Ucertify offers free demo for IIA-CIA-Part3 exam. "Certified Internal Auditor - Part 3, Business Analysis and Information Technology", also known as IIA-CIA-Part3 exam, is a IIA Certification. This set of posts, Passing the IIA IIA-CIA-Part3 exam, will help you answer those questions. The IIA-CIA-Part3 Questions & Answers covers all the knowledge points of the real exam. 100% real IIA IIA-CIA-Part3 exams and revised by experts!
Q76. Which of the following channel structures have the best means of managing channel conflict?
I. Conventional
II. Vertical
III. Horizontal
IV.
Multichannel
A.
I and II.
B.
II, III, and IV.
C.
I, III, and IV.
D.
II and III.
Answer: B
Explanation:
In vertical distribution systems, channel conflict is managed through common ownership, contractual relationships, or administration by one or a few dominant channel members. The joint nature of horizontal distribution efforts is the tool for managing channel conflict. In a multichannel system, because such a system is managed by a single entity, channel conflicts can be evaluated and managed internally. Conventional distribution systems consist of one or more independent producers, wholesalers, and retailers, each of which is a separate profit maximizing business. The profit objective of each independent channel member may result in actions that are not profit- maximizing for the system as a whole, and the conventional distribution system offers no means for controlling channel conflict.
Q77. One of the main reasons that implementation of a total quality management (TQM) program works better through the use of teams is:
A. Teams are more efficient and help an organization reduce its staffing.
B. Employee motivation is always higher for team members than for individual contributors.
C. Teams are a natural vehicle for sharing ideas, which leads to process improvement.
D. The use of teams eliminates the need for supervision, thereby allowing a company to reduce staffing.
Answer: C
Explanation:
TQM promotes teamwork by modifying or eliminating traditional (and rigid) vertical hierarchies and instead forming flexible groups of specialists. Quality circles, cross-functional teams, and self- managed teams are typical formats. Teams are an excellent means of encouraging the sharing of ideas and removing process improvement obstacles.
Q78. The operating condition that car-or-mot be identified by using a queuing model is the:
A. Average percentage of time that a service facility is idle.
B. Probability of a specified number of units in the queue.
C. Actual amount of time each unit spends in the queue.
D. Average number of units in the system and the mean length of the queue.
Answer: C
Explanation:
Queuing models determine the operating characteristics of a waiting line: the probability that no units are in the system, the average units in the line, the average units in the system, the average time a unit waits, the average time a unit is in the system, the probability that a unit must wait, and the probability of a given number of units in the system. However, the actual time spent in the queue cannot be determined from the model.
Q79. Which of the following pieces of information is useful to an internal auditor who is conducting a risk assessment for an e-commerce project?
I. The business plan for the e-commerce project
II. The level of functionality required to meet the end user's needs as well as management's objectives.
III.
The results of a risk assessment performed to evaluate impact of internal and external forces RRR.
A.
I and II only.
B.
I and III only.
C.
II and III only.
D.
I. II, and III.
Answer: D
Explanation:
The IIA's SAC publication can assist the internal auditor in audit planning and risk assessment. It includes a list of e-commerce areas that should be of interest to an internal auditor who is undertaking an engagement and assessing risks. The questions for the internal auditor to consider are listed in PA 2100-6, Control and Audit Implications of E-commerce Activities. All of the information given constitutes answers to some of the questions listed.
Q80. Exchange rates are determined by:
A. Each industrial country's government.
B. The International Monetary Fund.
C. Supply and demand in the foreign currency market.
D. Exporters and importers of manufactured goods.
Answer: C
Explanation:
Although currencies can be supported by various means for short periods, the primary determinant of exchange, rates is the supply of and demand for the various currencies. Under current international agreements, exchange rates are allowed to "float_" During periods of extreme fluctuations, however, governments and control banks may intervene to maintain stability in the market.
Q81. Which one of the following would not be included as a reason for the company to use EFT with the EDI system?
A. To take advantage of the time lag associated with negotiable instruments.
B. To allow the company to negotiate discounts with EDI vendors based upon prompt payment.
C. To improve its cash management program.
D. To reduce input time and input errors.
Answer: A
Explanation:
The float period is the time lag between transmittal of a regular check a negotiable instrument and its clearance through regular banking channels. Float is eliminated by EFT.
A multinational company has an agreement with a value-added network VAN) that provides the encoding and communications transfer for the company's electronic data interchange EDI) and electronic funds transfer EFT) transactions. Before transfer of data to the VAN, the company performs online preprocessing of the transactions. The internal auditor is responsible for assessing preprocessing controls. In addition, the agreement between the company and the VAN states that the internal auditor is allowed to examine and report on the controls in place at the VAN on an annual basis. The contract specifies that access to the VAN can occur on a surprise basis during the second or third quarter of the company's fiscal year. This period was chosen so it would not interfere with processing during the VAN's peak transaction periods. This provision was not reviewed with internal auditing. The annual audit plan approved by the board of directors specifies that a full audit would be done during the current year.
