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Introduction of IIA CIA Part 3 Exam
The Certified Internal Auditor (CIA) is an advanced professional certification for internal auditors. It is a globally recognized certification and is based on the International Professional Practices Framework (IPPF) of the IIA. The CIA exam consists of three parts. Part 1 covers the foundations of internal auditing, Part 2 covers business knowledge for internal auditing, and Part 3 covers internal audit practices. This article discusses the topic matter covered in Part 3 of the CIA exam. It also provides a sample question and answer to help candidates better prepare for this exam. The IIA CIA part 3 exam dumps are also one of the most complete study guides available. You will learn all the required topics and get a full understanding of them.
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.
Lead2Passed 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 52
A manager discovers by chance that a newly hired employee has strong beliefs that are very different from the manager's and from those of most of the other employees. The manager's best course of action would be to:
- A. Facilitate the reassignment of the new hire as quickly as possible before this situation becomes disruptive.
- B. Ask the rest of the team for their reaction and act according to the group consensus.
- C. Take no action unless the new hire's behavior is likely to cause harm to the organization.
- D. Try to counsel the new hire into more reasonable beliefs.
Answer: C
Explanation:
The only legitimate grounds on which the supervisor may take action is the employee's behavior. Personal beliefs, such as those an religious and political matters, cannot be the basis of personnel actions. Discrimination an the basis of personal beliefs could expose the organization to legal action.
NEW QUESTION 53
Which of the following best describes an objective for an audit of an environmental management system?
- A. To determine conformance with requirements and agreements.
- B. To evaluate executive management oversight.
- C. To assess whether an annual control review is necessary.
- D. To promote environmental awareness.
Answer: A
NEW QUESTION 54
Based on 365 days per year has days' sales outstanding to the nearest full day of:
- A. 3 days
- B. 0 days
- C. 6 days
- D. 7 days
Answer: C
Explanation:
Days' sales of receivables days' sales outstanding) equals the days in the year divided by the receivables turnover ratio net credit sales - average accounts receivable). Assuming sales are net credit sales and that ending accounts receivable equals average accounts receivable, the turnover ratio is 58 US $5,800 - $100), and the days' sales of receivables equals 6 days 365 - 58) rounded).
NEW QUESTION 55
Program documentation is a control designed primarily to ensure that:
- A. Programs do not make mathematical errors.
- B. Programmers have access to production programs.
- C. No one has made use of the computer hardware for personal reasons.
- D. Programs are kept up to date and perform as intended.
Answer: D
Explanation:
Complete, up-to-date documentation of all programs and associated operating procedures is necessary for efficient operation of a computer installation. Maintenance of programs is important to provide for continuity and consistency of data processing services to users. Program documentation the program run manual) consists of problem statements, systems flowcharts, operating instructions, record layouts, program flowcharts, program listings, test data, and approval and change sheets.
NEW QUESTION 56
The economic order quantity is the size of the order that minimizes total inventory costs which include ordering and holding (carrying) costs. It can be calculated using the formula:
If:
Q = order size in units
D = annual demand in units
P = cost per purchase order
S = carrying cost per year for one unit of inventory
If the annual demand decreases by 36% the optimal order size will
- A. Increase by 20%.
- B. Increase by 6%.
- C. Decrease by 20%.
- D. Decrease by 6%.
Answer: C
Explanation:
D decreases by 36%, that is, from 100% to 64%. Because .64 is the square of .8, the EOQ for .64D (Q1) equals 80% of the EOQ for D(Q).
NEW QUESTION 57
Companies that adopt just-in-time purchasing systems often experience:
- A. An increase in carrying costs.
- B. Less need for linkage with a vendor's computerized order entry system.
- C. A greater need for inspection of goods as the goods arrive.
- D. A reduction in the number of suppliers.
Answer: D
Explanation:
The objective of JIT is to reduce carrying costs by eliminating inventories and increasing the deliveries made by suppliers. Ideally, shipments of raw materials are received just in time to be incorporated into the manufacturing process. The focus of quality control under JIT is the prevention of quality problems. Quality control is shifted to the supplier. JIT companies typically do not inspect incoming goods; the assumption is that receipts are of perfect quality. Suppliers are limited to those who guarantee perfect quality and prompt delivery.
