IIA-CIA-Part3 Dumps Updated Feb 02, 2026 Practice Test and 515 unique questions

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NEW QUESTION # 274
An organization has decided to allow its managers to use their own smart phones at work. With this change, which of the following is most important to Include In the IT department's comprehensive policies and procedures?

• A. Required sign-off on conflict of interest statement.
• B. Required removal of personal pictures and contacts.
• C. Required documentation of expiration of contract with service provider.
• D. Required documentation of process for discontinuing use of the devices

Answer: D

NEW QUESTION # 275
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. Exception reports and procedures.
• B. Denial of orders placed or received.
• C. Duplication of payments.
• D. Denial of service attacks.

Answer: D

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 # 276
An internal auditor was asked to review an equal equity partnership In one sampled transaction Partner A transferred equipment into the partnership with a self-declared value of $10,000 and Partner B contributed equipment with a self-declared value of $15 000 The capital accounts of each partner were subsequently credited with S12,500. Which of the following statements is true regarding this transaction?

• A. No action is needed as the capital account of each partner was increased by the correct amount
• B. The capital accounts of the partners should be increased by the original cost of the contributed equipment.
• C. The capital accounts of the partners should be increased by the fair market value of their contribution
• D. The capital accounts should be increased using a weighted average based on the current percentage of ownership

Answer: C

NEW QUESTION # 277
The share split proposal will <List A> earnings per share by <List B> than will the share

• A. Option D
• B. Option B
• C. Option C
• D. Option A

Answer: C

Explanation:
The share split will double the number of shares outstanding to 2,000. The 10% share dividend will increase the number of outstanding shares to 1,111. The higher number of shares in the split will result in a lower earnings per share than will result from the share dividend. An entity has issued 1,000 ordinary shares with a par value of US$10 and its credit balance in retained earnings is US $5,000. Two proposals are under consideration. The first is a share split giving each shareholder two new shares for each share formerly held. The second is to declare and distribute a 10% share dividend.

NEW QUESTION # 278
A company's product has an expected 4-year life cycle from research, development, and design through its withdrawal from the market. Budgeted costs are:

The company plans to produce 200,000 units and price the product at 125% of the wholelife unit cost. Thus, the budgeted unit selling price is:

• A. US $36
• B. US $31
• C. US $15
• D. US $45

Answer: D

Explanation:
Whole-life costs include after-purchase costs operating, support, repair, and disposal) incurred by customers as well as life-cycle costs R&D, design, manufacturing, marketing, distribution, and research). Hence, the budgeted unit whole-life cost is US $36 [($2,000,000
+ $3,000,000 + $1,200,000 + $1,000,000) - 200,000 units], and the budgeted unit selling price is US $45 $36 125CYo).

NEW QUESTION # 279
A rapidly expanding retail organisation continues to be tightly controlled by its original small management team. Which of the following is a potential risk in this vertically centralized organization?

• A. Duplication of business activities
• B. Suboptimal decision making
• C. Lack of coordination among different business units
• D. Operational decisions are inconsistent with organizational goals

Answer: B

Explanation:
In a vertically centralized organization, decision-making authority is concentrated at the top levels of management. As a company rapidly expands, maintaining tight control by a small management team can lead to inefficiencies, delays, and suboptimal decision-making due to limited input from operational and frontline staff.
Let's analyze each option:
* Option A: Lack of coordination among different business units
* Incorrect. While coordination challenges can exist in a large, decentralized organization, a tightly controlled, centralized structure typically ensures strong coordination but at the cost of slower decision-making.
* Option B: Operational decisions are inconsistent with organizational goals
* Incorrect. In a centralized structure, top management closely controls decision-making, making goal misalignment less likely.
* Option C: Suboptimal decision making
* Correct.
* Decentralized decision-making allows managers closer to operations to make informed, timely decisions.
* A small centralized team may lack specialized knowledge about different departments, leading to inefficient or outdated decisions.
* As the company expands, delays in decision-making and lack of responsiveness to market conditions increase risk exposure.
* IIA Reference: Internal auditors assess organizational structures to identify risks associated with inefficient decision-making and control bottlenecks. (IIA Standard 2110: Governance)
* Option D: Duplication of business activities
* Incorrect. Duplication of activities is more common in decentralized structures, where different departments operate independently. A tightly controlled, centralized structure reduces redundancy but at the cost of decision-making efficiency.
Thus, the verified answer is C. Suboptimal decision making.

NEW QUESTION # 280
The investment opportunity schedule IOS) shows, in rank order, how much money the entity would invest at different rates of return. Such schedules can be drawn only for a set of projects that:

• A. Are independent.
• B. Have the same net present value.
• C. Have the same investment cost.
• D. Are mutually exclusive.

Answer: A

Explanation:
An IOS schedule is drawn for a set of independent projects. The decision to be made is whether to accept or reject each project without regard to other investment opportunities. Thus, the cash flows of one independent project are not influenced by those of another. Independence should be distinguished from mutual exclusivity.

