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IIA IIA-CIA-Part3 Business Knowledge for Internal Auditing Exam Practice Test

Demo: 51 questions
Total 340 questions

Business Knowledge for Internal Auditing Questions and Answers

Question 1

An internal auditor reviews a data population and calculates the mean, median, and range. What is the most likely purpose of performing this analytic technique?

Options:

A.

To inform the classification of the data population.

B.

To determine the completeness and accuracy of the data.

C.

To identify whether the population contains outliers.

D.

To determine whether duplicates in the data inflate the range.

Question 2

Which of the following principles s shared by both hierarchies and open organizational structures?

1. A superior can delegate the authority to make decisions but cannot delegate the ultimate responsibility for the results of those decisions.

2. A supervisor's span of control should not exceed seven subordinates.

3. Responsibility should be accompanied by adequate authority.

4. Employees at all levels should be empowered to make decisions.

Options:

A.

1 and 3 only

B.

1 and 4 only

C.

2 and 3 only

D.

3 and 4 only

Question 3

Internal auditors want to increase the likelihood of identifying very small control and transaction anomalies in their testing that could potentially be exploited to cause material breaches. Which of the following techniques would best meet this objective?

Options:

A.

Analysis of the full population of existing data.

B.

Verification of the completeness and integrity of existing data.

C.

Continuous monitoring on a repetitive basis.

D.

Analysis of the databases of partners, such as suppliers.

Question 4

Which of the following is the best example of a compliance risk that Is likely to arise when adopting a bring-your-own-device (BYOD) policy?

Options:

A.

The risk that users try to bypass controls and do not install required software updates.

B.

The risk that smart devices can be lost or stolen due to their mobile nature..

C.

The risk that an organization intrusively monitors personal Information stored on smart devices.

D.

The risk that proprietary information is not deleted from the device when an employee leaves.

Question 5

Which of the following application controls is the most dependent on the password owner?

Options:

A.

Password selection

B.

Password aging

C.

Password lockout

D.

Password rotation

Question 6

Which of the following types of accounts must be closed at the end of the period?

Options:

A.

Income statement accounts.

B.

Balance sheet accounts.

C.

Permanent accounts.

D.

Real accounts.

Question 7

Which of the following is required in effective IT change management?

Options:

A.

The sole responsibility for change management is assigned to an experienced and competent IT team

B.

Change management follows a consistent process and is done in a controlled environment.

C.

Internal audit participates in the implementation of change management throughout the organisation.

D.

All changes to systems must be approved by the highest level of authority within an organization.

Question 8

An organization with a stable rating, as assessed by International rating agencies, has issued a bond not backed by assets or collateral. Payments of the interests and the principal to bondholders are guaranteed by the organization. Which type of bond did the organization issue?

Options:

A.

A sinking fund bond.

B.

A secured bond.

C.

A junk bond.

D.

A debenture bond

Question 9

Which of the following best describes a detective control designed to protect an organization from cyberthreats and attacks?

Options:

A.

A list of trustworthy, good traffic and a list of unauthorized, blocked traffic.

B.

Monitoring for vulnerabilities based on industry intelligence.

C.

Comprehensive service level agreements with vendors.

D.

Firewall and other network perimeter protection tools.

Question 10

Management has established a performance measurement focused on the accuracy of disbursements. The disbursement statistics, provided daily to ail accounts payable and audit staff, include details of payments stratified by amount and frequency. Which of the following is likely to be the greatest concern regarding this performance measurement?

Options:

A.

Articulation of the data

B.

Availability of the data.

C.

Measurability of the data

D.

Relevance of the data.

Question 11

Which of the following is considered a physical security control?

Options:

A.

Transaction logs are maintained to capture a history of system processing.

B.

System security settings require the use of strong passwords and access controls.

C.

Failed system login attempts are recorded and analyzed to identify potential security incidents.

D.

System servers are secured by locking mechanisms with access granted to specific individuals.

Question 12

An organization selected a differentiation strategy to compete at the business level. Which of the following structures best fits this strategic choice?

Options:

A.

Functional structure.

B.

Divisional structure.

C.

Mechanistic structure.

D.

Functional structure with cross-functional teams.

Question 13

Which of these instances accurately describes the responsibilities for big data governance?

Options:

A.

Management must ensure information storage systems are appropriately defined and processes to update critical data elements are clear.

B.

