IIA IIA-CIA-Part3 Exam Questions

Question 6 of 327

Which of the following engagement observations would provide the least motivation for management to amend or replace an existing cost accounting system?

The distorted unit cost of a service is 50 percent lower than the true cost, while the true cost is 50 percent higher than the competition's cost.

The organization is losing $1,000,000 annually because it incorrectly outsourced an operation based on information from its current system.

The cost of rework, hidden by the current system, is 50 percent of the total cost of all services.

50 percent of total organizational cost has been allocated on a volume basis.

Correct Answer: D

Option D reflects a situation where a chosen method of cost allocation (volume-based) might not necessarily indicate a critical error or a malfunction in the cost accounting system. While it may not be the most accurate method for all circumstances, it does not demonstrate a clear monetary loss or competitive disadvantage as the other options do. Management might see less urgency in changing the system based solely on the allocation method, unlike the significant financial losses and competitive issues presented in options A, B, and C.

Question 7 of 327

Which of the following control techniques would minimize the risk of interception during transmission in an electronic data interchange system?

1. Encryption.

2. Traffic padding.

3. Edit checks.

4. Structured data format.

1 and 2 only

2 and 3 only

3 and 4 only

1, 2, and 3 only

Correct Answer: A

Question 8 of 327

For an engineering department with a total quality management program, important elements of quality management include all of the following except:

Basing performance evaluations on the number of projects completed.

Comparing results with those of other engineering departments.

Creating a quality council within the engineering department.

Conducting post-project surveys on performance.

Correct Answer: A

Total Quality Management (TQM) focuses on continuous improvement, customer satisfaction, and systematic problem-solving. It emphasizes quality over quantity, teamwork, and long-term success rather than just meeting deadlines or completing a set number of projects. Therefore, basing performance evaluations solely on the number of projects completed does not align with TQM principles. Quality management should aim for the enhancement of processes and performance through comprehensive measures, not just numerical outputs.

Question 9 of 327

Refer to the exhibit.

The figure below shows the network diagram for the activities of a large project. What is the shortest number of days in which the project can be completed?

21 days.

22 days.

27 days.

51 days.

Correct Answer: C

To determine the shortest number of days in which the project can be completed, we need to find the critical path, which is the longest path through the network. The possible paths and their durations are: A to B to D, which is 10 + 12 + 9 = 31 days, A to C to D, which is 10 + 8 + 9 = 27 days, and A to E, which is 10 + 12 = 22 days. The longest duration among these paths is 27 days for the A to C to D path. Therefore, the shortest number of days in which the project can be completed is 27 days.

Question 10 of 327

Which of the following is a characteristic of just-in-time inventory management systems?

Users determine the optimal level of safety stocks.

They are applicable only to large organizations.

They do not really increase overall economic efficiency because they merely shift inventory levels further up the supply chain.

They rely heavily on high quality materials.

Correct Answer: D

Just-in-time (JIT) inventory management systems are characterized by reliance on high quality materials. This is because JIT aims to reduce inventory costs by having materials arrive only as they are needed in the production process. To avoid disruptions, the materials must be of high quality to minimize defects and ensure smooth production flow. High quality materials are crucial in maintaining the efficiency and reliability of the production process, as there is little room for error or delay in JIT systems.