Q82. Setting the introductory price of a new product relatively high is:
A. Market-based pricing.
B. Price skimming.
C. Penetration pricing.
D. Pricing by intermediaries.
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.
Q83. The use of teams in total quality management (TQM) is important because:
A. Well-managed teams can be highly creative and are able to address complex problems better
than individuals can.
B. Teams are quicker to make decisions, thereby helping to reduce cycle time.
C. Employee motivation is higher for team members than for individual contributors.
D. The use of teams eliminates the need for supervision, thereby allowing a company to become leaner and more profitable.
Answer: A
Explanation:
Teams can use the diverse knowledge and skills of all team members. Employee involvement means training and empowering employees to harness their creativity for problem solving. Quality control circles are used to obtain input from employees and to locate the best perspective on problem solving.
Q84. A disadvantage of separating performance evaluations from compensation-increase decisions is that:
A. Not enough emphasis is placed on short-run performance.
B. Financial rewards may lose their motivational effect.
C. Employees may not be motivated by good appraisals.
D. The employee's performance evaluation does not consider the financial status of the company overall.
Answer: C
Explanation:
The employee may not be motivated immediately by a good appraisal because of the delay in receipt of any monetary reward. The evaluation also may not be taken as seriously by the employee if compensation is not correlated with performance.
Q85. A company allows each of its departments to develop its own system for evaluating performance. How should the personnel director communicate appraisal information to a new employee?
A. Presenting anything that is pertinent to the listener's situation.
B. Providing an overview of all systems within the company.
C. Describing how her own performance is evaluated.
D. Discussing each department's evaluation system in detail.
Answer: A
Explanation:
The personnel director should tailor the discussion to the listener by describing how the employee's department evaluates performance and what is expected of him/her. The director should also obtain feedback from the employee to determine if everything is clearly understood.
Q86. An internal auditor for a large automotive parts retailer wishes to perform a risk analysis and wants to use an appropriate statistical tool to help identify stores that would be out of line compared to the majority of stores. The most appropriate statistical tool to use is:
A. Line artime series analysis.
B. Cross-sectional regression analysis.
C. Cross tabulations with chi-square analysis of significance.
D. Time series multiple regression analysis to identify changes in individual stores over time.
Answer: B
Explanation:
Time series data pertain to a given entity over a number of prior time periods. Cross-sectional data, however, pertain to different entities for a given time period or at a given time. Thus, cross- sectional regression analysis is the most appropriate statistical tool because it compares attributes of all stores' operating statistics at one moment in time.
Q87. The auditor wishes to determine if the change in investment income during the current year was due to a) changes in investment strategy, b) changes in portfolio mix, or c) other factors. Which of the following analytical review procedures should the auditor use?
A. Simple linear regression that compares investment income changes over the past 5 years to determine the nature of the changes.
B. Ratio analysis that compares changes in the investment portfolio on a monthly basis.
C. Trend analysis that compares the changes in investment income as a percentage of total assets and of investment assets over the past 5 years.
D. Multiple regression analysis that includes independent variables related to the nature of the investment portfolio and market conditions.
Answer: D
Explanation:
Regression analysis develops an equation to explain the behavior of a dependent variable for example, investment income) in terms of one or more independent variables for example, market risk and the risks of particular investments). Multiple regression analysis is the best approach because it allows the auditor to regress the change in investment income on more than one independent variable.
Q88. 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. Sensitivity analysis.
D. Regression analysis.
Answer: C
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):
Q89. The feasible solution region is bounded by the lines connecting points:
A. 3, 4, 6, and 7
B. 1, 5, 6, and 8.
C. 2, 4, 5 6, and 8.
D. 3, 5, 6, and 7.
Answer: A
Explanation:
A model consisting of a system of functions may be used to optimize an objective function. If the functions in the model are all linear, the model is a linear programming model. Linear programming is a technique to determine optimal resource allocation. Several solution methods are available to solve linear programming problems. The graphical method, the easiest technique, is limited to simple problems. Here, the graph consists of three lines, each representing a production constraint. The lines connecting points 3, 4, 6, and 7 bound the feasible solution region. Product mixes of X and Y that lie outside this boundary cannot be produced and/or sold because the demand constraint (line 3, 4), the labor constraint (line 4, 6), and the material constraint (line 6, 7) are binding.
Q90. Which of the following terms is not used in project management?
A. Dummy activity.
B. Latest finish.
C. Optimistic time.
D. Lumpy demand.
Answer: D
Explanation:
Project management concerns managing teams assigned to special projects. Lumpy demand refers to periodic demand for a product or service that increases in large, lumpy increments.