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How to Pass the IIA IIA-CIA-Part3 Exam: Comprehensive Business Knowledge for Internal Auditing Guide and Tips

Questions 71

An organization had a gross profit margin of 40 percent in year one and in year two. The net profit margin was 18 percent in year one and 13 percent in year two. Which of the following could be the reason for the decline in the net profit margin for year two?

Options:
A.

Cost of sales increased relative to sales.

B.

Total sales increased relative to expenses.

C.

The organization had a higher dividend payout rate in year two.

D.

The government increased the corporate tax rate

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Questions 72

Senior management is trying to decide whether to use the direct write-off or allowance method for recording bad debt on accounts receivables. Which of the following would be the best argument for using the direct write-off method?

Options:
A.

It is useful when losses are considered insignificant.

B.

It provides a better alignment with revenue.

C.

It is the preferred method according to The IIA.

D.

It states receivables at net realizable value on the balance sheet.

Questions 73

An internal auditor has requested the organizational chart in order to evaluate the control environment of an organization. Which of the following is a disadvantage of using the organizational chart?

Options:
A.

The organizational chart shows only formal relationships.

B.

The organizational chart shows only the line of authority.

C.

The organizational chart shows only the senior management positions.

D.

The organizational chart is irrelevant when testing the control environment.

Questions 74

A newly appointed board member received an email that appeared to be from the company's CEO. The email stated:

“Good morning. As you remember, the closure of projects is our top priority. Kindly organize prompt payment of the attached invoice for our new solar energy partners.” The board member quickly replied to the email and asked under which project the expense should be accounted. Only then did he realize that the sender 's mail domain was different from the company's. Which of the following cybersecurity risks nearly occurred in the situation described?

Options:
A.

A risk of spyware and malware.

B.

A risk of corporate espionage.

C.

A ransomware attack risk.

D.

A social engineering risk.

Questions 75

According to Herzberg's Two-Factor Theory of Motivation, which of the following is a factor mentioned most often by satisfied employees?

Options:
A.

Relationship with supervisor

B.

Salary

C.

Security.

D.

Achievement

Questions 76

A small chain of grocery stores made a reporting error and understated its ending inventory. What effect would this have on the income statement for the following year?

Options:
A.

Net income would be understated.

B.

Net income would not be affected.

C.

Net income would be overstated.

D.

Net income would be negative.

Questions 77

What is the primary purpose of data and systems backup?

Options:
A.

To restore all data and systems immediately after the occurrence of an incident.

B.

To set the maximum allowable downtime to restore systems and data after the occurrence of an incident.

C.

To set the point in time to which systems and data must be recovered after the occurrence of an incident.

D.

To restore data and systems to a previous point in time after the occurrence of an incident

Questions 78

How do data analysis technologies affect internal audit testing?

Options:
A.

They improve the effectiveness of spot check testing techniques.

B.

They allow greater insight into high risk areas.

C.

They reduce the overall scope of the audit engagement,

D.

They increase the internal auditor's objectivity.

Questions 79

Which of the following best explains why an organization would enter into a capital lease contract?

Options:
A.

To increase the ability to borrow additional funds from creditors

B.

To reduce the organization's free cash flow from operations

C.

To Improve the organization's free cash flow from operations

D.

To acquire the asset at the end of the lease period at a price lower than the fair market value

Questions 80

Which of the following items represents the first thing that should be done with obtained dote in the data analytics process?

Options:
A.

Verify completeness and accuracy.

B.

Verify existence and accuracy.

C.

Verify completeness and integrity.

D.

Verify existence and completeness.

Exam Code: IIA-CIA-Part3
Certification Provider: IIA
Exam Name: Business Knowledge for Internal Auditing
Last Update: Jan 24, 2025
Questions: 340

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