Projects are mutually exclusive if acceptance of one requires rejection of the other.
An entity has the following three investment projects available:
The entity has a 4O f debt and 60 l equity capital structure. Each monetary unit of
investment funds will be raised in these proportions .40 of debt and .60 of equity). The
marginal cost of financing increases with the amount of new funds raised, as follows:

These investment opportunities and financing costs are shown in the graph below.

MCC=Marginal cost of capital IOS=Investment opportunity schedule

NEW QUESTION # 281
Which of the following is a characteristic of an emerging industry?

• A. Technical expertise.
• B. Low number of new firms.
• C. Established strategy of players.
• D. High unit costs.

Answer: D

NEW QUESTION # 282
Which of the following is most appropriate for the chief audit executive to keep in mind when establishing policies and procedures to guide the internal audit function?

• A. The size and maturity of the internal audit function
• B. The size of the organization
• C. The structure of the organization
• D. The nature of the internal audit function

Answer: A

Explanation:
Policies and procedures should be tailored to the size and maturity of the internal audit function. A small or less mature function may require simpler procedures, while a large and well-established function may require more detailed and formalized guidance.
Option A (nature of audit) and D (organizational structure) are relevant but secondary. Option B (organization size) does not necessarily dictate internal audit's needs as directly as its own size and maturity.
Reference:
IIA Standards - Standard 2040: Policies and Procedures.

NEW QUESTION # 283
Which of the following statements about desktop computers, servers, and mainframe computers is true?

• A. Servers must be programmed directly in machine language while mainframes use higher-level language.
• B. Because of the increase, desktop computers, there will be little need for mainframes in the near future.
• C. The cost per transaction to process on each type of computer has decreased in recent years.
• D. Desktop computers usually more than servers but less than mainframes.

Answer: C

Explanation:
Advances in technology have resulted in less expensive computers and increased computing power. The cost to process transactions on all kinds of computers has therefore decreased.

NEW QUESTION # 284
The following information and diagram apply to a project:

The earliest completion time for the project is:

• A. 15 days.
• B. 11 days.
• C. 20 days.
• D. 14 days.

Answer: A

Explanation:
The two paths through the network are A-C-E (5 + 4 + 6 = 15 days) and B-D-E (3 + 2 + 6 = 11 days). The critical or longest path is thus A-C-E. Hence, the earliest completion time is 15 days.

NEW QUESTION # 285
Which of the following job design techniques would most likely be used to increase employee motivation through job responsibility and recognition?

• A. Job enlargement
• B. Job complicating
• C. Job rotation
• D. Job enrichment

Answer: D

Explanation:
* Understanding Job Enrichment:
* Job enrichment is a job design technique that increases motivation by adding meaningful responsibilities, autonomy, and recognition to a job.
* It aligns with Herzberg's Two-Factor Theory, which suggests that responsibility and recognition are key motivators.
* How Job Enrichment Increases Employee Motivation:
* Increases Autonomy: Employees are given more decision-making power, leading to a stronger sense of ownership.
* Provides Recognition: Workers receive direct feedback and acknowledgment for their contributions.
* Encourages Skill Development: Employees handle more complex tasks, improving job satisfaction and career growth opportunities.
* Why Other Options Are Incorrect:
* A. Job complicating - Incorrect, as this is not a recognized job design technique; increasing job difficulty does not improve motivation.
* B. Job rotation - Incorrect, as job rotation involves shifting employees between different tasks to reduce monotony, but it does not necessarily increase job responsibility or recognition.
* D. Job enlargement - Incorrect, as job enlargement adds more tasks at the same skill level, increasing workload without necessarily improving responsibility or recognition.
* IIA's Perspective on Employee Motivation and Organizational Success:
* IIA Standard 2120 - Risk Management states that internal auditors should evaluate employee engagement strategies, including job design techniques.
* COSO ERM Framework emphasizes that motivated employees contribute to operational efficiency and organizational success.
IIA References:
* IIA Standard 2120 - Risk Management & Employee Motivation
* Herzberg's Two-Factor Theory - Motivation through Responsibility and Recognition
* COSO ERM - Employee Engagement and Organizational Performance
Thus, the correct and verified answer is C. Job enrichment.

NEW QUESTION # 286
Which of the following situations best illustrates a "false positive" in the performance of a spam filter?

• A. The spam filter deleted commercial ads automatically, as they were recognized as unwanted.
• B. The spam filter routed to the "junk|r folder a newsletter that appeared to include links to fake websites.
• C. The spam filter removed Incoming communication that included certain keywords and domains.
• D. The spam filter blocked a fitness club gift card that coworkers sent to an employee for her birthday.

