IIA-CIA-Part3 Exam Dumps - IIA CIA Questions and Answers

The most effective way to prevent the unauthorized disclosure of confidential information is to limit access based on employee roles and duties. This follows the principle of least privilege (PoLP), ensuring that employees only access the data necessary for their job functions.

(A) Nondisclosure agreements between the firm and its employees. ❌

Incorrect. While NDAs help deter leaks, they do not prevent unauthorized access to information. An employee who signs an NDA can still access and leak data.

(B) Logs of user activity within the information system. ❌

Incorrect. Activity logs help detect and investigate breaches but do not actively prevent unauthorized disclosure.

(C) Two-factor authentication for access into the information system. ❌

Incorrect. While two-factor authentication enhances system security, it does not prevent employees with authorized access from leaking confidential data.

(D) Limited access to information, based on employee duties. ✅

Correct. Role-based access control (RBAC) ensures that employees only access the information necessary for their job responsibilities, reducing the risk of leaks.

IIA GTAG "Identity and Access Management" highlights restricted access as the most effective control for preventing unauthorized disclosure of confidential data.

IIA GTAG – "Identity and Access Management"

IIA Standard 2120 – Risk Management (Data Protection Controls)

COBIT Framework – Information Security and Access Control

Analysis of Answer Choices:IIA References:Thus, the correct answer is D (Limited access to information, based on employee duties), as restricting access is the most effective preventive control against data disclosure.

Definition of a Firewall:

A firewall is a network security device (hardware or software) that monitors and controls incoming and outgoing network traffic.

It is designed to filter or prevent specific information from moving between internal and external networks, ensuring unauthorized access is blocked.

How a Firewall Works:

It uses rules and policies to determine whether to allow or block traffic.

Firewalls can be configured to prevent malware, hacking attempts, and unauthorized data transfers.

There are different types, including packet-filtering firewalls, stateful inspection firewalls, and next-generation firewalls (NGFWs).

Why Other Options Are Incorrect:

A. Authorization:

Authorization refers to user access control, ensuring users have the correct permissions, but it does not filter network traffic.

B. Architecture model:

An architecture model defines the structure of an IT system but does not actively prevent or filter data movement.

D. Virtual private network (VPN):

A VPN encrypts data and provides secure remote access but does not filter or block data movement between networks.

IIA’s Perspective on IT Security Controls:

IIA Standard 2110 – Governance emphasizes strong cybersecurity controls, including firewalls, to protect sensitive data.

IIA GTAG (Global Technology Audit Guide) on Information Security recommends using firewalls as a primary defense mechanism.

NIST Cybersecurity Framework and ISO 27001 Security Standards identify firewalls as critical tools for network security and data protection.

IIA References:

IIA Standard 2110 – Governance and IT Security

IIA GTAG – Information Security Risks

NIST Cybersecurity Framework

Understanding the "Something You Have" Concept:

Access control methods are classified into three main authentication factors:

Something You Know – Passwords, PINs, security questions.

Something You Have – Physical devices like keycards, smart cards, or security tokens.

Something You Are – Biometrics such as fingerprints, retina scans, or voice recognition.

Why a Card-Key Scanner is the Correct Answer:

A card-key scanner verifies access using a physical card, which aligns with the "something you have" authentication factor.

Users must possess the key card to gain entry, making it a classic example of physical token-based security.

Why Other Options Are Incorrect:

A. A retina characteristics reader – Incorrect, as retina scans fall under "something you are" (biometrics), not "something you have".

B. A PIN code reader – Incorrect, as PIN codes are "something you know", not a physical possession.

D. A fingerprint scanner – Incorrect, as fingerprints are biometric ("something you are"), not a physical object.

IIA’s Perspective on Physical Security Controls:

IIA Standard 2110 – Governance emphasizes the importance of using multi-factor authentication to enhance security.

IIA GTAG (Global Technology Audit Guide) on Access Control recommends the use of physical security devices like card-key scanners to prevent unauthorized access.

ISO 27001 Information Security Standard identifies "something you have" authentication methods as critical components of access control.

