IIA-CIA-Part3 Exam Dumps - IIA CIA Questions and Answers

Comprehensive and Detailed In-Depth Explanation:

Password selection is the most dependent on the user, as it involves choosing and setting a secure password that meets organizational security requirements.

Option B (Password aging) – Controlled by system settings, not directly by the user.

Option C (Password lockout) – Automatically triggered after failed login attempts.

Option D (Password rotation) – Enforced by system policies, not the individual user’s decision.

Since password security starts with user selection, Option A is correct.

The first step in a project management plan is to break the project into manageable components, known as Work Breakdown Structure (WBS). This step ensures clarity, task allocation, and effective tracking.

(A) Estimate time required to complete the whole project.

Incorrect: Time estimation comes after breaking the project into smaller tasks.

(B) Determine the responses to expected project risks.

Incorrect: Risk management is important but is planned after defining project tasks and scope.

(C) Break the project into manageable components. (Correct Answer)

Dividing the project into smaller tasks (WBS) helps in resource allocation, scheduling, and risk assessment.

IIA GTAG 12 – Project Risk Management suggests using WBS to define tasks clearly.

(D) Identify resources needed to complete the project.

Incorrect: Resources can only be allocated effectively after defining project components.

IIA GTAG 12 – Project Risk Management: Recommends Work Breakdown Structure (WBS) as the first step in project planning.

PMBOK (Project Management Body of Knowledge): Defines WBS as the foundation of project planning.

Analysis of Each Option:IIA References Supporting the Answer:Thus, the correct answer is (C) Break the project into manageable components, as this is the first step in structuring and planning a successful project.

A focus strategy targets a specific market segment, geographical area, or niche customer base rather than competing in the entire market.

Why Option D (Focus strategy) is Correct:

The car manufacturer introduced a hybrid vehicle specifically for the European market to address increasing emission taxes, meaning they are focusing on a specific region and customer need.

Focus strategy aims at tailoring products to meet the needs of a particular group of consumers (e.g., environmentally conscious European customers).

Why Other Options Are Incorrect:

Option A (Reactive strategy):

Incorrect because while the company is responding to regulatory changes, "reactive strategy" is not a recognized competitive strategy under Porter’s model.

Option B (Cost leadership strategy):

Incorrect because cost leadership focuses on minimizing costs and offering the lowest price in the broad market. This scenario does not emphasize cost reduction.

Option C (Differentiation strategy):

Incorrect because differentiation involves offering unique products across a broad market, whereas the hybrid vehicle is targeted specifically for the European market.

IIA Practice Guide – "Auditing Strategic Risk Management": Discusses competitive strategies, including focus strategy.

Porter's Competitive Strategy Model: Defines focus strategy as targeting a niche market.

COSO ERM Framework – "Strategic Decision-Making": Recommends market-specific focus strategies to mitigate regulatory risks.

IIA References:

Comprehensive and Detailed In-Depth Explanation:

Allowing external devices to access proprietary systems introduces compliance risks, as these devices may not meet the organization’s security, data protection, and regulatory standards.

Option B (Privacy) – Important but does not fully capture the risk of unauthorized access or non-compliance with security protocols.

Option C (Strategic) – Strategic risks relate to business direction, not security concerns with third-party access.

Option D (Physical security) – Physical risks involve device theft, which is secondary to compliance when granting access.

Since compliance violations can lead to regulatory penalties and data breaches, Option A (Compliance) is the correct answer.

Fixed manufacturing costs refer to costs that do not vary with the level of production activity within a relevant range. These costs include expenses such as depreciation, rent, property taxes, and salaries of permanent employees in the production facility. Their primary purpose is to ensure the availability and operational readiness of production facilities, regardless of fluctuations in production levels.

(A) Correct – To ensure availability of production facilitiesFixed manufacturing costs are incurred to maintain and operate production facilities, ensuring that they remain functional and available for production when needed. These costs exist even if no units are produced, emphasizing their role in sustaining the production infrastructure.

(B) Incorrect – To decrease direct expenses related to productionFixed manufacturing costs are unrelated to direct expenses, such as raw materials and labor, which vary with production volume. Instead, they remain constant regardless of output levels.

(C) Incorrect – To incur stable costs despite operating capacityWhile fixed costs remain stable within a relevant range, their primary purpose is not just cost stability but ensuring production facilities' availability and functionality.

(D) Incorrect – To increase the total unit cost under absorption costingUnder absorption costing, fixed manufacturing costs are allocated to units produced, affecting per-unit cost calculations. However, this is an accounting treatment rather than the core purpose of fixed manufacturing costs.

IIA’s Global Internal Audit Standards – Managing Resources Effectively

Fixed manufacturing costs ensure operational resources are available and managed efficiently.

IIA’s Guide on Cost Management and Internal Control

Highlights the role of cost structures, including fixed costs, in ensuring business continuity.

IIA’s Practice Advisory on Cost Accounting Controls

Discusses the importance of maintaining production facilities to ensure operational readiness.

Breakdown of Answer Choices:IIA References and Internal Auditing Standards:Would you like further clarification on any point?

Effective change management ensures that IT changes (such as software updates, system modifications, or infrastructure upgrades) are well-controlled, minimizing disruptions. Poor change management leads to instability, inefficiencies, and operational risks.

Unplanned Downtime (2) – Indicates that changes are being implemented without proper testing or failover planning, disrupting business operations.

Excessive Troubleshooting (3) – Suggests that changes are causing recurring issues, leading to increased workload for IT support teams.

