Testking 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!
Q31. All of the following are generally included in a cost-of-quality report except:
A. Warranty claims.
B. Design engineering.
C. Supplier evaluations.
D. Lost contribution margin.
Answer: D
Explanation:
A cost-of-quality report includes most costs related to quality, specifically the costs of prevention, appraisal, internal failure, and external failure.
Q32. Only two companies manufacture Product A. The finished product is identical regardless of which company manufactures it. The cost to manufacture Product A is US $1, and the selling price is US $2. One company considers reducing the price to achieve 100c'% market share but fears the other company will respond by further reducing the price. Such a scenario would involve a:
A. No-win strategy.
B. Dual-win strategy.
C. One win-one lose strategy.
D. Neutral strategy.
Answer: A
Explanation:
If bath firms reduce the selling price of Product A, neither will gain sales and the resultant price war will cause bath firms to earn lower profits. This outcome is inevitable when reduced profit margins do not result in a significant increase in sales. The effect is a no-win strategy. A bank has two drive-in lanes to serve customers: one attached to the bank itself and one on an island. One teller serves bath stations. The bank is interested in determining the average waiting times of customers and has developed a model based on random numbers. The two key factors are the time between successive car arrivals and the time customers wait in line. Assume that the analysis begins with cars just arriving at bath service windows. bath requiring 3 minutes of service time. Car 1 is the attached window attached to the bank unless that window has more cars waiting than the island window. The lone teller will always serve the car that arrived first. If two cars arrive simultaneously, the one at the attached window will be served before the one at the island.
Q33. An organization sells a product for which demand is uncertain. Management would like to ensure that there is sufficient inventory on hand during periods of high demand so that it does not lose sales and customers). To do so, the organization should:
A. Keep a safety stock.
B. Use a just-in-time inventory system.
C. Employ a materials requirements planning system.
D. Keep a master production schedule.
Answer: A
Explanation:
Safety stock is inventory maintained to reduce the number of stock outs resulting from higher- than-expected demand during lead time. Maintaining a safety stock avoids the costs of stock outs, e.g., lost sales and customer dissatisfaction.
Q34. A small company has changed from a system of recording time worked on clock cards to a computerized payroll system in which employees record time in and out with magnetic cards. The computer system automatically updates all payroll records. Because of this change,
A. A generalized computer audit program must be used.
B. Part of the audit trail is altered.
C. The potential for payroll-related fraud is diminished. D Transactions must be processed in batches.
Answer: B
Explanation:
In a manual payroll system, a paper trail of documents is created to provide audit evidence that controls over each step in processing are in place and functioning. One element of a computer system that differentiates it from a manual system is that a transaction trail useful for auditing purposes might exist only for a brief time or only in computer-readable form.
Q35. A competitive marketing strategy in which a firm specializes in serving customers overlooked or ignored by major competitors is called a:
A. Market leader strategy.
B. Market challenger strategy.
C. I' Market follower strategy.
D. Market niche strategy.
Answer: D
Explanation:
Specializing in serving customers overlooked or ignored by major competitors is a market niche strategy. This strategy specializes along market, customer, product, or marketing mix lines.
Q36. Which of the following is an encryption feature that can be used to authenticate the originator of a document and ensure that the message is intact and has not been tampered with?
A. Heuristic terminal.
B. Perimeter switch.
C. Default settings.
D. Digital signatures.
Answer: D
Explanation:
Businesses and others require that documents sent over the Internet be authentic. To authenticate a document, a company or other user may transmit a complete plaintext document along with an encrypted portion of the same document or another standard text that serves as a digital signature_ If the plaintext document is tampered with, the two will not match.
Q37. While auditing a marketing department, the internal auditor discovered that the product life cycle model was used to structure the marketing mix. Under such a philosophy, the price charged on a consistent basis for a specific product would probably be lowest during which life cycle stage?
A. Introduction stage.
B. Growth stage.
C. Maturity stage.
D. Decline stage.
Answer: C
Explanation:
During the maturity stage, competition is at its greatest and costs are at their lowest. Moreover, firms are engaged in competitive price-cutting measures, resulting in some of the lowest prices seen during a product's life cycle.
