IIA-CIA-Part3 sample questions

Question 1

Which of the following describes the result if an organization records merchandise as a purchase, but fails to include it in the closing inventory count?

Accepted Answer

The cost of goods sold for the period will be overstated.

Answer

The cost of goods sold for the period will be understated.

Answer

The net income for the period will be understated.

Answer

There will be no effect on the cost of goods sold or the net income for the period.

Question 2

When applied to international economics, the theory of comparative advantage proposes that total worldwide output will be greatest when:

Accepted Answer

Each good is produced by the nation that has the lowest opportunity cost for that good.

Answer

Each nation's total imports approximately equal its total exports.

Answer

Goods that contribute to a nation's balance-of-payments deficit are no longer imported.

Answer

International trade is unrestricted and tariffs are not imposed.

Question 3

Which of the following professional organizations sets standards for quality and environmental audits?

Accepted Answer

The International Standards Organization.

Answer

The Committee of Sponsoring Organizations of the Treadway Commission.

Answer

The board of Environmental, Health, and Safety Auditor Certifications.

Answer

The International Organization of Supreme Audit Institutions.

Question 4

Multinational organizations generally spend more time and effort to identify and evaluate:

Accepted Answer

External trends and events.

Answer

Internal strengths and weaknesses.

Answer

Break-even points.

Answer

Internal risk factors.

Question 5

A rapidly expanding retail organization continues to be tightly controlled by its original small management team.

Which of the following is a potential risk in this vertically centralized organization?

Accepted Answer

Suboptimal decision-making.

Answer

Lack of coordination among different business units.

Answer

Operational decisions are inconsistent with organizational goals.

Answer

Duplication of business activities.

Question 6

Which of the following statements is false regarding the internal audit approach when a set of standards other than The IIA's Standards is applicable to a specific engagement?

Accepted Answer

If there are inconsistencies between the other standards and The IIA's Standards, the internal auditor must use the less restrictive standards.

Answer

The internal auditor may cite the use of other standards during audit communications.

Answer

If the other standards are government-issued, the internal auditor should apply them in conjunction with The IIA's Standards.

Answer

|f there are inconsistencies between the other standards and The IIA's Standards, the internal auditor must use the more restrictive standards.

Question 7

A consultant is explaining a company's competitive landscape using Porter's Five Forces model. A new, low-cost manufacturing process has just been developed by a startup, dramatically lowering the capital required to enter the market. According to the model shown, which force is most directly and significantly impacted by this development?

graph TD subgraph Porter_s_Five_Forces A[Threat of New Entrants] -- influences --> C{Industry Rivalry} B[Bargaining Power of Buyers] -- influences --> C D[Bargaining Power of Suppliers] -- influences --> C E[Threat of Substitute Products] -- influences --> C end

Accepted Answer

Threat of New Entrants

Answer

Bargaining Power of Suppliers

Answer

Threat of Substitute Products

Answer

Bargaining Power of Buyers

Question 8

During which phase of the contracting process are contracts drafted for a proposed business activity?

Accepted Answer

Initiation phase.

Answer

Bidding phase.

Answer

Development phase.

Answer

Management phase.

Question 9

At an organization that uses a periodic inventory system, the accountant accidentally understated the organization's beginning inventory. How would the accountant's accident impact the income statement?

Accepted Answer

Cost of goods sold will be understated and there will be no impact on net income.

Answer

Cost of goods sold will be understated and net income will be overstated.

Answer

Cost of goods sold will be overstated and net income will be understated.

Answer

There will be no impact on cost of goods sold and net income will be overstated.

Question 10

Which of the following is a systems software control?

Accepted Answer

Ensuring that all user requirements are documented.

Answer

Restricting server room access to specific individuals.

Answer

Housing servers with sensitive software away from environmental hazards.

Answer

Performing of intrusion testing on a regular basis.

IIA-CIA-Part3 CIA Part 3: Internal Audit Function Practice Questions

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