 kg

120 units

Options:

A.

50 units

B.

60 units

C.

70 units

D.

1:20 units

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Questions 11

An organization has instituted a bring-your-own-device (BYOD) work environment. Which of the following policies best addresses the increased risk to the organization's network incurred by this environment?

Options:

A.

Limit the use of the employee devices for personal use to mitigate the risk of exposure to organizational data.

B.

Ensure that relevant access to key applications is strictly controlled through an approval and review process.

C.

Institute detection and authentication controls for all devices used for network connectivity and data storage.

D.

Use management software scan and then prompt parch reminders when devices connect to the network

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Questions 12

Which component of an organization's cybersecurity risk assessment framework would allow management to implement user controls based on a user's role?

Options:

A.

Prompt response and remediation policy

B.

Inventory of information assets

C.

Information access management

D.

Standard security configurations

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Questions 13

With regard to disaster recovery planning, which of the following would most likely involve stakeholders from several departments?

Options:

A.

Determining the frequency with which backups will be performed.

B.

Prioritizing the order in which business systems would be restored.

C.

Assigning who in the IT department would be involved in the recovery procedures.

D.

Assessing the resources needed to meet the data recovery objectives.

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Questions 14

An organization has an agreement with a third-party vendor to have a fully operational facility, duplicate of the original site and configured to the organization's needs, in order to quickly recover operational capability in the event of a disaster, Which of the following best describes this approach to disaster recovery planning?

Options:

A.

Cold recovery plan,

B.

Outsourced recovery plan.

C.

Storage area network recovery plan.

D.

Hot recovery plan

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Questions 15

Which of the following is a disadvantage in a centralized organizational structure?

Options:

A.

Communication conflicts

B.

Slower decision making.

C.

Loss of economies of scale

D.

Vulnerabilities in sharing knowledge

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Questions 16

How do data analysis technologies affect internal audit testing?

Options:

A.

They improve the effectiveness of spot check testing techniques.

B.

They allow greater insight into high risk areas.

C.

They reduce the overall scope of the audit engagement,

D.

They increase the internal auditor's objectivity.

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Questions 17

Which of the following application controls, implemented by management, monitors data being processed to ensure the data remains consistent and accurate?

Options:

A.

Management trail controls

B.

Output controls.

C.

Integrity controls

D.

input controls

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Questions 18

Which of the following is a sound network configuration practice to enhance information security?

Options:

A.

Change management practices to ensure operating system patch documentation is retained.

B.

User role requirements are documented in accordance with appropriate application-level control needs.

C.

Validation of intrusion prevention controls is performed to ensure intended functionality and data integrity.

D.

Interfaces reinforce segregation of duties between operations administration and database development.

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Questions 19

Which of the following best describes a potential benefit of using data analyses?

Options:

A.

It easily aligns with existing internal audit competencies to reduce expenses

B.

It provides a more holistic view of the audited area.

C.

Its outcomes can be easily interpreted into audit: conclusions.

D.

Its application increases internal auditors' adherence to the Standards

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Questions 20

Management is pondering the following question:

"How does our organization compete?"

This question pertains to which of the following levels of strategy?

Options:

A.

Functional-level strategy

B.

Corporate-level strategy.

C.

Business-level strategy,

D.

DepartmentsHevet strategy

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Questions 21

Which of the following is an example of an application control?

Options:

A.

Automated password change requirements.

B.

System data backup process.

C.

User testing of system changes.

D.

Formatted data fields

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Questions 22

Which of the following is true regarding the use of remote wipe for smart devices?

Options:

A.

It can restore default settings and lock encrypted data when necessary.

B.

It enables the erasure and reformatting of secure digital (SD) cards.

C.

It can delete data backed up to a desktop for complete protection if required.

D.

It can wipe data that is backed up via cloud computing

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Questions 23

In accounting, which of the following statements is true regarding the terms debit and credit?

Options:

A.

Debit indicates the right side of an account and credit the left side

B.

Debit means an increase in an account and credit means a decrease.

C.

Credit indicates the right side of an account and debit the left side.

D.

Credit means an increase in an account and debit means a decrease

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Questions 24

Which of the following organization structures would most likely be able to cope with rapid changes and uncertainties?

Options:

A.

Decentralized

B.

Centralized

C.

Departmentalized

D.

Tall structure

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Questions 25

What relationship exists between decentralization and the degree, importance, and range of lower-level decision making?

Options:

A.

Mutually exclusive relationship.

B.