Answer: D

Explanation:
A false positive occurs when a system incorrectly identifies a legitimate item as a threat or an unwanted entity. In the case of a spam filter, a false positive happens when the filter mistakenly classifies a genuine email as spam, even though it is legitimate.
* Option A: "The spam filter removed incoming communication that included certain keywords and domains."
* This describes a general filtering mechanism but does not indicate a mistake. If the filter was correctly configured, it is not necessarily a false positive. (Incorrect)
* Option B: "The spam filter deleted commercial ads automatically, as they were recognized as unwanted."
* If the ads were indeed unwanted, this is a true positive, meaning the system worked correctly.
(Incorrect)
* Option C: "The spam filter routed to the 'junk' folder a newsletter that appeared to include links to fake websites."
* If the newsletter contained suspicious links, the filter was functioning as designed. This is not necessarily an error. (Incorrect)
* Option D: "The spam filter blocked a fitness club gift card that coworkers sent to an employee for her birthday."
* This is a clear example of a false positive because the email was not spam or malicious, yet the filter mistakenly blocked it. (Correct Answer)
* IIA GTAG (Global Technology Audit Guide) on Cybersecurity and IT Risks: Discusses false positives and negatives in automated security controls.
* IIA's "Auditing IT Security Controls" Report: Emphasizes the need for tuning security filters to reduce false positives.
* COBIT 2019 - DSS05.07 (Manage Security Services): Highlights the importance of minimizing false positives to ensure business communication is not disrupted.
Analysis of Each Option:IIA References:Thus, the correct answer is D. The spam filter blocked a fitness club gift card that coworkers sent to an employee for her birthday.

NEW QUESTION # 287
The following steps make up the stages of a theory of constraints (TOC) analysis.
I. Determine the most profitable product mix given the constraint.
II. Increase capacity at the constraint.
III. Identify the constraint.
IV.
Redesign the manufacturing process.
V.Maximize the flow through the constraint.
If executed in the correct order, the sequence is:

• A. III. II. I. V. IV.
• B. III. I. II, V, IV.
• C. III. II. I. IV, V.
• D. III. I. V. II, IV.

Answer: D

Explanation:
The steps in a TOC analysis are (1) identify the constraint, (2) determine the most profitable product mix given the constraint, (3) maximize the flow through the constraint. (4) increase capacity at the constraint, and (5) redesign the manufacturing process for greater flexibility and speed.

NEW QUESTION # 288
According to IIA guidance, which of the following is a typical risk associated with the tender process and contracting stage of an organization's IT outsourcing life cycle?

• A. There is a lack of alignment to organizational strategies.
• B. The operational quality is less than projected.
• C. There is increased potential for loss of assets.
• D. The process is not sustained and is not optimized as planned.

Answer: C

NEW QUESTION # 289
Refer to the exhibit.

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

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

Answer: C

NEW QUESTION # 290
Which of the following is an example of two-factor authentication?

• A. The user's key fob and a smart card.
• B. The user's fingerprint and a personal Identification number.
• C. The user's facial geometry and voice recognition.
• D. The user's password and a separate passphrase.

Answer: B

Explanation:
Two-factor authentication (2FA) enhances security by requiring two different authentication factors from the following categories:
* Something you know (e.g., password, PIN)
* Something you have (e.g., smart card, key fob)
* Something you are (e.g., fingerprint, facial recognition)
The combination of a fingerprint (biometric authentication) and a PIN (knowledge-based authentication) satisfies two-factor authentication requirements.
* A. The user's facial geometry and voice recognition - Incorrect. Both are biometric factors ( something you are), meaning this is single-factor authentication.
* B. The user's password and a separate passphrase - Incorrect. Both are knowledge-based factors ( something you know), making this single-factor authentication.
* C. The user's key fob and a smart card - Incorrect. Both are possession-based factors (something you have), meaning this is not true two-factor authentication.
* D. The user's fingerprint and a personal identification number (PIN) (Correct Answer) - This combines biometric authentication (fingerprint) with knowledge-based authentication (PIN), fulfilling two-factor authentication.
* IIA GTAG 15 - Information Security Governance emphasizes multi-factor authentication as a key security control.
* NIST SP 800-63B - Digital Identity Guidelines defines two-factor authentication as requiring two distinct categories of authentication.
* COBIT 2019 - DSS05 (Managed Security Services) highlights 2FA as a best practice for access control.
Explanation of Each Option:IIA References:

NEW QUESTION # 291
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Passing the IIA-CIA-Part3 exam represents a significant achievement for individuals seeking to establish themselves as qualified internal auditors. Business Knowledge for Internal Auditing certification demonstrates to employers and clients that the candidate has the knowledge and skills necessary to provide effective internal audit services. The IIA-CIA-Part3 certification is also an excellent way for internal auditors to enhance their professional development and career advancement opportunities.

IIA-CIA-Part3 exam is a three-hour computer-based test that consists of 100 multiple-choice questions. IIA-CIA-Part3 exam is administered at Pearson VUE test centers around the world. IIA-CIA-Part3 exam is designed to test the candidate's knowledge of business processes, financial management, risk management, and governance. Candidates who pass the exam are awarded the Certified Internal Auditor (CIA) designation.

 

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