Certified Internal Auditor® (CIA®) Sample Exam Questions |
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According to IIA guidance, independence of the internal audit activity is achieved through which of the following?
A. Staffing and supervision.
B. Continuing professional development and due professional care.
C. Human relations and communications.
D. Organizational status and objectivity.
- Incorrect. Staffing and supervision relate to the professional proficiency of the internal audit activity.
- Incorrect. Continuing professional development and due professional care relate to the professional proficiency of the internal auditor.
- Incorrect. Human relations and communications relate to the professional proficiency of the internal auditor.
- Correct. According to Practice Advisory 1110-1, organizational status and objectivity permit members of the internal audit activity to render the impartial and unbiased judgments essential to the proper conduct of engagements.”
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Considering the differences between statistical and judgmental sampling, which of the following statements about statistical sampling is true?
A. No judgment is required, because everything is computed according to a formula.
B. A smaller sample can be used.
C. More accurate results are obtained.
D. Population estimates can be made with measurable reliability.
- Incorrect. Judgment is needed for confidence levels and sample unit definition.
- Incorrect. A statistical sample may result in either a smaller or larger sample.
- Incorrect. There is no way to determine which method would produce greater accuracy.
- Correct. The only way to have measured reliability (stated in terms of confidence intervals) is to use a statistical sample..
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Which of the following is the best strategy for limiting production delays caused by equipment breakdown and repair?
- Schedule production based on capacity planning.
- Plan maintenance activity based on an analysis of equipment repair work orders.
- Preauthorize equipment maintenance and overtime pay.
- Establish a preventive maintenance program for all production equipment.
- Incorrect. Scheduling production based on capacity utilization ignores other important factors such as demands.
- Incorrect. Budgeting maintenance department activities based on previous work orders will not prevent equipment breakdowns and repairs.
- Incorrect. Standing authorizations of work orders and overtime will not address the problem posed.
- Correct. A preventive maintenance program will reduce equipment breakdowns and repairs..
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In the Boston Consulting Group (BCG) growth-share matrix, which strategy in the matrix describes large generation of cash and heavy investment needed to grow and maintain competitive positioning but net cash flow is usually modest?
- Cash cows.
- Question marks.
- Dogs.
- Stars.
- Incorrect. A cash cow generates more cash than it requires, providing funds to the corporation to invest in other ventures.
- Incorrect. Question marks deserve attention to determine if the venture is viable or not. The business is located in a growing industry but has not achieved a strong competitive position.
- Incorrect. Dogs describe a business situated in a low growth or declining industry and if not positioned strongly will be divested.
- Correct. Stars describe a business with a strong competitive position in the industry. The industry is robust and SBUs are highly attractive. Net cash flow is modest since investment is heavy although stars generate large amounts of cash.
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In which of the following industry environments are franchising and horizontal mergers commonly used strategies?
- Emerging industries.
- Declining industries.
- Fragmented industries.
- Mature industries.
- Incorrect. See answer “C”.
- Incorrect. See answer “C”.
- Correct. Strategies such as chaining, franchising, and horizontal mergers are commonly used in fragmented industries, because there are low barriers to entry. Companies in fragmented industries face many opportunities for differentiation but each opportunity for competitive advantage is small.
- Incorrect. See answer “C”.
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Which of the following costs does management need to consider when introducing a new product or substituting a new product for an existing one?
- Costs of retraining employees.
- Costs of acquiring new ancillary equipment.
- Write-offs due to undepreciated investment in old technology.
- Capital requirements for changeover.
- I and III only.
- I, II, and IV only.
- II, III, and IV only.
- I, II, III, and IV.
- Correct.
- Correct.
- Correct.
- Correct. Costs that management should consider would include costs of retraining employees; costs of acquiring new ancillary equipment; write-offs of undepreciated investments in the old technology; capital requirements and research and development costs of the changeover; and costs of modifying interrelated stages of production or related aspects of the business.
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Which of the following theories includes the assertion that employees may be motivated by achievement of acceptance or esteem in the workplace?
- Equity theory.
- Expectancy theory.
- Needs hierarchy theory.
- Goal-setting theory.
- Incorrect. The equity theory focuses on the balance between inputs and outcomes.
- Incorrect. The basis of the expectancy theory is that employees are only motivated to provide inputs if they believe a given level of outcome will result.
- Correct. The need theory suggests that employees have needs that they are motivated to satisfy in the workplace.
- Incorrect. The goal-setting theory is based upon the belief that employees have desires and aspirations, which result in goals that direct their behavior.
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Candidates from the following countries must refer to their local IIA Institute web-site or contact their local representative for more information about local certification processes:
The information contained on this website pertains to all other countries. |
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