Exam Code: IIA-CIA-Part3 (Practice Exam Latest Test Questions VCE PDF)
Exam Name: Certified Internal Auditor - Part 3, Business Analysis and Information Technology
Certification Provider: IIA
Free Today! Guaranteed Training- Pass IIA-CIA-Part3 Exam.
Q16. Before authorizing payment of an EDI invoice, the computer automatically compares the invoice with the purchase order and receiving report data. When the system was being developed, the auditor reviewed the payment authorization program and made recommendations. Which one of the following was most likely recommended by the auditor for the situation in which the quantity invoiced is greater than the quantity received?
A. Prepare an exception report.
B. Pay the amount billed and adjust the inventory for the difference.
C. Return the invoice to the vendor.
D. Authorize payment of the full invoice, but maintain an open purchase order record for the missing goods.
Answer: A
Explanation:
An exception report error listing) should be issued so that company personnel can investigate the discrepancy, determine its cause, and take appropriate corrective action.
Q17. The value of the domestic currency in relation to foreign currencies is:
A. Determined directly by the price of gold because the value of the domestic currency is tied to the price of gold.
B. Set by the domestic government in consultation with foreign governments.
C. Set along with the value of other currencies held by the International Monetary Fund.
D. Determined by the forces of supply and demand on the foreign exchange markets.
Answer: D
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.
Q18. As part of a risk analysis, an auditor wishes to forecast the percentage growth in next month's sales for a particular plant using the past 30 months" sales results. Significant changes in the organization affecting sales volumes were made within the last 9 months. The most effective analysis technique to use would be:
A. Unweighted moving average.
B. Exponential smoothing.
C. Queuing theory.
D. Linear regression analysis.
Answer: B
Explanation:
Under exponential smoothing, each forecast equals the sum of the last observation times the smoothing constant, plus the last forecast times one minus the constant. Thus, exponential means that greater weight is placed on the most recent data, with the weights of all data falling off exponentially as the data age. This feature is important because of the organizational changes that affected sales volume.
Q19. A major benefit of computer integrated manufacturing CIM) is:
A. Increased amount of scrap available for resale.
B. Increased working capital.
C. Delivery of customized products with long lead times.
D. Increased flexibility.
Answer: D
Explanation:
CIM entails a holistic approach to manufacturing in which design is translated into product by centralized processing and robotics. CIM can help an organization reduce costs of spoilage, increase flexibility, and increase productivity. Flexibility is the key benefit. A traditional manufacturing system might become disrupted from an emergency change, but CII1 will reschedule everything in the plant when a priority requirement is inserted into the system.
Q20. Which of the following actions would best address a concern that data uploaded from a desktop computer may be erroneous?
A. The mainframe computer should be backed up on a regular basis.
B. Two persons should be present at the desktop computer when it is uploading data.
C. The mainframe computer should subject the data to the same edits and validation routines that online data entry would require.
D. Users should be required to review a random sample of processed data.
Answer: C
Explanation:
The same edits and validation routines used for online data entry should be applied to data uploaded from a desktop computer. This could help prevent data errors.
Q21. Quality costing is similar in service and manufacturing organizations. Nevertheless, the differences
between these organizations have certain implications for quality management. Thus,
A. Direct labor costs are usually a higher percentage of total costs in manufacturing organizations.
B. External failure costs are relatively greater in service organizations.
C. Quality improvements resulting in more efficient use of labor time are more likely to be accepted by employees in service organizations.
D. Poor service is less likely to result in loss of customers than a faulty product.
Answer: B
Explanation:
External failure costs arise when problems occur after delivery. They occur because products or services are nonconforming or otherwise do not satisfy customers. External failure costs in service enterprises are even more important than in manufacturing environments. Faulty goods sometimes maybe reworked or replaced to a customer's satisfaction, but poor service tends to result in a loss of customers.
Q22. Which of the following statements is true with respect to value engineering?
I. Value engineering is a means of reaching targeted cost levels.
II. Value engineering is the Japanese concept that emphasizes continuous improvement in all phases of company activities through numerous minor changes.
III.
Value engineering requires distinguishing between cost incurrence and locked-in costs, with an emphasis on controlling costs at the design stage.
A.
Items I and II only.
B.
Items I and III only.
C.
Items II and III only.
D.
Items I, II, and III.
Answer: B
Explanation:
Value engineering is a means of reaching targeted cost levels. Value engineering requires distinguishing between cost incurrence and locked-i n costs, with emphasis on controlling costs at the design stage. It is not Japanese.
Q23. Which of the following measures create the most restrictive barrier to exporting to a country?