Q38. The costs of quality that are incurred in detecting units of product that do not conform to product specifications are referred to as:
A. Preventive costs.
B. Appraisal costs.
C. Internal failure costs.
D. External failure costs.
Answer: B
Explanation:
The Categories of quality costs include conformance costs (prevention and appraisal) and nonconformance costs(internal failure and external failure).appraisal costs embrace such activities as statistical quality control programs. inspection, and testing. thus, the cost of detecting nonconfoming products is an appraisal cost. listed below are costs of quality that a manufacturing company has incurred throughout its operations, the company plans to prepare a report that classified these costs into the following four categories: preventive costs, appraisal costs, internal failure costs, and external failure costs.
Q39. Before sending or receiving EDI messages, a company should:
A. Execute a trading partner agreement with each of its customers and suppliers.
B. Reduce inventory levels in anticipation of receiving shipments.
C. Demand that all its suppliers implement EDI capabilities.
D. Evaluate the effectiveness of its use of EDI transmissions.
Answer: A
Explanation:
Before sending or receiving EDI messages, a company should execute a trading partner agreement with its customers and suppliers. All parries should understand their responsibilities, the messages each will initiate, how they will interpret messages, the means of authenticating and verifying the completeness and accuracy of messages, the moment when the contract between the parries is effective, the [required level of security, etc.
Q40. The most important component of quality control is:
A. Ensuring goods and services conform to the design specifications.
B. Satisfying upper management.
C. Conforming with ISO-9000 specifications.
D. Determining the appropriate timing of inspections.
Answer: A
Explanation:
The intent of quality control is to ensure that goods and services conform to the design specifications. Whether the focus is on feed forward, feedback, or concurrent control, the emphasis is on ensuring product or service conformity.
Q41. An investment company is attempting to allocate its available funds between two investment alternatives, equities and bonds, which differ in terms of expected return and risk. The company would like to minimize its risk while earning an expected return of at least 10% and investing no more than 70% in either of the investment alternatives. An appropriate technique for allocating its funds between equities and bonds is:
A. Linear programming.
B. Capital budgeting.
C. Differential analysis.
D. Queuing theory.
Answer: A
Explanation:
Linear programming is a mathematical technique for planning resource allocation that optimizes a given objective function that is subject to certain constraints. In this case, the maximum investment is constrained by a 70% limit on either investment choice.
Q42. In the standard regression equation y = a + bx, how is the letter b best described?
A. Independent Variable
B. Dependent Variable
C. Constant coefficient
D. Variable coefficient
Answer: D
Explanation:
In the standard regression equation, b represents the variable coefficient. For example, in a cost determination regression, equals total costs, b is the variable cost per unit, is the number of units produced, and a is fixed cost. In preparing the annual profit plan for the coming year, Wilkens Company wants to determine the cost behavior pattern of the maintenance costs.
Wilkens has decided to use linear regression by employing the equation = a + bx for maintenance costs. The prior year's data regarding maintenance hours and costs, and the results of the regression analysis, are given below and in the opposite column.
Q43. If the central bank of a country raises interest rates sharply, the country's currency will likely:
A. Increase in relative value.
B. Remain unchanged in value.
C. Decrease in relative value.
D. Decrease sharply in value at first and then return to its initial value.
Answer: A
Explanation:
Exchange rates fluctuate depending upon the demand for each country's currency. If a country raises its interest rates, its currency will appreciate. The demand for investment at the higher interest rates will shift the demand curare for the currency to the right. The reverse holds true for a decrease in interest rates.
Q44. In a product's life cycle, the first symptom of the decline stage is a decline in the:
A. Firm's inventory levels.
B. Product's sales.
C. Product's production cost.
D. Product's prices.
Answer: B
Explanation:
The sales of most product types and brands eventually decrease permanently. This decline may be slow or rapid. This first symptom of the decline stage of a product's life cycle triggers such other effects as price cutting, narrowing of the product line, and reduction in promotion budgets.
Q45. ix months after a disgruntled systems programmer was fired and passwords disabled, the company's mainframe computer was brought to a halt when it suddenly erased all of its own files and software. The most likely way the programmer accomplished this was by:
A. Returning to the computer center after 6 months.
B. Planting a computer virus through the use of telephone access.
C. Having an accomplice in the computer center.
D. Implanting a virus in the operating system and executing it via a back door.
Answer: D
Explanation:
Viruses are a form of computer sabotage. They are programs hidden within other programs that have the capacity to duplicate themselves and infect other systems. Sharing of storage media or participation in computer networks creates exposure to viruses. Viruses may result in actions ranging from harmless pranks to erasure of files and programs. A back door is a shortcut created in an operating system that permits a programmer simple access to the system.