Unavailability of Critical Services (4) – Highlights that change-related failures are affecting essential business functions, indicating improper risk assessment.

While inadequate control design is a general IT risk, it is not a direct indicator of poor change management. Instead, it relates more to weaknesses in IT governance and security frameworks.

IIA’s GTAG (Global Technology Audit Guide) on Change Management – Identifies unplanned downtime, excessive troubleshooting, and service unavailability as key red flags of poor change management.

COBIT 2019 (Governance and Management of IT) – Emphasizes structured change management to minimize disruptions.

ITIL Change Management Framework – Highlights these issues as symptoms of ineffective change control.

Why 2, 3, and 4 Are Indicators of Poor Change Management?Why Not Option 1 (Inadequate Control Design)?IIA References:✅ Final Answer: D. 2, 3, and 4 only.

A decentralized structure distributes decision-making authority across different business units, divisions, or geographical locations. While decentralization provides flexibility and autonomy, the primary risk is inconsistency in decision-making, as different units may develop their own policies, processes, and priorities that are not aligned with the organization's strategic goals.

(A) Inability to adapt.

Incorrect. Decentralization typically enhances adaptability, as individual units can quickly respond to local market conditions, customer needs, and emerging risks without waiting for corporate approval.

(B) Greater costs of control function.

Partially correct but not the primary risk. While decentralization may increase oversight costs (e.g., more auditors and compliance personnel), the primary issue is lack of uniform decision-making rather than costs alone.

(C) Inconsistency in decision making. ✅

Correct. When decision-making authority is spread across various units, inconsistencies arise in areas such as risk management, compliance, operational procedures, and resource allocation. This can lead to conflicts, inefficiencies, and misalignment with corporate strategy.

IIA Standard 2120 – Risk Management emphasizes the need for consistent risk oversight in all business units.

IIA GTAG "Auditing the Control Environment" warns that inconsistent policies weaken internal controls and governance.

(D) Lack of resilience.

Incorrect. A decentralized structure often improves resilience because decision-making is spread out, reducing dependency on a central authority. This allows units to function independently if one area experiences disruption.

IIA Standard 2120 – Risk Management

IIA GTAG – "Auditing the Control Environment"

COSO Framework – Internal Control Principles

Analysis of Answer Choices:IIA References:Thus, the correct answer is C, as decentralization introduces decision-making inconsistencies, affecting governance and strategic alignment.

Cybersecurity controls are primarily designed to protect the Confidentiality, Integrity, and Availability (CIA) of data. These are the three fundamental principles of cybersecurity and are essential for protecting organizational information assets. Let’s analyze each option:

Option A: Veracity, velocity, and variety.

Incorrect. These attributes are commonly associated with big data and data analytics rather than cybersecurity. Cybersecurity controls focus on ensuring that data is secure, rather than on its volume, speed, or diversity.

IIA Reference: Cybersecurity risk management frameworks emphasize the CIA triad over big data attributes. (IIA GTAG: Auditing Cybersecurity Risk)

Option B: Integrity, availability, and confidentiality.

Correct. These three principles are at the core of cybersecurity:

Confidentiality: Ensures that sensitive information is only accessible to authorized individuals.

Integrity: Protects data from unauthorized modifications or corruption.

Availability: Ensures that data and systems are accessible when needed.

IIA Reference: The IIA’s guidance on IT governance highlights the CIA triad as the foundation of cybersecurity. (IIA GTAG: Information Security Governance)

Option C: Accessibility, accuracy, and effectiveness.

Incorrect. While these attributes are important in data management and usability, they do not directly define cybersecurity controls.

Option D: Authorization, logical access, and physical access.

Incorrect. While these are essential security components, they fall under broader IT security measures rather than forming the fundamental principles of cybersecurity.

Detecting an inventory fraud scheme requires analyzing patterns of inventory adjustments, particularly across different locations. Fraudulent activities often involve unauthorized write-offs, stock transfers, or misstatements of inventory levels.

(A) Analyze invoice payments just under individual authorization limits.

Incorrect: This technique is useful for detecting procurement fraud or invoice splitting, but not directly related to inventory fraud.

(B) Analyze stratification of inventory adjustments by warehouse location. (Correct Answer)

Fraudulent inventory write-offs often occur in specific warehouses or locations where controls are weak.

Stratifying inventory adjustments helps identify abnormal patterns, such as excessive losses in one location.

IIA Standard 2120 (Risk Management) recommends data analytics and trend analysis to detect anomalies.

COSO ERM – Control Activities emphasizes monitoring and review of inventory adjustments to prevent fraud.

(C) Analyze inventory invoice amounts and compare with approved contract amounts.

Incorrect: This technique is effective for detecting overbilling or procurement fraud, but not inventory fraud, which involves physical stock manipulation.

(D) Analyze differences discovered during duplicate payment testing.

Incorrect: Duplicate payment testing helps uncover billing fraud, not inventory fraud.

IIA Standard 2120 – Risk Management: Encourages fraud detection through trend analysis and data monitoring.

IIA Practice Guide – Auditing Inventory Management: Suggests stratification of inventory adjustments to identify fraud.

COSO ERM – Control Activities: Recommends monitoring inventory transactions to prevent fraud.

Analysis of Each Option:IIA References Supporting the Answer:Thus, the correct answer is (B) because analyzing stratification of inventory adjustments by warehouse location helps detect irregular patterns indicative of fraud.