Regular Free Updates IIA-CIA-Part3 Dumps Real Exam Questions Test Engine May 15, 2023 [Q45-Q61]

IIA-CIA-Part3 IIA

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May 15, 2023

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Regular Free Updates IIA-CIA-Part3 Dumps Real Exam Questions Test Engine May 15, 2023

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The IIA-CIA-Part3 certification is widely recognized as a mark of excellence in the field of internal auditing. It demonstrates that the candidate has a deep understanding of business management concepts and knows how to apply them in the context of internal auditing. The certification is also a valuable asset for professionals seeking career advancement, as it is often required or preferred by employers in the field of internal auditing.

Q45. 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?

Scope and initiation phase.

Business impact analysis.

Plan development.

Testing.

Q46. The marginal cost of capital MCC) curve for this entity rises price, first when the entity has raised US $75 million and again when US $175 million of new funds has been raised. These increases in the MCC are caused by:

Increases in the returns on the additional investments undertaken.

Decreases in the returns on the additional investments undertaken.

Decreases in the cost of at least one of the financing sources.

Increases in the cost of at least one of the financing sources.

The MCC is a weighted average of the costs of the different financing sources. If the cost of any source of financing increases, the MCC curve will rise. The MCC curve is upward sloping because the lowest cost financing sources are assumed to be used first. Thus, as cumulative debt increases, the cost of debt also increases. CyberAge Outlet. a relatively new store, is a cafe that offers customers the opportunity to browse the Internet or play computer games at their tables while they drink coffee. The customer pays a fee based on the amount of time spent signed on to the computer. The store also sells books, tee-shirts, and computer accessories. CyberAge has been paying all of its bills on the last day of the payment period, thus forfeiting all supplier discounts. Shown below are data on CyberAge’s two major vendors, including average monthly purchases and credit terms.

Q47. A retail mail order entity currently uses a central collection system that requires all checks to be sent to its headquarters. An average of 6 days is required for mailed checks to be received. 3 days for the entity to process them, and 2 days for the checks to clear through the bank. A proposed lockbox system would reduce the mailing and processing time to 2 days and the check clearing time to 1 day. The entity has an average daily collection of US $150,000. How much will the average cash balance increase by if the entity adopts the lockbox system?

US $1,200,000

US $750,000

US $600,000

US $450,000

Checks are currently tied up for 11 days 6 for mailing, 3 for processing, and 2 for clearing). If that period were reduced to 3 days the entity’s cash balance would increase by US $1.200.000 $150,000 per day x 8 days).

Q48. The board of directors wants to implement an incentive program for senior management that is specifically tied to the long-term health of the organization. Which of the following methods of compensation would be best to achieve this goal?

Commissions.

Stock options

Gain-sharing bonuses.

Allowances

Q49. Application control objectives do not normally include assurance that:

Authorized transactions are completely processed once and only once.

Transaction data are complete and accurate.

Review and approval procedures for new systems are set by policy and adhered to.

Processing results are received by the intended user.

Application controls provide reasonable assurance that the recording, processing, and reporting of data are properly performed. Review and approval procedures for new systems are among the general controls known as system software acquisition and maintenance controls.

Q50. When writing a business memorandum, the writer should choose a writing style that achieves all of the following except:

Draws positive attention to the writing style.

Treats all receivers with respect.

Suits the method of presentation and delivery.

Develops ideas without overstatement.

Q51. An entity plans to tighten its credit policy. The new policy will decrease the average number of days in collection from 75 to 50 days and will reduce the ratio of credit sales to total revenue from 70% to 60%. The entity estimates that projected sales will be 5% less if the proposed new credit policy is implemented. If projected sales for the coming year are US $50 million, calculate the dollar impact on accounts receivable of this proposed change in credit policy. Assume a 360-day year.

US $3,817,445 decrease

US $6,500,000 decrease

US $3,333,334 decrease

US $18,749,778 increase

If sales are US $50 million, 70% of which are on credit, total credit sales will be US $35 million. The receivables turnover equals 4.8 times per year 360 days – 75-day collection period). Receivables turnover equals net credit sales divided by average receivables. Accordingly, average receivables equal US $7,291.667 $35,000,000 – 4.8). Under the new policy, sales will be US $47.5 million 95% x $50,000,000), and credit sales will be US $28.5 million 60% x $47,500,000). The collection period will be reduced to 50 days, resulting in a turnover of 7.2 times per year 360 – 50). The average receivables balance will therefore be US $3,958,333 ($28,500,000 – 7.2), a reduction of US $3,333,334 $7,291.667 $3,958,333).

