IIA-CIA-Part3 Premium Exam Questions

Earned Value Analysis (EVA) is a project management technique that integrates scope, time, and cost data to measure project performance and progress objectively. EVA allows internal auditors to assess whether a software development project is on track by comparing planned work with completed work and actual costs.

Here’s why EVA is the most appropriate choice:

Evaluates Project Progress and Performance – EVA measures how much work has been completed against the planned schedule and budget, helping auditors analyze project efficiency.

Identifies Deviations – It highlights cost overruns or delays in task completion, which is critical for software development projects.

Uses Key Metrics – EVA includes essential indicators like:

Planned Value (PV) – The budgeted cost of work scheduled.

Earned Value (EV) – The value of actual work performed.

Actual Cost (AC) – The real cost incurred for work completed.

Schedule Variance (SV) and Cost Variance (CV) – Indicators of deviations from planned performance.

Supports Risk-Based Internal Audit Approach – The IIA emphasizes risk-based auditing, and EVA helps auditors assess risks related to project cost overruns, schedule slippage, and performance gaps.

A. A Balanced Scorecard – This measures overall organizational performance across perspectives (financial, customer, internal processes, and learning & growth), but it is not specifically designed for evaluating project task completion.

B. A Quality Audit – This focuses on compliance with quality standards and does not measure project task completion efficiency.

D. Trend Analysis – This evaluates patterns over time but does not provide a structured measurement of project progress in terms of cost, time, and completion percentage.

The IIA’s GTAG (Global Technology Audit Guide) on IT Project Management – Recommends using earned value analysis for project auditing.

IIA’s International Professional Practices Framework (IPPF) – Performance Standard 2120 (Risk Management) – Emphasizes the need for internal auditors to evaluate the effectiveness of project risk management, which EVA supports.

COSO’s Enterprise Risk Management (ERM) Framework – Encourages structured performance measurement techniques like EVA to monitor projects.

Why Not the Other Options?IIA References:Thus, Earned Value Analysis (EVA) is the correct answer because it provides a precise, quantitative way to measure project performance. ✅

The Internet of Things (IoT) refers to a network of interconnected physical devices that collect and exchange data through the internet. The key benefits of IoT include automation, improved decision-making, cost savings, and efficiency gains.

(A) Employees can choose from a variety of devices they want to utilize to privately read work emails without their employer’s knowledge.

This is incorrect because it focuses on unauthorized access rather than a benefit of IoT. Security and monitoring are major concerns in IoT environments.

IIA Standard 2110 – Governance requires organizations to ensure adequate governance structures for IT and data security.

(B) Physical devices, such as thermostats and heat pumps, can be set to react to electricity market changes and reduce costs. ✅

This is correct because IoT enables smart devices to automatically adjust based on real-time data.

Example: Smart thermostats (e.g., Nest, Honeywell) use IoT to track energy prices and consumption, adjusting temperatures to optimize efficiency.

IIA Practice Guide "Assessing the Governance of Risks in IT Projects" highlights IoT as a tool for operational efficiency and cost savings.

(C) Information can be extracted more efficiently from databases and transmitted to relevant applications for in-depth analytics.

This relates more to big data and data analytics, not necessarily IoT.

IIA GTAG "Auditing IT Governance" discusses IoT in operational efficiency but distinguishes it from data extraction.

(D) Data mining and data collection from the internet and social networks is easier, and the results are more comprehensive.

This describes AI and machine learning rather than IoT, which primarily connects physical devices.

IIA GTAG "Auditing Cybersecurity Risk" highlights IoT risks but does not emphasize social media data mining.

IIA GTAG (Global Technology Audit Guide) – "Auditing IT Governance"

IIA GTAG – "Assessing the Governance of Risks in IT Projects"

IIA Standard 2110 – Governance

IIA GTAG – "Auditing Cybersecurity Risk"

Analysis of Answer Choices:IIA References:Thus, the most appropriate answer is B because IoT improves efficiency by automating energy consumption based on market conditions.

A hot recovery plan (hot site) is a fully operational, duplicate site that is pre-configured and ready for immediate use in case of a disaster. This approach allows an organization to recover critical operations quickly with minimal downtime.

(A) Cold recovery plan.

Incorrect: A cold site is a facility that has infrastructure but no active IT systems or data until set up after a disaster, resulting in longer recovery times.

(B) Outsourced recovery plan.

Incorrect: Outsourcing recovery refers to third-party disaster recovery services, but does not specifically describe a fully operational duplicate site.

(C) Storage area network recovery plan.

Incorrect: A storage area network (SAN) recovery plan focuses on data storage redundancy, not a fully operational duplicate facility.

(D) Hot recovery plan. (Correct Answer)

A hot site is the fastest and most effective disaster recovery solution, ensuring immediate failover with minimal downtime.

IIA GTAG 10 – Business Continuity Management highlights hot sites as the most effective for mission-critical operations.

IIA GTAG 10 – Business Continuity Management: Recommends hot sites for critical recovery scenarios.

IIA Standard 2120 – Risk Management: Emphasizes preparedness for disaster recovery planning.

Analysis of Each Option:IIA References Supporting the Answer:Thus, the correct answer is (D) Hot recovery plan, as it ensures a fully operational backup site for immediate disaster recovery.

Owner’s equity represents the residual interest in a company’s assets after deducting liabilities. It is a fundamental concept in financial accounting, reflecting the net worth of a business.

Formula:Owner’s Equity=Assets−Liabilities\text{Owner’s Equity} = \text{Assets} - \text{Liabilities}Owner’s Equity=Assets−Liabilities

Represents the True Value of Ownership – It measures the owner's claim on the business after settling all obligations.

Directly Tied to the Accounting Equation – Assets=Liabilities+Owner’s Equity\text{Assets} = \text{Liabilities} + \text{Owner’s Equity}Assets=Liabilities+Owner’s Equity Rearranging the equation: Owner’s Equity=Assets−Liabilities\text{Owner’s Equity} = \text{Assets} - \text{Liabilities}Owner’s Equity=Assets−Liabilities

Commonly Used in Financial Statements – Found in the Balance Sheet under the "Equity" section.

B. Total assets – Incorrect because assets include both owner-financed and liability-financed resources.

C. Total liabilities – Incorrect because liabilities represent debts owed, not ownership value.

D. Owner’s contribution plus drawings – Incorrect because it only considers investments and withdrawals, not retained earnings or net assets.

IIA’s GTAG on Business Financial Management – Discusses financial statement analysis, including owner’s equity.

COSO’s Internal Control – Integrated Framework – Highlights financial reporting accuracy, including equity calculations.

IFRS & GAAP Accounting Standards – Define owner’s equity as assets minus liabilities in financial reporting.

Why Option A is Correct?Why Not the Other Options?IIA References: