IIA-CIA-PART3 practice questions 1–10

1. Question 1 · 336 in bank

   Which of the following statements is correct regarding risk analysis?

   • AThe extent to which management judgments are required in an area could serve as a risk factor in assisting the auditor in making a comparative risk analysis.
   • BThe highest risk assessment should always be assigned to the area with the largest potential loss.
   • CThe highest risk assessment should always be assigned to the area with the highest probability of occurrence.
   • DRisk analysis must be reduced to quantitative terms in order to provide meaningful comparisons across an organization.

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   Answer: A

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2. Question 2 · 336 in bank

   An organization accomplishes its goal to obtain a 40 percent share of the domestic market, but is unable to get the desired return on investment and output per hour of labor. Based on this information, the organization is most likely focused on which of the following?

   • ACapital investment and not marketing.
   • BMarketing and not capital investment.
   • CEfficiency and not input economy.
   • DEffectiveness and not efficiency.

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   Answer: D

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3. Question 3 · 336 in bank

   Which of the following statements regarding organizational governance is not correct?

   • AAn effective internal audit function is one of the four cornerstones of good governance.
   • BThose performing governance activities are accountable to the customer.
   • CAccountability is one of the key elements of organizational governance.
   • DGovernance principles and the need for an internal audit function are applicable to governmental and not-for-profit activities.

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   Answer: B

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4. Question 4 · 336 in bank

   An organization that sells products to a foreign subsidiary wants to charge a price that will decrease import tariffs. Which of the following is the best course of action for the organization?

   • ADecrease the transfer price.
   • BIncrease the transfer price.
   • CCharge at the arm's length price.
   • DCharge at the optimal transfer price.

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   Answer: A

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5. Question 5 · 336 in bank

   An organization with global headquarters in the United States has subsidiaries in eight other nations. If the organization operates with an ethnocentric attitude, which of the following statements is true?

   • AStandards used for evaluation and control are determined at local subsidiaries, not set by headquarters.
   • BOrders, commands, and advice are sent to the subsidiaries from headquarters.
   • CPeople of local nationality are developed for the best positions within their own country.
   • DThere is a significant amount of collaboration between headquarters and subsidiaries.

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   Answer: D

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6. Question 6 · 336 in bank

   Which of the following data security policies is most likely to be the result of a data privacy law?

   • AAccess to personally identifiable information is limited to those who need it to perform their job.
   • BConfidential data must be backed up and recoverable within a 24-hour period.
   • CUpdates to systems containing sensitive data must be approved before being moved to production.
   • DA record of employees with access to insider information must be maintained, and those employees may not trade company stock during blackout periods.

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   Answer: A

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7. Question 7 · 336 in bank

   A large retail customer made an offer to buy 10,000 units at a special price of $7 per unit. The manufacturer usually sells each unit for $10. Variable manufacturing costs are $5 per unit and fixed manufacturing costs are $3 per unit. For the manufacturer to accept the offer, which of the following assumptions needs to be true?

   • AFixed and variable manufacturing costs are less than the special offer selling price.
   • BThe manufacturer can fulfill the order without expanding the capacities of the production facilities.
   • CCosts related to accepting this offer can be absorbed through the sale of other products.
   • DThe manufacturer's production facilities are currently operating at full capacity.

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   Answer: C

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8. Question 8 · 336 in bank

   The first stage in the development of a crisis management program is to:

   • AFormulate contingency plans.
   • BConduct a risk analysis.
   • CCreate a crisis management team.
   • DPractice the response to a crisis.

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   Answer: C

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9. Question 9 · 336 in bank

   Which of the following responsibilities would ordinarily fall under the help desk function of an organization?

   • AMaintenance service items such as production support.
   • BManagement of infrastructure services, including network management.
   • CPhysical hosting of mainframes and distributed servers.
   • DEnd-to-end security architecture design.

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   Answer: A

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10. Question 10 · 336 in bank

    As it relates to the data analytics process, which of the following best describes the purpose of an internal auditor who cleaned and normalized data?

    • AThe auditor eliminated duplicate information.
    • BThe auditor organized data to minimize useless information.
    • CThe auditor made data usable for a specific purpose by ensuring that anomalies were identified and corrected.
    • DThe auditor ensured data fields were consistent and that data could be used for a specific purpose.

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    Answer: A

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IIA-CIA-PART3 practice, question 1. 336 questions available.