External auditors must ensure that analytical models are periodically monitored and maintained.

C.

The board must implement controls around data quality dimensions to ensure that they are effective.

D.

Internal auditors must ensure the quality and security of data, with a heightened focus on the riskiest data elements.

Question 14

Which of the following should internal auditors be attentive of when reviewing personal data consent and opt-in/opt-out management process?

Options:

A.

Whether customers are asked to renew their consent for their data processing at least quarterly.

B.

Whether private data is processed in accordance with the purpose for which the consent was obtained?

C.

Whether the organization has established explicit and entitywide policies on data transfer to third parties.

D.

Whether customers have an opportunity to opt-out the right to be forgotten from organizational records and systems.

Question 15

During an audit of the payroll system, the internal auditor identifies and documents the following condition:

"Once a user is logged into the system, the user has access to all functionality within the system."

What is the most likely root cause for tins issue?

Options:

A.

The authentication process relies on a simple password only, which is a weak method of authorization.

B.

The system authorization of the user does not correctly reflect the access rights intended.

C.

There was no periodic review to validate access rights.

D.

The application owner apparently did not approve the access request during the provisioning process.

Question 16

With regard to disaster recovery planning, which of the following would most likely involve stakeholders from several departments?

Options:

A.

Determining the frequency with which backups will be performed.

B.

Prioritizing the order in which business systems would be restored.

C.

Assigning who in the IT department would be involved in the recovery procedures.

D.

Assessing the resources needed to meet the data recovery objectives.

Question 17

Which of the following best describes the use of predictive analytics?

Options:

A.

A supplier of electrical parts analyzed an instances where different types of spare parts were out of stock prior to scheduled deliveries of those parts.

B.

A supplier of electrical parts analyzed sales, applied assumptions related to weather conditions, and identified locations where stock levels would decrease more quickly.

C.

A supplier of electrical parts analyzed all instances of a part being, out of stock poor to its scheduled delivery date and discovered that increases in sales of that part consistently correlated with stormy weather.

D.

A supplier of electrical parts analyzed sales and stock information and modelled different scenarios for making decisions on stock reordering and delivery

Question 18

An organization suffered significant damage to its local: file and application servers as a result of a hurricane. Fortunately, the organization was able to recover all information backed up by its overseas third-party contractor. Which of the following approaches has been used by the organization?

Options:

A.

Application management

B.

Data center management

C.

Managed security services

D.

Systems integration

Question 19

Which of the following analytical techniques would an internal auditor use to verify that none of an organization's employees are receiving fraudulent invoice payments?

Options:

A.

Perform gap testing.

B.

Join different data sources.

C.

Perform duplicate testing.

D.

Calculate statistical parameters.

Question 20

Which of the following statements. Is most accurate concerning the management and audit of a web server?

Options:

A.

The file transfer protocol (FTP) should always be enabled.

B.

The simple mail transfer protocol (SMTP) should be operating under the most privileged accounts.

C.

The number of ports and protocols allowed to access the web server should be maximized.

D.

Secure protocols for confidential pages should be used instead of dear-text protocols such as HTTP or FTP.

Question 21

Which of the following should software auditors do when reporting internal audit findings related to enterprisewide resource planning?

Options:

A.

Draft separate audit reports for business and IT management.

B.

Conned IT audit findings to business issues.

C.

Include technical details to support IT issues.

D.

Include an opinion on financial reporting accuracy and completeness.

Question 22

Which of the following capital budgeting techniques considers the tune value of money?

Options:

A.

Annual rate of return.

B.

Incremental analysis.

C.

Discounted cash flow.

D.

Cash payback

Question 23

An internal auditor is assigned to perform data analytics. Which of the following is the next step the auditor should undertake after she has ascertained the value expected from the review?

Options:

A.

Normalize the data,

B.

Obtain the data

C.

Identify the risks.

Analyze the data.

Question 24

Which of following best demonstrates the application of the cost principle?

Options:

A.

A company reports trading and investment securities at their market cost

B.

A building purchased last year for $1 million is currently worth ©1.2 million, but the company still reports the building at $1 million.

C.

A building purchased last year for ©1 million is currently worth £1,2 million , and the company adjusts the records to reflect the current value

D.

A company reports assets at either historical or fair value, depending which is closer to market value.

Question 25

Which of the following is a likely result of outsourcing?

Options:

A.

Increased dependence on suppliers.

B.

