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IIA-CIA-Part3 Exam evaluates candidates' understanding of business management principles, governance, risk management, and communication skills. IIA-CIA-Part3 exam consists of 100 multiple-choice questions and lasts three hours. The questions are designed to test candidates' knowledge of the various aspects of business that internal auditors need to understand to be effective in their roles. IIA-CIA-Part3 exam is offered in English, Spanish, Portuguese, French, German, and Chinese.
IIA-CIA-Part3 exam is a critical component of the certification process for internal auditors. It tests the candidate's understanding of business processes, financial management, and risk management frameworks. Passing IIA-CIA-Part3 exam demonstrates that the candidate has the necessary knowledge and skills to provide valuable insights into the business operations of their organization. It is an essential step for internal auditors who want to advance their careers and increase their value to their organizations.
NEW QUESTION # 51
Which of the following budgets must be prepared first?
- A. Selling and administrative expenses budget.
- B. Sales budget.
- C. Cash budget.
- D. Production budget.
Answer: B
NEW QUESTION # 52
Which of the following best describes a man-in-the-middle cyber-attack?
- A. The perpetrator is able to disable default security controls and introduce additional vulnerabilities
- B. The perpetrator is able to take over control of data communication in transit and replace traffic.
- C. The perpetrator is able to delete data on the network without physical access to the device.
- D. The perpetrator is able to exploit network activities for unapproved purposes.
Answer: B
Explanation:
Understanding a Man-in-the-Middle (MITM) Attack:
A Man-in-the-Middle (MITM) attack occurs when a cybercriminal intercepts, alters, or steals data while it is being transmitted between two parties.
The attacker can modify messages, inject malicious content, or eavesdrop on sensitive communications without the knowledge of the sender or receiver.
How MITM Attacks Work:
Attackers position themselves between two communicating parties (e.g., a user and a banking website) and intercept the data exchange.
This allows them to steal login credentials, financial information, or confidential communications.
Common MITM attack methods include:
Wi-Fi eavesdropping (public network interception).
Session hijacking (stealing active user sessions).
HTTPS spoofing (tricking users into thinking they are on a secure website).
Why Other Options Are Incorrect:
A). The perpetrator is able to delete data on the network without physical access to the device - Incorrect.
This describes a remote cyberattack, such as malware or ransomware, rather than MITM, which focuses on data interception.
B). The perpetrator is able to exploit network activities for unapproved purposes - Incorrect.
This is too broad and could refer to insider threats, malware, or privilege escalation attacks, rather than specifically MITM.
D). The perpetrator is able to disable default security controls and introduce additional vulnerabilities - Incorrect.
This describes a system exploitation attack, such as a rootkit or backdoor installation, not an MITM attack.
IIA's Perspective on Cybersecurity and IT Risk Management:
IIA Standard 2110 - Governance requires organizations to implement cybersecurity controls to mitigate risks like MITM attacks.
IIA GTAG (Global Technology Audit Guide) on Cybersecurity Risks advises organizations to use encryption (e.g., TLS, VPNs) to protect data in transit.
NIST Cybersecurity Framework recommends multi-factor authentication (MFA) and secure protocols to prevent MITM attacks.
IIA References:
IIA Standard 2110 - IT Security and Cyber Risk Governance
IIA GTAG - Cybersecurity Controls and Threat Mitigation
NIST Cybersecurity Framework - Secure Data Transmission
Thus, the correct and verified answer is C. The perpetrator is able to take over control of data communication in transit and replace traffic.
NEW QUESTION # 53
The correlation coefficient that indicates the weakest linear association between two variables is:
- A. 0.35
- B. 0.12
- C. -0.11
- D. -0.73
Answer: C
Explanation:
The correlation coefficient can vary from -1 to +1. A-1 relationship indicates a perfect inverse correlation, and a +1 relationship indicates a perfect direct correlation. A zero correlation coefficient indicates no linear association between the variables. Thus, the correlation coefficient that is nearest to zero would indicate the weakest linear association. Of the options given in the question, the correlation coefficient that is nearest to zero is
0.11.
NEW QUESTION # 54
A compensating balance:
- A. Is a level of inventory held to compensate for variations in usage rate and lead time.
- B. Is the amount of prepaid interest on a loan.
- C. Is used to compensate for possible losses on a marketable securities portfolio.
- D. Compensates a financial institution for services rendered by providing it with deposits of funds.
Answer: D
Explanation:
Banks sometimes require a borrower to keep a certain percentage of the face amount of a loan in a noninterest-bearing checking account. This requirement raises the effective rate of interest paid by the borrower. This greater rate compensates a bank for services provided and results in greater profitability for the financial institution. Funds kept as a compensating balance can often be withdrawn if a certain average balance is maintained.
NEW QUESTION # 55
Assume that additional workers are hired for the bottleneck operation to expedite setups and materials handling. The cost of the additional workers is US $50,000 per year. As a result, the annual output of the bottleneck operation will increase by 500 units. The change in operating income attributable to the increase in workers is:
- A. US $ 20,000)
- B. US $ 14,000)
- C. US $36,000
- D. US $50,000
Answer: B
Explanation:
Operation 2 is the bottleneck because it is functioning at its capacity. The incremental annual throughput contribution revenues - direct materials costs) from adding workers to Operation 2 is US $36,000 [500 units x $120 unit price - $48 DPI per unit)]. Because the cost of the additional workers is US $50,000, the change in operating income is US $ 14,000). This information is relevant to a theory of constraints TOG) analysis. A manufacturer that can sell all of its output produces its sole product using three operations. Each unit sells for US $120, and direct materials costing US $48 per unit are added at the start of the first operation. Other variable costs are immaterial. The fallowing annual cost and capacity information is available concerning those operations:
NEW QUESTION # 56
Which of the following is a typical example of structured data?