Direct relationship.

C.

Intrinsic relationship.

D.

Inverse relationship.

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Questions 26

Management has decided to change the organizational structure from one that was previously decentralized to one that is now highly centralized. As such: which of the

following would be a characteristic of the now highly centralized organization?

Options:

A.

Top management does little monitoring of the decisions made at lower levels.

B.

The decisions made at the lower levels of management are considered very important.

C.

Decisions made at lower levels in the organizational structure are few.

D.

Reliance is placed on top management decision making by few of the organization's departments.

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Questions 27

Which of the following concepts of managerial accounting is focused on achieving a point of low or no inventory?

Options:

A.

Theory of constraints.

B.

Just-in-time method.

C.

Activity-based costing.

D.

Break-even analysis

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Questions 28

Which of the following risks would Involve individuals attacking an oil company's IT system as a sign of solidarity against drilling in a local area?

Options:

A.

Tampering

B.

Hacking

C.

Phishing

D.

Piracy

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Questions 29

Which of the following is most appropriately placed in the financing section of an organization's cash budget?

Options:

A.

Collections from customers

B.

Sale of securities.

C.

Purchase of trucks.

D.

Payment of debt, including interest

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Questions 30

Which of the following attributes of data are cybersecurity controls primarily designed to protect?

Options:

A.

Veracity, velocity, and variety.

B.

Integrity, availability, and confidentiality.

C.

Accessibility, accuracy, and effectiveness.

D.

Authorization, logical access, and physical access.

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Questions 31

For which of the following scenarios would the most recent backup of the human resources database be the best source of information to use?

Options:

A.

An incorrect program fix was implemented just prior to the database backup.

B.

The organization is preparing to train all employees on the new self-service benefits system.

C.

There was a data center failure that requires restoring the system at the backup site.

D.

There is a need to access prior year-end training reports for all employees in the human resources database

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Questions 32

An organization had a gross profit margin of 40 percent in year one and in year two. The net profit margin was 18 percent in year one and 13 percent in year two. Which of the following could be the reason for the decline in the net profit margin for year two?

Options:

A.

Cost of sales increased relative to sales.

B.

Total sales increased relative to expenses.

C.

The organization had a higher dividend payout rate in year two.

D.

The government increased the corporate tax rate

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Questions 33

After purchasing shoes from an online retailer, a customer continued to receive additional unsolicited offers from the retailer and other retailers who offer similar products.

Which of the following is the most likely control weakness demonstrated by the seller?

Options:

A.

Excessive collecting of information

B.

Application of social engineering

C.

Retention of incomplete information.

D.

Undue disclosure of information

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Questions 34

Which of the following best explains why an organization would enter into a capital lease contract?

Options:

A.

To increase the ability to borrow additional funds from creditors

B.

To reduce the organization's free cash flow from operations

C.

To Improve the organization's free cash flow from operations

D.

To acquire the asset at the end of the lease period at a price lower than the fair market value

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Questions 35

Which of the following items represents the first thing that should be done with obtained dote in the data analytics process?

Options:

A.

Verify completeness and accuracy.

B.

Verify existence and accuracy.

C.

Verify completeness and integrity.

D.

Verify existence and completeness.

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Questions 36

An organization decided to outsource its human resources function. As part of its process migration, the organization is implementing controls over sensitive employee data.

What would be the most appropriate directive control in this area?

Options:

A.

Require a Service Organization Controls (SOC) report from the service provider

B.

Include a data protection clause in the contract with the service provider.

C.

Obtain a nondisclosure agreement from each employee at the service provider who will handle sensitive data.

D.

Encrypt the employees ' data before transmitting it to the service provider

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Questions 37

Which of the following application controls is the most dependent on the password owner?

Options:

A.

Password selection

B.

Password aging

C.

Password lockout

D.

Password rotation

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Questions 38

Which of the following is an example of a physical control designed to prevent security breaches?

Options:

A.

Preventing database administrators from initiating program changes

B.

Blocking technicians from getting into the network room.

C.

Restricting system programmers' access to database facilities

D.

Using encryption for data transmitted over the public internet

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Questions 39

Which of the following accounting methods is an investor organization likely to use when buying 40 percent of the stock of another organization?

Options:

A.

Cost method.

B.

Equity method .

C.

Consolidation method.

D.

Fair value method.

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Exam Code: IIA-CIA-Part3
Exam Name: Business Knowledge for Internal Auditing
Last Update: Jun 28, 2022
Questions: 266

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