Increased importance of market strategy.

C.

Decreased sensitivity to government regulation

D.

Decreased focus on costs

Question 26

According to 11A guidance on it; which of the following statements is true regarding websites used in e-commerce transactions?

Options:

A.

HTTP sites provide sufficient security to protect customers' credit card information.

B.

Web servers store credit cardholders' information submitted for payment.

C.

Database servers send cardholders’ information for authorization in clear text.

D.

Payment gatewaysauthorizecredit cardonlinepayments.

Question 27

Which of the following job design techniques would most likely be used to increase employee motivation through job responsibility and recognition?

Options:

A.

Job complicating

B.

Job rotation

C.

Job enrichment

D.

Job enlargement

Question 28

An organization discovered fraudulent activity involving the employee time-tracking system. One employee regularly docked in and clocked out her co-worker friends on their days off, inflating their reported work hours and increasing their wages. Which of the following physical authentication devices would be most effective at disabling this fraudulent scheme?

Options:

A.

Face or finger recognition equipment,

B.

Radiofrequency identification chips to authenticate employees with cards.

C.

A requirement to clock in and clock out with a unique personal identification number.

D.

A combination of a smart card and a password to clock in and clock out.

Question 29

An organization decided to outsource its human resources function. As part of its process migration, the organization is implementing controls over sensitive employee data.

What would be the most appropriate directive control in this area?

Options:

A.

Require a Service Organization Controls (SOC) report from the service provider

B.

Include a data protection clause in the contract with the service provider.

C.

Obtain a nondisclosure agreement from each employee at the service provider who will handle sensitive data.

D.

Encrypt the employees ' data before transmitting it to the service provider

Question 30

An organization has an immediate need for servers, but no time to complete capital acquisitions. Which of the following cloud services would assist with this situation?

Options:

A.

Infrastructure as a Service (laaS).

B.

Platform as a Service (PaaS).

C.

Enterprise as a Service (EaaS).

D.

Software as a Service (SaaS).

Question 31

Which of the following techniques would best detect on inventory fraud scheme?

Options:

A.

Analyze invoice payments just under individual authorization limits.

B.

Analyze stratification of inventory adjustments by warehouse location.

C.

Analyze Inventory Invoice amounts and compare with approved contract amounts.

D.

Analyze differences discovered curing duplicate payment testing.

Question 32

Which of the following is a disadvantage in a centralized organizational structure?

Options:

A.

Communication conflicts

B.

Slower decision making.

C.

Loss of economies of scale

D.

Vulnerabilities in sharing knowledge

Question 33

An attacker, posing as a bank representative, convinced an employee to release certain, financial information that ultimately resulted in fraud. Which of the following best describes this cybersecurity risk?

Options:

A.

Shoulder suiting

B.

Pharming,

C.

Phishing.

D.

Social engineering.

Question 34

Management has decided to change the organizational structure from one that was previously decentralized to one that is now highly centralized. As such: which of the

following would be a characteristic of the now highly centralized organization?

Options:

A.

Top management does little monitoring of the decisions made at lower levels.

B.

The decisions made at the lower levels of management are considered very important.

C.

Decisions made at lower levels in the organizational structure are few.

D.

Reliance is placed on top management decision making by few of the organization's departments.

Question 35

Which of the following measures would best protect an organization from automated attacks whereby the attacker attempts to identify weak or leaked passwords in order to log into employees' accounts?

Options:

A.

Requiring users to change their passwords every two years.

B.

Requiring two-step verification for all users

C.

Requiring the use of a virtual private network (VPN) when employees are out of the office.

D.

Requiring the use of up-to-date antivirus, security, and event management tools.

Question 36

Which of the following is an example of a physical control?

Options:

A.

Providing fire detection and suppression equipment

B.

Establishing a physical security policy and promoting it throughout the organization

C.

Performing business continuity and disaster recovery planning

D.

Keeping an offsite backup of the organization's critical data

Question 37

Which of the following attributes of data are cybersecurity controls primarily designed to protect?

Options:

A.

Veracity, velocity, and variety.

B.

Integrity, availability, and confidentiality.

C.

Accessibility, accuracy, and effectiveness.

D.

Authorization, logical access, and physical access.

Question 38

An internal auditor considers the financial statement of an organization as part of a financial assurance engagement. The auditor expresses the organization's electricity and depreciation expenses as a percentage of revenue to be 10% and 7% respectively. Which of the following techniques was used by the internal auditor In this calculation?

