CIA IIA-CIA-Part3 Exam Questions and Answers PDF

Performance Measurement Should Provide Meaningful Insights:

While providing detailed statistics on disbursements, the greatest concern is whether the data is relevant to achieving the objective of accurate disbursements.

If the data does not directly support decision-making or process improvements, it may not serve its intended purpose.

IIA Standard 2010 - Planning requires internal auditors to evaluate the relevance of information used in decision-making.

A. Articulation of the data (Incorrect)

The way the data is presented is important but is a secondary concern compared to whether the data is relevant.

B. Availability of the data (Incorrect)

While timely access to data is critical, the primary concern is whether the data is meaningful in evaluating disbursement accuracy.

C. Measurability of the data (Incorrect)

The data is already being measured and reported; the real issue is whether it provides useful insights for improving accuracy.

Explanation of Incorrect Answers:Conclusion:The greatest concern with this performance measurement is whether the data is relevant (Option D) to assessing disbursement accuracy and guiding improvements.

IIA References:

IIA Standard 2010 - Planning

Debt investments refer to financial instruments where an investor lends money to an entity (corporation, government, or institution) in exchange for periodic interest payments and the repayment of the principal amount at maturity. These include:

Government bonds (such as U.S. Treasury bonds, municipal bonds, and sovereign bonds)

Corporate bonds

Certificates of deposit (CDs)

Commercial paper

A. Investments in the capital stock of a corporation → Incorrect. Capital stock represents ownership (equity investments), not debt investments.

C. Contents of an investment portfolio → Incorrect. A portfolio may contain both equity and debt investments, making this too broad to classify specifically as debt.

D. Acquisition of common stock of a corporation → Incorrect. Common stock is an equity investment, not a debt investment.

The IIA’s Global Internal Audit Standards on Investment Management and Risk Assessment highlight debt instruments as fixed-income securities.

International Financial Reporting Standards (IFRS 9 – Financial Instruments) classify bonds and loans as debt investments, distinct from equity instruments.

The Generally Accepted Accounting Principles (GAAP) – FASB ASC 320 specifies how to account for debt securities.

Explanation of the Other Options:IIA References & Best Practices:Thus, the correct answer is B. Acquisition of government bonds.

Understanding Predictive Analytics:

Predictive analytics involves using historical data, statistical algorithms, and machine learning techniques to forecast future trends and behaviors.

It applies assumptions and models patterns to predict outcomes, helping businesses make proactive decisions.

Why Option B is Correct:

Predictive analytics is forward-looking and uses assumptions (e.g., weather conditions) to predict where stock levels would decrease more quickly.

This aligns with the goal of predictive analytics: forecasting potential events before they occur.

Why Other Options Are Incorrect:

A. Analyzed instances where parts were out of stock before scheduled deliveries: This is descriptive analytics, as it looks at past data without making future predictions.

C. Analyzed past stockouts and found a correlation with stormy weather: This is diagnostic analytics, as it identifies past correlations but does not predict future trends.

D. Modeled different scenarios for stock reordering and delivery decisions: This is prescriptive analytics, which focuses on decision-making rather than predictions.

IIA Standards and References:

IIA GTAG on Data Analytics (2017): Highlights predictive analytics as a tool for forecasting risks and operational inefficiencies.

IIA Standard 1220 – Due Professional Care: Encourages auditors to use analytical techniques to anticipate potential issues.

COSO ERM Framework: Supports the use of predictive models to improve risk management and strategic planning.

Thus, the correct answer is B: A supplier of electrical parts analyzed sales, applied assumptions related to weather conditions, and identified locations where stock levels would decrease more quickly.