IIA-CIA-PART3 practice questions 251–260

1. Question 251 · 336 in bank

   According to IIA guidance, which of the following would be a primary reason for an internal auditor to test the organization's IT contingency plan?

   • ATo ensure that adequate controls exist to prevent any significant business interruptions.
   • BTo identify and address potential security weaknesses within the system.
   • CTo ensure that tests contribute to improvement of the program.
   • DTo ensure that deficiencies identified by the audit are promptly addressed.

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   Answer: A

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2. Question 252 · 336 in bank

   Refer to the exhibit.

   

   If the profit margin of an organization decreases, and all else remains equal, which of the following describes how the "Funds Needed" line in the graph below will shift?

   • AThe "Funds Needed" line will remain pointed upward, but will become less steep.
   • BThe "Funds Needed" line will remain pointed upward, but will become more steep.
   • CThe "Funds Needed" line will point downward with a minimal slope.
   • DThe "Funds Needed" line will point downward with an extreme slope.

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   Answer: B

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3. Question 253 · 336 in bank

   Which of the following is a key characteristic of a zero-based budget?

   • AA zero-based budget provides estimates of costs that would be incurred under different levels of activity.
   • BA zero-based budget maintains focus on the budgeting process.
   • CA zero-based budget is prepared each year and requires each item of expenditure to be justified.
   • DA zero-based budget uses input from lower-level and middle-level managers to formulate budget plans.

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   Answer: C

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4. Question 254 · 336 in bank

   An organization has a declining inventory turnover but an increasing gross margin rate. Which of the following statements can best explain this situation?

   • AThe organization's operating expenses are increasing
   • BThe organization has adopted just-in-time inventory
   • CThe organization is experiencing inventory theft
   • DThe organization's inventory is overstated

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   Answer: C

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5. Question 255 · 336 in bank

   Which of the following represents an inventory costing technique that can be manipulated by management to boost net income by selling units purchased at a low cost?

   • AFirst-in first-out method (FIFO)
   • BLast-in first-out method (LIFO)
   • CSpecific identification method
   • DAverage-cost method

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   Answer: A

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6. Question 256 · 336 in bank

   While performing an audit of a car tire manufacturing plant, an internal auditor noticed a significant decrease in the number of tires produced from the previous operating period. To determine whether worker inefficiency caused the decrease, what additional information should the auditor request?

   • ATotal tire production labor hours for the operating period
   • BTotal tire production costs for the operating period
   • CPlant production employee headcount average for the operating period
   • DTire production machinery utilization rates

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   Answer: A

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7. Question 257 · 336 in bank

   Which of the following should be established by management during implementation of big data systems to enable ongoing production monitoring?

   • AKey performance indicators
   • BReports of software customization
   • CChange and patch management.
   • DMaster data management

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   Answer: A

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8. Question 258 · 336 in bank

   What is the primary risk associated with an organization adopting a decentralized structure?

   • AInability to adapt
   • BGreater costs of control function
   • CInconsistency in decision making
   • DLack of resilience

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   Answer: C

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9. Question 259 · 336 in bank

   Which of the following best describes the purpose of fixed manufacturing costs?

   • ATo ensure availability of production facilities
   • BTo decrease direct expenses related to production
   • CTo incur stable costs despite operating capacity
   • DTo increase the total unit cost under absorption costing

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   Answer: A

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10. Question 260 · 336 in bank

    An organization decided to outsource its human resources function. As part of its process migration, the organization is implementing controls over sensitive employee data. What would be the most appropriate directive control in this area?

    • ARequire a Service Organization Controls (SOC) report from the service provider
    • BInclude a data protection clause in the contract with the service provider
    • CObtain a nondisclosure agreement from each employee at the service provider who will handle sensitive data
    • DEncrypt the employee’s data before transmitting it to the service provider

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    Answer: B

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IIA-CIA-PART3 practice, question 251. 336 questions available.