A. Tariffs
B. Quotas.
C. Embargoes.
D. Exchange controls.
Answer: C
Explanation:
An embargo is a total ban on some kinds of imports. It is an extreme form of the import quota. Embargoes have the effect of totally excluding the exporting entity from selling in that country and are the most restrictive type of import/export law.
Q24. A company that wishes to improve its rate of retention of its experienced employees might:
A. Abolish its hire-from-within policy.
B. Improve its fringe benefit package.
C. Initiate job simplification programs.
D. Set a mandatory retirement age.
Answer: B
Explanation:
Fringe benefits e.g., pensions and profit-sharing plans) may be contingent on duration of employment. Accordingly, they motivate employees to remain with the company.
Q25. The chart displays the:
A. Arithmetic mean of each computer complaint.
B. F elative frequency of each computer complaint.
C. Median of each computer complaint.
D. Absolute frequency of each computer complaint.
Answer: D
Explanation:
This Pareto diagram depicts the frequencies of complaints in absolute terms. It displays the actual number of each type of complaint. The chart does not display arithmetic means, relative frequencies, or medians of each type of complaint.
Q26. An organization has collected data on the complaints made by personal computer users and has categorized the complaints.
The chart displays the:
A. Arithmetic mean of each computer complaint.
B. Relative frequency of each computer complaint.
C. Median of each computer complaint.
D. Absolute frequency of each computer complaint.
Answer: D
Explanation:
This Pareto diagram depicts the frequencies of complaints in absolute terms. It displays the actual number of each type of complaint. The chart does not display arithmetic means, relativefrequencies, or medians of each type of complaint.
Q27. Correlation is a term frequently used in conjunction with regression analysis and is measured by the value of the coefficient of correlation, r. The best explanation of the value r is that it:
A. Is always positive.
B. Interprets variances in terms of the independent variable.
C. Ranges in size from negative infinity to positive infinity.
D. Is a measure of the relative relationship between two variables.
Answer: D
Explanation:
The coefficient of correlation (r) measures the strength of the linear relationship between the dependent and independent variables. The magnitude of r is independent of the scales of measurement of x and y. The coefficient has a range of-1 to +1. A value of zero indicates no linear relationship between the x and y variables. A value of+1 indicates a perfectly direct relationship, and a value of —1 indicates a perfectly inverse relationship.
Q28. The network diagram and the corresponding activity cost chart for a manufacturing project at Networks, Inc., are presented below. The numbers in the diagram are the expected times (in days) to perform each activity in the project.
The expected time of the critical path is:
A. 12.0 days
B. 13.0 days
C. 11.5 days
D. 11.0 days
Answer: B
Explanation:
The critical path is the longest path. The longest path in the diagram is A-D-E, which requires 13 days (5.5 + 7.5) based on expected times.
Q29. A plumbing company, a wholesale distributor, supplies plumbing contractors and retailers throughout the Northeast on a next-day delivery. basis. The company has a centrally located warehouse to accept receipts of plumbing supplies. The warehouse has a single dock to accept and unload railroad freight cars during the night. It takes 5 hours to unload each freight car. The company's prior records indicate that the number of freight cars that arrive in the course of a night range from zero to five or mare, with no indicated pattern of arrivals. If more than two freight cars arrive on the same night, some freight must be held until the next dad{ for unloading. The company wants to estimate the wait time when more than two freight cars arrive in the same night. The appropriate technique to analyze the arrival of freight cars is
A. Integer programming.
B. Linear programming.
C. Monte Carlo simulation.
D. Regression analysis.
Answer: C
Explanation: The Monte Carlo simulation method is often used to generate the individual values for a random variable. The performance of a quantitative model under uncertainty may be investigated by randomly selecting values for each variable in the model based on the probability distribution of each variable) and then calculating the value of the solution. If this process is performed many times, the distribution of results from the model will be obtained.
Q30. An example of an internal nonfinancial benchmark is:
A. The labor rate of comparably skilled employees at a major competitor's plant.
B. The average actual cost per pound of a specific product at the company's most efficient plant.
C. A US $50,000 limit on the cost of employee training programs at each of the company's plants.
D. The percentage of customer orders delivered on time at the company's most efficient plant.
Answer: D
Explanation:
Benchmarking is a continuous evaluation of the practices of the best organizations in their class and the adaptation of processes to reflect the best of these practices. It requires analysis and measurement of key outputs against those of the best organizations. This procedure also involves identifying the underlying key actions and causes that contribute to the performance difference. The percentage of orders delivered on time at the company's most efficient plant is an example of an internal nonfinancial benchmark.