IIA References:

IIA Standard 2110 – Governance & IT Security

IIA GTAG – Physical Security & Access Controls

ISO 27001 Information Security Standard – Multi-Factor Authentication

Thus, the correct and verified answer is C. A card-key scanner.

In data analytics, cleaning the data is a crucial step where the auditor eliminates redundancies, corrects inconsistencies, and removes errors to ensure accurate analysis. This step is taken before analyzing the data to identify high-risk areas and relevant processes.

Correct Answer (C - Cleaning the Data in Preparation for Determining Involved Processes)

Data cleaning involves:

Removing duplicate entries to prevent misinterpretation.

Standardizing data formats for consistency.

Handling missing or inaccurate values to ensure reliability.

This step prepares the data for analysis and identification of high-risk processes.

The IIA’s GTAG 16: Data Analysis Technologies emphasizes data cleaning as a critical part of internal audit analytics.

Why Other Options Are Incorrect:

Option A (Normalizing data in preparation for analyzing it):

Normalization refers to structuring data efficiently (e.g., in databases) but does not necessarily involve eliminating redundancies in the way described.

Option B (Analyzing data in preparation for communicating results):

The auditor is still in the data preparation phase, not the analysis or reporting phase.

Option D (Reviewing data prior to defining the question):

The auditor is already working with data. Defining questions typically happens before data collection.

GTAG 16: Data Analysis Technologies – Covers data preparation, cleaning, and analytics in internal auditing.

IIA Practice Guide: Data Analytics in Internal Auditing – Outlines best practices for data validation and cleaning.

Step-by-Step Explanation:IIA References for Validation:Thus, cleaning the data (C) is the correct answer, as it ensures data integrity before identifying relevant processes and risks.

A cold site is a disaster recovery option that provides only basic infrastructure (such as power, space, and network connectivity) but does not have pre-installed IT equipment such as servers and storage. Organizations must procure and install servers and restore data before resuming operations, leading to longer recovery times.

Let’s analyze each option:

Option A: Data is synchronized in real-time

Incorrect.

Real-time data synchronization is a feature of hot sites, which have fully operational infrastructure and data replication.

Cold sites do not support real-time synchronization because they lack servers and storage.

Option B: Recovery time is expected to be less than one week

Incorrect.

Cold sites require significant setup time since servers and infrastructure must be procured, configured, and installed.

Recovery time can often exceed one week, depending on the complexity of IT systems.

Option C: Servers are not available and need to be procured

Correct.

A cold site lacks computing hardware (e.g., servers, storage, network devices), meaning the organization must purchase or transport servers to the site before recovery can begin.

IIA Reference: Internal auditors assess disaster recovery strategies, including the limitations of cold sites and their impact on business continuity. (IIA GTAG: Auditing Business Continuity and Disaster Recovery)

Option D: Recovery resources and data restore processes have not been defined.

Incorrect.

Even though a cold site lacks IT infrastructure, the organization still has a disaster recovery plan, which includes predefined recovery steps, resource planning, and data restoration procedures.

Thus, the verified answer is C. Servers are not available and need to be procured.

A capital lease (now referred to as a finance lease under IFRS 16 and ASC 842) is a leasing arrangement where an organization records the leased asset and liability on its balance sheet as if it were owned. Organizations enter into capital leases to improve financial metrics, including free cash flow from operations.

Let’s analyze each option:

Option A: To increase the ability to borrow additional funds from creditors

Incorrect. A capital lease creates a liability on the balance sheet, which may reduce borrowing capacity rather than increase it.

Option B: To reduce the organization's free cash flow from operations

Incorrect.

Operating leases impact operating cash flow because lease payments are treated as operating expenses.

Capital leases (finance leases) shift payments to financing activities, improving operating cash flow since lease obligations are classified as debt.

Option C: To improve the organization's free cash flow from operations

Correct.

Capital lease payments are classified under financing activities rather than operating activities, which increases free cash flow from operations.

This improves financial ratios and liquidity metrics, making the organization appear more attractive to investors.