NEW QUESTION 58
Which of the following is not a condition that the internal auditor should be alert for when testing for fraud in an e-commerce audit?
- A. Denial of service attacks.
- B. Exception reports and procedures.
- C. Duplication of payments.
- D. Denial of orders placed or received.
Answer: A
Explanation:
According to the outline of a possible e-commerce audit protocol for key areas given in PA 2100-6, the internal auditor should be alert for the following conditions with respect to fraud:
Unauthorized movement of money e.g., transfers to jurisdictions where the recovery of funds would be difficult).
Duplication of payments.
Denial of orders placed or received, goods received, or payments made.
Exception reports and procedures and effectiveness of the follow-up.
Digital signatures: Are they used for all transactions? Who authorizes them? Who has access to them?
Protections against viruses and hacking activities history file, use of tools).
Access rights: Are they reviewed regularly? Are they promptly revised when staff members are changed? History of interception of transactions by unauthorized persons.
NEW QUESTION 59
What ensures that an entity is complying with the documented quality management system (QMS) procedures and ISO 9000 standards?
- A. Management commitment.
- B. The registrar.
- C. An internal audit system.
- D. Onsite inspections by an external auditor.
Answer: C
Explanation:
An important requirement of the ISO 9000 standards is an internal audit system. Internal audits ensure that the entity is complying with the documented QMS procedures and ISO 9000 standards.
NEW QUESTION 60
An organization engages in questionable financial reporting practices due to pressure to meet unrealistic performance targets. Which internal control component is most negatively affected?
- A. Control environment.
- B. Monitoring.
- C. Control activities.
- D. Risk assessment.
Answer: A
NEW QUESTION 61
Which of the following is not a common feature of cumulative preferred stock?
- A. Priority over common stock with regard to assets.
- B. Priority over common stock with regard to dividend payment.
- C. Priority over common stock with regard to dilution of shares.
- D. Priority over common stock with regard to earnings.
Answer: C
NEW QUESTION 62
When evaluating the help desk services provided by a third-party service provider which of the following is likely to be the internal auditor's greatest concern?
- A. Whether a unique identification number was assigned to each issue identified by the service provider
- B. Whether every call that the service provider received was logged by the help desk.
- C. Whether the service provider used its own facilities to provide help desk services
- D. Whether the provider's responses and resolutions were well defined according to the service-level agreement.
Answer: D
NEW QUESTION 63
A company experienced a machinery breakdown on one of its production lines. As a consequence of the breakdown, manufacturing fell behind schedule, and a decision was made to schedule overtime to return manufacturing to schedule. Which one of the following methods is the proper way to account for the overtime paid to the direct laborers?
- A. The overtime hours times the sum of the straight-time wages and overtime premium entirely to manufacturing overhead.
- B. The overtime hours times the overtime premium would be charged to manufacturing overhead and the overtime hours times the straight-time wages would be treated as direct labor.
- C. The overtime hours times the sum of the straight-time wages and overtime premium direct labor.
- D. The overtime hours times the overtime premium would be charged to repair and maintenance expense, and the overtime hours times the straight-time wages would be treated as direct labor.
Answer: B
Explanation:
Direct labor costs are wages paid to labor that can feasibly be specifically identified with the production of finished goods. Factory overhead consists of all costs, other than direct materials and direct labor that are associated with the manufacturing process. Thus, straight-time wages would be treated as direct labor; however, because the overtime premium cost is a cost that should be borne by all production, the overtime hours times the overtime premium should be charged to manufacturing overhead.
NEW QUESTION 64
Based on its current operating levels Glucose LLC estimates that its annual level of taxable profit in the foreseeable future will be US $200,000 annually_ Enacted tax rates for the tax jurisdiction in which Glucose operates are 15% for the first US $50.000 of taxable profit.
25% for the next US $50.000 of taxable profit, and 35% for taxable profit in excess of US $100,000. Which tax rate should Glucose use to measure a deferred tax liability or asset?