Options:

A.

Horizontal analysis

B.

Vertical analysis

C.

Ratio analysis

D.

Trend analysis

Question 39

Which of the following is an example of two-factor authentication?

Options:

A.

The user's facial geometry and voice recognition.

B.

The user's password and a separate passphrase.

C.

The user's key fob and a smart card.

D.

The user's fingerprint and a personal Identification number.

Question 40

An internal auditor is reviewing key phases of a software development project. Which of the following would; the auditor most likely use to measure the project team's performance related to how project tasks are completed?

Options:

A.

A balanced scorecard.

B.

A quality audit

C.

Earned value analysis.

D.

Trend analysis

Question 41

According to I1A guidance on IT. which of the following activities regarding information security Is most likely to be the responsibility of line management as opposed to executive management, internal auditors, or the board?

Options:

A.

Review and monitor security controls.

B.

Dedicate sufficient security resources.

C.

Provide oversight to the security function.

D.

Assess information control environments.

Question 42

The head of the research arid development department at a manufacturing organization believes that his team lacks expertise in some areas, and he decides to hire more experienced researchers to assist in the development of a new product. Which of the following variances are likely to occur as the result of this decision?

1. Favorable labor efficiency variance.

2. Adverse labor rate variance.

3. Adverse labor efficiency variance.

4. Favorable labor rate variance.

Options:

A.

1 and 2

B.

1 and 4

C.

3 and A

D.

2 and 3

Question 43

Which of the following is a limitation of the remote wipe for a smart device?

Options:

A.

Encrypted data cannot be locked to prevent further access

B.

Default settings cannot be restored on the device.

C.

All data, cannot be completely removed from the device

D.

Mobile device management software is required for successful remote wipe

Question 44

An internal auditor discusses user-defined default passwords with the database administrator. Such passwords will be reset as soon as the user logs in for the first time, but the initial value of the password is set as "123456." Which of the following are the auditor and the database administrator most likely discussing in this situation?

Options:

A.

Whether it would be more secure to replace numeric values with characters.

B.

What happens in the situations where users continue using the initial password.

C.

What happens in the period between the creation of the account and the password change.

D.

Whether users should be trained on password management features and requirements.

Question 45

An Internal auditor is using data analytics to focus on high-risk areas during an engagement. The auditor has obtained data and is working to eliminate redundancies in the data. Which of the following statements is true regarding this scenario?

Options:

A.

The auditor is normalizing data in preparation for analyzing it.

B.

The auditor is analyzing the data in preparation for communicating the results,

C.

The auditor is cleaning the data in preparation for determining which processes may be involves .

D.

The auditor is reviewing trio data prior to defining the question

Question 46

Which of the following capital budgeting techniques considers the expected total net cash flows from investment?

Options:

A.

Cash payback

B.

Annual rate of return

C.

Incremental analysis

D.

Net present value

Question 47

Which of the following items best describes the strategy of outsourcing?

Options:

A.

Contracting the work to Foreign Service providers to obtain lower costs

B.

Contracting functions or knowledge-related work with an external service provider.

C.

Contract -ng operation of some business functions with an internal service provider

D.

Contracting a specific external service provider to work with an internal service provider

Question 48

Which of the following is an indicator of liquidity that is more dependable than working capital?

Options:

A.

Acid-test (quick) ratio

B.

Average collection period

C.

Current ratio.

D.

Inventory turnover.

Question 49

In reviewing an organization's IT infrastructure risks, which of the following controls is to be tested as pan of reviewing workstations?

Options:

A.

Input controls

B.

Segregation of duties

C.

Physical controls

D.

Integrity controls

Question 50

Which of the following performance measures includes both profits and investment base?

Options:

A.

Residual income

B.

A flexible budget

C.

Variance analysis.

D.

A contribution margin income statement by segment.

Question 51

Based on lest results, an IT auditor concluded that the organization would suffer unacceptable loss of data if there was a disaster at its data center. Which of the following test results would likely lead the auditor to this conclusion?

Options:

A.

Requested backup tapes were not returned from the offsite vendor In a timely manner.

B.

Returned backup tapes from the offsite vendor contained empty spaces.

C.

Critical systems have boon backed up more frequently than required.

D.

Critical system backup tapes are taken off site less frequently than required

Demo: 51 questions
Total 340 questions