- A. Sales reports documented in word processing software.
- B. Production information maintained in relational tables.
- C. Tweets and posts of users on social media.
- D. Photos and videos stored in hard drive catalogs.
Answer: B
NEW QUESTION # 57
An employee in the receiving department keyed in a shipment to the accounts payable system and inadvertently omitted the purchase order number. The best systems control to detect this error is:
- A. Reasonableness test.
- B. Compatibility test.
- C. Sequence check.
- D. Completeness test.
Answer: D
Explanation:
A completeness test checks that all data elements are entered before processing. An interactive system can be programmed to notify the user to enter the number before accepting the receiving report.
NEW QUESTION # 58
According to Maslow's hierarchy of needs theory, which of the following best describes a strategy where a manager offers an assignment to a subordinate specifically to support his professional growth and future advancement?
- A. Sense of belonging in the organization.
- B. Job security.
- C. Esteem by colleagues.
- D. Self-fulfillment.
Answer: B
Explanation:
Explanation/Reference: https://opentextbc.ca/businessopenstax/chapter/maslows-hierarchy-of-needs/
NEW QUESTION # 59
Senior management has decided to implement the Three Lines of Defense model for risk management. Which of the following best describes senior management's duties with regard to this model?
- A. Identify emerging issues.
- B. Identify management functions.
- C. Set goals for implementation.
- D. Ensure compliance with the model.
Answer: D
NEW QUESTION # 60
If legal or regulatory standards prohibit conformance with certain parts of The IIA's Standards, the auditor should do which of the following?
- A. Conform with all other parts of The IIA's Standards and provide appropriate disclosures.
- B. Continue the engagement without conforming with the other parts of The IIA's Standards.
- C. Conform with all other parts of The IIA's Standards; there is no need to provide appropriate disclosures.
- D. Withdraw from the engagement.
Answer: A
NEW QUESTION # 61
When the economic order quantity (EOQ) decision model is employed, the <List A> are being offset or balanced by the <List B>.
- A. Option C
- B. Option A
- C. Option B
- D. Option D
Answer: B
Explanation:
The objective of the EOQ model is to find an optimal order quantity that balances carrying and ordering costs. Only variable costs should be considered. The EOQ is the point where the ordering cost and carrying cost curves intersect. It corresponds to the minimum point on the total inventory cost curve.
NEW QUESTION # 62
The chart displays the:
- A. Absolute frequency of each computer complaint.
- B. Median of each computer complaint.
- C. F elative frequency of each computer complaint.
- D. Arithmetic mean of each computer complaint.
Answer: A
Explanation:
This Pareto diagram depicts the frequencies of complaints in absolute terms. It displays the actual number of each type of complaint. The chart does not display arithmetic means, relative frequencies, or medians of each type of complaint.
NEW QUESTION # 63
Which of the following is the most appropriate way lo record each partner's initial Investment in a partnership?
- A. At the original cost.
- B. At book value.
- C. At the value agreed upon by the partners.
- D. At fair value
Answer: C
Explanation:
Recording Initial Investment in a Partnership:
When forming a partnership, each partner contributes assets, cash, or services to the business.
The initial investment should be recorded at the value agreed upon by the partners, which may differ from fair market value or book value.
This is because partnerships are formed based on mutual agreement, and partners decide how to allocate capital and contributions.
Why Other Options Are Incorrect:
B). At book value:
Book value refers to the value recorded in a partner's individual financial statements. However, in a new partnership, the previous book value is not relevant.
C). At fair value:
While fair value is commonly used in financial reporting, in partnerships, the agreed-upon value is more relevant as partners may negotiate different terms.
D). At the original cost:
The original cost of assets contributed may not reflect their current market or partnership-agreed value, making it an inappropriate basis for initial recording.
IIA's Perspective on Financial Recording:
IIA Standard 1220 - Due Professional Care requires auditors to ensure that financial transactions are recorded in accordance with agreed terms.
COSO Internal Control - Integrated Framework supports the principle that partnership agreements should dictate valuation methods.
GAAP & IFRS Accounting Guidelines recognize that partnership accounting is based on agreed-upon contributions rather than standardized valuation methods.
IIA References:
IIA Standard 1220 - Due Professional Care
COSO Internal Control - Integrated Framework
GAAP & IFRS Partnership Accounting Standards
NEW QUESTION # 64
Which of the following would provide the least security for sensitive data stored on a notebook computer?
- A. Encrypting data files on the notebook computer.
- B. Using a notebook computer with a removable hard disk drive.
- C. Using password protection for the screen-saver program on the notebook computer.
- D. Locking the notebook computer in a case when not in use.
Answer: C
Explanation:
Password protection for a screen-saver program can be easily bypassed.
NEW QUESTION # 65
During which phase of disaster recovery planning should an organization identify the business units, assets, and systems that are critical to continuing an acceptable level of operations?
- A. Business impact analysis.
- B. Scope and initiation phase.
- C. Plan development.
- D. Testing.
Answer: A
NEW QUESTION # 66
Which of the following does not provide operational assurance that a computer system is operating properly?
- A. Conducting system monitoring.
- B. Performing a system audit.
- C. Testing policy compliance.
- D. Making system changes.
Answer: D
NEW QUESTION # 67
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