- A. 15%
- B. 0
- C. 25%
- D. 27.5%
Answer: D
Explanation:
In measuring a deferred tax liability DTL or asset DTA), the objective is to use the enacted or substantively enacted tax rate(s) expected to apply to taxable profit in the periods in which the deferred tax liability or asset is expected to be settled or realized. If different rates apply to different taxable profit levels, a DTA or DTL is measured based on the average rates expected to apply in the periods when the TDs are expected to reverse. Accordingly, the applicable tax rate is 21.5%.
NEW QUESTION 65
Which of the following is a computer program that appears to be legitimate but performs some illicit activity when it is run?
- A. Hoax virus.
- B. Trojan horse.
- C. Web crawler.
- D. Killer application.
Answer: B
Explanation:
A Trojan horse is a computer program that appears friendly, for example, a game, but that actually contains an application destructive to the computer system.
NEW QUESTION 66
Company F produces and sells two products. Product A costs US $10 per unit and Product B costs US $5 per unit. Product A is selling very well, but sales of Product B are low. In order to increase sales of Product B, Company F has begun setting a price of US $13 for one of each.
What is the pricing method?
- A. Collusive pricing.
- B. Product-bundle pricing.
- C. By-product pricing.
- D. Value pricing.
Answer: B
Explanation:
Product-bundle pricing entails selling combinations of products at a price lower than the combined prices of the individual items. This strategy promotes sales of items consumers might riot otherwise buy.
NEW QUESTION 67
During the last year, an organization had an opening inventory of $300,000, purchases of $980,000, sales of $1,850,000, and a gross margin of 40 percent. What is the closing inventory if the periodic inventory system is used?
- A. $540,000
- B. $170,000
- C. $300,000
- D. $280,000
Answer: B
NEW QUESTION 68
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. Linear regression analysis.
- B. Exponential smoothing.
- C. Queuing theory.
- D. Unweighted moving average.
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.
NEW QUESTION 69
A department store sells gift certificates that may be redeemed for merchandise. Each certificate expires 3 years after issuance. The revenue from the gift certificates should be recognized:
- A. Evenly over 3 years from the date of issuance.
- B. In the period the certificates expire.
- C. In the period the certificates are redeemed or in the period they expire if they are allowed to lapse.
- D. In the period the certificates are sold.
Answer: C
Explanation:
Income, which includes revenue and gains, should not be recognized until an increase future economic benefits related to an increase in an asset or a decrease in a liability is sufficiently certain and can be measured reliably_ These criteria are met when the certificates are redeemed or expire because the liability for redemptions will then decrease and economic benefits will be reliably measurable. On January 1, Year 1, a construction company signed a contract with a property management firm involving the construction of a large urban office tower. The total price of constructing the tower was agreed to be US $10 million with US $2 million being paid on the date of the agreement. Construction began immediately upon the signing of the contract and was expected to take 3 years to complete. The original estimate of total construction costs was US $8 million. During the year ended December 31, Year 1, US $4 million of construction costs were incurred, and engineering estimates indicated that the office tower was 30% complete at year-end. At year-end, the revised estimate of total construction costs was US $8.5 million and the properly management firm had been billed a further US $4 million, although only US $1 million of that amount had been collected by year-end.
NEW QUESTION 70
Which of the following statements is true regarding the capital budgeting procedure known as discounted payback period?
- A. It ignores the time value of money
- B. It calculates the time a project takes to break even.
- C. It begins at time zero for the project.
- D. It calculates the overall value of a project
Answer: B
NEW QUESTION 71
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Things You Should Know about the IIA CIA Part 3 Exam
The IIA CIA Part 3 course is designed to help you pass the Part 3 exam in just two days. The course focuses on all the major topics that you need to be familiar with in order to pass the test.
It is important to keep in mind that while you are taking your test it is a good idea to take a break and relax as much as possible. Taking a break will help keep your mind off of how much time has passed since you last took a test. It also gives you an opportunity to get back on track and focus on what you are doing.
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