Q52. An organization is experiencing a high turnover. Which of the following can human resources deploy to effectively detect the root cause of turnover?

Require regular performance appraisals

Perform exit interviews

Encourage periodic rotation of employee duties.

Ensure mandatory vacations

Q53. In which product-mix pricing strategy is it appropriate for the seller to accept any price that exceeds the storage and delivery costs for the product?

By-product pricing.

Optional-product pricing.

Captive-product pricing.

Product-bundle pricing.

A by-product is a product of relatively minor importance generated during the production of one or more other products. Its production entails no additional costs. Any amount received above the storage and delivery costs for a by-product allows the seller to reduce the main product’s price to make it more competitive.

Q54. Which of the following factors is most likely to lead to a lack of cohesiveness in a project team?

Prestige

Small size.

Competition

Common threat

Q55. The publisher of a popular magazine offers a special discounted price for a 3-year subscription. At the balance sheet date, the amount that has already been collected but pertains to future periods is best referred to as:

Accrued subscriptions revenuean asset account

Deferred subscriptions revenuea liability account

Earned subscriptions revenuea revenue account

Precollected subscriptions receivable a deferred asset account

Income, which includes revenue and gains, is recognized in the income statement when an increase in future economic benefits related to an increase in an asset or a decrease in a liability can be reliably measured. Revenue is recognized reported as revenue) in the period in which the recognition criteria are met: therefore, when it is received in advance, the amount applicable to future periods is deferred. This deferral reflects the uncertainty of the reliable measurement of the future economic benefits. The uncertainty arises because the entity still must satisfy an obligation to perform in the future before it is entitled to the future economic benefits. The amount received in advance is considered a liability because it represents a present obligation arising from a past event.
Accordingly, deferred or unearned revenue is an amount that has been received but that has not met the recognition criteria for revenue.

Q56. The most important reason to use risk assessment in audit planning is to:

Identify redundant controls.

Improve budgeting accuracy.

Enhance assurance provided to management.

Assist in developing audit programs.

Q57. Return on investment ROI) is a very popular measure employed to evaluate the performance of corporate segments because it incorporates all of the major ingredients of profitability revenue, cost, investment) into a single measure. Under which one of the following combinations of actions regarding a segment’s revenues costs, and investment would a segment’s ROI always increase?

Option A

Option B

Option C

Option D

An increase in revenue and a decrease in costs will increase the ROI numerator. A decrease in investment will decrease the denominator. The ROI must increase in this situation.

Q58. An internal auditor is trying to assess control risk and the effectiveness of an organization’s internal controls. Which of the following audit procedures would not provide assurance to the auditor on this matter?

Interviewing the organization’s employees.

Observing the organization’s operations.

Reading the board’s minutes.

Inspecting manuals and documents.

Q59. According to IIA guidance, which of the following would be the best first step to manage risk when a third party is overseeing the organization’s network and data?

Creating a comprehensive reporting system for vendors to demonstrate their ongoing due diligence in network operations

Drafting a strong contract that requires regular vendor control reports and a right-to-audit clause.

Applying administrative privileges to ensure right-to-access controls are appropriate

Creating a standing cybersecurity committee to identify and manage risks related to data security

Q60. Which of the following is not an appropriate time series forecasting technique?

Least squares.

Exponential smoothing.

The Delphi technique.

Moving averages.

The Delphi technique is an approach in which the manager solicits opinions on a problem from experts, summarizes the opinions, and feeds the summaries back to the experts (without revealing any of the participants to each other). The process is reiterated until the opinions converge on an optimal solution. Thus, the Delphi technique is a qualitative, not a quantitative, method.

Q61. Futures and option contracts are examples of what type of financial instruments?

Non derivatives.

Underlying.

Derivatives.

Equity instruments.

A derivative is a financial instrument whose value changes with the change in the underlying. It requires little or no investment and is settled in the future. Examples are futures. forward, swap, or option contracts. The underlying is a specified interest rate, security price. foreign currency exchange rate. price index, commodity price, etc.

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