Certified Internal Auditor - Part 3, Business Analysis and Information Technology v6.0 (IIA-CIA-Part3)

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Total 220 questions

Refer to the exhibit.


A company's financial balance sheet is presented below:
The company has net working capital of:

  • A. $160
  • B. $210
  • C. $350
  • D. $490


Answer : B

Preferred stock is less risky for investors than is common stock because:

  • A. Common stock pays dividends as a stated percentage of face value.
  • B. Common stock has priority over preferred stock with regard to earnings and assets.
  • C. Preferred dividends are usually cumulative.
  • D. Preferred stock with no conversion feature has a higher dividend yield than does convertible preferred stock.


Answer : C

A retail organization is considering acquiring a composite textile company. The retailer's due diligence team determined the value of the textile company to be $50 million. The financial experts forecasted net present value of future cash flows to be $60 million.
Experts at the textilecompany determined their company's market value to be $55 million if purchased by another entity. However, the textile company could earn more than $70 million from the retail organization due to synergies. Therefore, the textile company is motivated to make the negotiation successful. Which of the following approaches is most likely to result in a successful negotiation?

  • A. Develop a bargaining zone that lies between $50 million and $70 million and create sets of outcomes between $50 million and $70 million.
  • B. Adopt an added-value negotiating strategy, develop a bargaining zone between $50 million and $70 million, and create sets of outcomes between $50 million and $70 million.
  • C. Involve a mediator as a neutral party who can work with the textile company's management to determine a bargaining zone.
  • D. Develop a bargaining zone that lies between $55 million and $60 million and create sets of outcomes between $55 million and $60 million.


Answer : D

According to the COSO enterprise risk management (ERM) framework, which of the following is not a typical responsibility of the chief risk officer?

  • A. Establishing risk category definitions and a common risk language for likelihood and impact measures.
  • B. Defining ERM roles and responsibilities.
  • C. Providing the board with an independent, objective risk perspective on financial reporting.
  • D. Guiding integration of ERM with other management activities.


Answer : C

Unsecured loans are loans:

  • A. That do not have to be repaid for over one year.
  • B. That appear to be too risky for most lenders to consider.
  • C. Granted on the basis of a company's credit standing.
  • D. Backed by mortgaged assets.


Answer : C

When an organization is choosing a new external auditor, which of the following is the most appropriate role for the chief audit executive to undertake?

  • A. Review and acquire the external audit service.
  • B. Assess the appraisal and actuarial services.
  • C. Determine the selection criteria.
  • D. Identify regulatory requirements to be considered.


Answer : D

When developing an effective risk-based plan to determine audit priorities, an internal audit activity should start by:

  • A. Identifying risks to the organization's operations.
  • B. Observing and analyzing controls.
  • C. Prioritizing known risks.
  • D. Reviewing organizational objectives.


Answer : D

An organization is considering mirroring the customer data for one regional center at another center. A disadvantage of such an arrangement would be:

  • A. Lack of awareness of the state of processing.
  • B. Increased cost and complexity of network traffic.
  • C. Interference of the mirrored data with the original source data.
  • D. Confusion about where customer data are stored.


Answer : B

When assessing the adequacy of a risk mitigation strategy, an internal auditor should consider which of the following?
1.Managements tolerance for specific risks.
2.The cost versus benefit of implementing a control.
3.Whether a control can mitigate multiple risks.
4.The ability to test the effectiveness of the control.

  • A. 1, 2, and 3
  • B. 1, 2, and 4
  • C. 1, 3, and 4
  • D. 2, 3, and 4


Answer : C

The economic order quantity can be calculated using the following formula:


Which of the following describes how the optimal order size will change if the annual demand increases by 36 percent?

  • A. Decrease by about 17 percent.
  • B. Decrease by about 7 percent.
  • C. Increase by about 7 percent.
  • D. Increase by about 17 percent.


Answer : D

Which of the following are the most appropriate measures for evaluating the change in an organization's liquidity position?

  • A. Times interest earned, return on assets, and inventory turnover.
  • B. Accounts receivable turnover, inventory turnover in days, and the current ratio.
  • C. Accounts receivable turnover, return on assets, and the current ratio.
  • D. Inventory turnover in days, the current ratio, and return on equity.


Answer : B

Which of the following would provide the most relevant assurance that the application under development will provide maximum value to the organization?

  • A. Use of a formal systems development lifecycle.
  • B. End-user involvement.
  • C. Adequate software documentation.
  • D. Formalized non-regression testing phase.


Answer : B

What are the objectives of governance as defined by the Standards?

  • A. Inform, direct, manage, and monitor.
  • B. Identify, assess, manage, and control.
  • C. Organize, assign, authorize, and implement.
  • D. Add value, improve, assure, and conform.


Answer : A

Which stage of group development is characterized by a decrease in conflict and hostility among group members and an increase in cohesiveness?

  • A. Forming stage.
  • B. Norming stage.
  • C. Performing stage.
  • D. Storming stage.


Answer : B

Which of the following local area network physical layouts is subject to the greatest risk of failure if one device fails?

  • A. Star network.
  • B. Bus network.
  • C. Token ring network.
  • D. Mesh network.


Answer : C

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Total 220 questions