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

Comprehensive and Detailed In-Depth Explanation:

Computer hardware refers to the physical components of a computer system.

Workstation: A high-performance computer designed for technical or scientific applications.

Modem: A device that modulates and demodulates signals for data transmission over communication lines.

Disk drive: A device that reads and/or writes data to a disk storage medium.

Option D lists only physical components, fitting the definition of computer hardware.

In contrast:

Value-added network (option A): A hosted service offering specialized networking services, not a physical component.

Data warehouse (option B): A system used for reporting and data analysis, representing a data storage concept rather than a physical device.

Firewall (option C): While it can be hardware, it is often implemented as software; thus, the term doesn't exclusively denote hardware.

Therefore, option D accurately represents a list of computer hardware components.

References:

The Institute of Internal Auditors. (n.d.). CIA Exam Syllabus. Retrieved from [https://www.theiia.org/en/certifications/cia

A declining inventory turnover combined with an increasing gross margin rate suggests that the organization is not selling inventory as quickly as before, but still reporting higher profitability. This can indicate overstated inventory values, meaning that financial statements show higher inventory balances than what actually exists.

(A) Incorrect – The organization’s operating expenses are increasing.

Operating expenses do not directly affect inventory turnover, which measures how quickly inventory is sold.

Higher expenses could reduce net profit, but they would not explain a higher gross margin.

(B) Incorrect – The organization has adopted just-in-time (JIT) inventory.

JIT inventory systems increase inventory turnover by reducing excess stock.

Since turnover is declining, this suggests the opposite of JIT.

(C) Incorrect – The organization is experiencing inventory theft.

Inventory theft usually reduces inventory levels, potentially increasing inventory turnover due to lower stock.

Theft could lower gross margins if significant losses occur.

(D) Correct – The organization’s inventory is overstated.

Overstated inventory leads to lower COGS, artificially inflating gross margin.

If inventory levels are inflated, turnover appears lower because reported inventory is higher than actual sales justify.

IIA’s Global Internal Audit Standards – Financial Statement Audits and Fraud Risk

Covers risks related to inventory misstatements and financial fraud.

IFRS & GAAP Accounting Standards – Inventory Valuation

Defines how inventory overstatement impacts financial ratios.

Analysis of Answer Choices:IIA References and Internal Auditing Standards:

When an organization outsources IT services, risks can be categorized as:

Risks specific to the organization – Risks that arise internally within the company.

Risks specific to the service provider – Risks that are under the control of the third-party provider.

Shared risks – Risks that require joint management by both the organization and the service provider.

Let’s analyze the answer choices:

Option A: Unexpected increases in outsourcing costs.

Incorrect. While cost increases can be a risk, they are often a shared risk because the organization and the provider negotiate pricing terms.

Option B: Loss of data privacy.

Incorrect. Data privacy concerns are shared between the organization (which must ensure compliance with regulations like GDPR or CCPA) and the service provider (which must implement proper security controls).

Option C: Inadequate staffing.

Correct. The service provider is responsible for maintaining adequate staffing levels to deliver the contracted services effectively. If they fail to do so, service quality can deteriorate, posing risks to the organization.

IIA Reference: Internal auditors should assess vendor risk management, including the provider’s staffing capabilities. (IIA GTAG: Auditing IT Outsourcing)

Option D: Violation of contractual terms.

Incorrect. While the service provider may be responsible for upholding contract terms, the organization is also responsible for contract enforcement. This makes it a shared risk rather than one specific to the provider.

Comprehensive and Detailed In-Depth Explanation:

A globalization strategy focuses on standardizing products and marketing campaigns across all international markets. This ensures consistent branding and messaging, achieving economies of scale while maintaining a uniform customer experience.

Option A (Export strategy) primarily refers to selling domestic products abroad without a significant focus on global marketing.

Option B (Transnational strategy) balances global standardization and local adaptation, but does not emphasize a single advertising approach.

Option C (Multi-domestic strategy) tailors marketing and product offerings to each local market, making it less suitable for a uniform advertising campaign.

Thus, the globalization strategy (Option D) is the best approach for a unique yet standardized advertising campaign across markets.

The internal rate of return (IRR) is a measure used to evaluate the profitability of an investment. The project is considered acceptable if its IRR is greater than or equal to the required rate of return (RRR), which is the minimum return an organization expects from an investment.

Correct Answer (C - Compare to the Required Rate of Return)

The required rate of return (RRR) represents the minimum acceptable return for the project.

If IRR ≥ RRR, the project is acceptable. If IRR < RRR, the project is rejected.

The IIA Practice Guide: Auditing Capital Investments suggests comparing IRR to the RRR to ensure financial feasibility.

Why Other Options Are Incorrect:

Option A (Compare to the annual cost of capital):

The cost of capital (WACC - Weighted Average Cost of Capital) is an important factor, but RRR is the direct benchmark for IRR comparison.

Option B (Compare to the annual interest rate):

Interest rates do not determine project feasibility—they only affect financing costs.

Option D (Compare to the net present value - NPV):

NPV and IRR are related, but they serve different purposes.

IRR is compared against RRR, while NPV measures absolute profitability in dollar terms.

IIA Practice Guide: Auditing Capital Investments – Discusses IRR, RRR, and investment decision-making.

IIA GTAG 3: Business Case Development – Explains how financial metrics like IRR and RRR are used in decision-making.

Step-by-Step Explanation:IIA References for Validation:Thus, C is the correct answer because IRR should be compared to the required rate of return to determine project acceptability.