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IIA-CIA-Part3-3P IIA CIA Exam Part Three: Business Knowledge for Internal Auditing Free Practice Exam Questions (2025 Updated)

Prepare effectively for your IIA IIA-CIA-Part3-3P CIA Exam Part Three: Business Knowledge for Internal Auditing certification with our extensive collection of free, high-quality practice questions. Each question is designed to mirror the actual exam format and objectives, complete with comprehensive answers and detailed explanations. Our materials are regularly updated for 2025, ensuring you have the most current resources to build confidence and succeed on your first attempt.

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A large hospital has an existing contract with a vendor in another country to provide software support and maintenance of the hospital's patient records information system. From the hospital management's perspective, which of the following controls would be most effective to address privacy risks related to this outsourcing arrangement?

A.

Conduct periodic reviews of the privacy policy to ensure that the existing policy meets current

legislation requirements in both regions.

B.

Include a "right to audit" clause in the contract and impose detailed security obligations on the

outsourced vendor

C.

Implement mandatory privacy training for management to help with identifying privacy risks when outsourcing services

D.

Develop an incident monitoring and response plan to track breaches from internal and external sources

Which of the following accounting methods is an investor organization likely to use when buying 40 percent of the stock of another organization?

A.

Cost method

B.

Equity method

C.

Consolidation method

D.

Fair value method

A retail organization mistakenly did not include S10.000 of inventory in the physical count at the end of the year. What was the impact to the organization's financial statements?

A.

Cost of sales and net income are understated

B.

Cost of sales and net income are overstated

C.

Cost of sales is understated and net income is overstated.

D.

Cost of sales is overstated and net income is understated.

According to IIA guidance, which of the following is the correct order to conduct a business impact analysis (BIA) for the potential loss of an organization's network services''

1. identify resources and partners to provide required recovery services

2. Identify the business processes supporting the network functionality

3. Obtain approval of the BIA from the operating managers relative to their areas of responsibility

4. Identify the business impact if the network services cannot be performed

A.

1, 2, 3, 4

B.

2, 1, 4, 3

C.

2, 4, 1, 3

D.

4, 2, 1, 3

When examining an organization's strategic plan, an internal auditor should expect to find which of the following components?

A.

Identification of achievable goals and timelines.

B.

Analysis of the competitive environment.

C.

Plan for the procurement of resources.

D.

Plan for progress reporting and oversight.

An organization had a gross profit margin of 40 percent in year one and in year two. The net profit margin was 18 percent in year one and 13 percent in year two.

Which of the following could be the reason for the decline in the net profit margin for year two?

A.

Cost of sales increased relative to sales.

B.

Total sales increased relative to expenses.

C.

The organization had a higher dividend payout rate in year two.

D.

The government increased the corporate tax rate.

The mobility of personal smart devices significantly increases which of the following risks?

A.

Data integrity risks

B.

Compliance risks.

C.

Physical security risks

D.

Privacy risks

A multinational organization allows its employees to access work email via personal smart devices. However, users are required to consent to the installation of mobile device management (MDM) software

that will remotely wipe data in case of theft or other incidents.

Which of the following should the organization ensure in exchange for the employees' consent?

A.

That those employees who do not consent to MDM software cannot have an email account.

B.

That personal data on the device cannot be accessed and deleted by system administrators.

C.

That monitoring of employees' online activities is conducted in a covert way to avoid upsetting them.

D.

That employee consent includes appropriate waivers regarding potential breaches to their privacy.

Data encryption is an example of which of the following controls?

A.

Application control.

B.

IT general control

C.

Data input control

D.

Data output control

Which of the following statements is most accurate with respect to various forms, elements, and characteristics of business contracts?

A.

A contract is a tool used by both suppliers and customers, the model and complexity of which generally remains constant

B.

Collaboration during contract negotiation encourages stakeholders to develop consensus but typically increases cycle times and the likelihood that the contract will fail

C.

Differing legal requirements affect the attitudes of contracting parties as well as the length content and language of contracts

D.

A contract is a tool used by both suppliers and customers though it offers commercial assurance of the relationship, purely from a customer perspective

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

A.

Residual income.

B.

A flexible budget.

C.

Variance analysis.

D.

A contribution margin income statement by segment.

If a just-in-time purchasing system is successful in reducing the total inventory costs of a manufacturing company, which of the following combinations of cost changes would be most likely to occur?

A.

1

B.

2

C.

3

D.

4

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

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

Which of the following statements is true regarding partnership liquidation?

A.

Operations can continue after the liquidation if all partners agree

B.

Partnership liquidation ends both the legal and economic life of an entity

C.

Partnership liquidation occurs when there is capital deficiency Stable

D.

When a partnership is liquidated, each partner pays creditors from cash received

Which of the following principles is shared by both hierarchical 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.

A.

1 and 3 only.

B.

1 and 4 only.

C.

2 and 3 only

D.

3 and 4 only.

When using cost-volume-profit analysts which of the following will increase operating income once the break-even point has been reached?

A.

Fixed costs per unit for each additional unit sold

B.

Variable costs per unit for each additional unit sold

C.

Contribution margin per unit for each additional unit sold

D.

Gross margin per unit for each additional unit sold

Which of the following factors is most likely to lead to a lack of cohesiveness in a project team?

A.

Prestige

B.

Small size.

C.

Competition

D.

Common threat

Which of the following assists in ensuring mat information exchanged over IT systems is encrypted?

A.

Operating system

B.

Utility software

C.

Firewall

D.

Application software

Which of the following is a typical example of structured data?

A.

Production information maintained in relational tables.

B.

Tweets and posts of users on social media.

C.

Photos and videos stored in hard drive catalogs.

D.

Sales reports documented in word processing software.

Which of the following is the first step an internal audit activity should undertake when executing a data analytics process?

A.

Conduct a risk assessment regarding the effectiveness of the data analytics process.

B.

Analyze possible and available sources of raw data

C.

Define the purpose and the anticipated value

D.

Select data for cleaning and normalization procedures.

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