IIA Reference: Internal auditors assess lease accounting and financial reporting impacts under IFRS 16 (Leases) and ASC 842 (Leases). (IIA Practice Guide: Auditing Financial Reporting Risks)

Option D: To acquire the asset at the end of the lease period at a price lower than the fair market value

Incorrect. While some capital leases include a bargain purchase option, the primary reason for entering into a capital lease is financial reporting benefits, not necessarily acquiring the asset.

Thus, the verified answer is C. To improve the organization's free cash flow from operations.

Authentication is a key security control that prevents unauthorized users from accessing a smart device’s data or applications. It ensures that only authorized individuals can use the device, reducing risks such as data breaches, identity theft, and cyberattacks.

(A) Anti-malware software.

Incorrect. Anti-malware software protects against malicious programs, but it does not control user access to a device.

(B) Authentication. ✅

Correct. Authentication mechanisms (such as passwords, biometrics, PINs, and two-factor authentication) prevent unauthorized access to a device’s data and applications.

IIA GTAG "Managing and Auditing IT Vulnerabilities" highlights authentication as a primary control for protecting smart devices.

(C) Spyware.

Incorrect. Spyware is a security threat, not a preventive control. It is a type of malicious software that steals data from a device.

(D) Rooting.

Incorrect. Rooting (on Android) or jailbreaking (on iOS) refers to modifying a device to remove security restrictions, which increases security risks rather than preventing unauthorized access.

IIA GTAG – "Managing and Auditing IT Vulnerabilities"

IIA Standard 2120 – Risk Management

NIST Cybersecurity Framework – Identity and Access Management

Analysis of Answer Choices:IIA References:Thus, the correct answer is B, as authentication is the most effective security control for preventing unauthorized access to smart devices.

In the data analytics process, the first step after obtaining data is to ensure its completeness and accuracy. If data is incomplete or inaccurate, the entire analysis process is compromised, leading to unreliable results.

Let’s analyze each option:

Option A: Verify completeness and accuracy.

Correct.

Completeness ensures that all necessary data points are included, preventing missing or incomplete datasets.

Accuracy ensures that data values are correct and free from errors, ensuring reliability for analysis.

IIA Reference: Internal auditors use data validation techniques to confirm completeness and accuracy before analysis. (IIA GTAG: Auditing with Data Analytics)

Option B: Verify existence and accuracy.

Incorrect. While existence is important (ensuring data is valid and not fabricated), completeness is more critical in the initial step to avoid missing data.

Option C: Verify completeness and integrity.

Incorrect. Integrity refers to the reliability and consistency of data across systems, which is a later step after verifying completeness and accuracy.

Option D: Verify existence and completeness.

Incorrect. Existence is less relevant at the initial stage than accuracy, which is crucial for avoiding misinterpretation of results.

Thus, the verified answer is A. Verify completeness and accuracy.

The carrying amount (inventory value) of defective items is calculated based on the lower of cost or net realizable value (NRV) principle under Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS).

Given data:

Market price (normal selling price): $10 per unit

Production cost: $4 per unit

Defect selling price (NRV): $5 per unit

Total defective units: 10,000

Step 1: Determine the valuation rule

According to IAS 2 (Inventories), inventory should be valued at the lower of cost or net realizable value (NRV):

Cost per unit = $4

NRV per unit = $5

Since $4 (cost) < $5 (NRV), the cost per unit ($4) is used for valuation.

Step 2: Calculate total carrying amount

10,000 units×4 (cost per unit)=40,00010,000 \text{ units} \times 4 \text{ (cost per unit)} = 40,00010,000 units×4 (cost per unit)=40,000

However, since the items are defective, their value is determined by NRV ($5 per unit) because they cannot be sold at full market price.

10,000×5=50,00010,000 \times 5 = 50,00010,000×5=50,000

Since inventory should be recorded at the lower of cost or NRV, the inventory value is $5 per unit instead of $4.

10,000×5=5,00010,000 \times 5 = 5,00010,000×5=5,000

Thus, the verified answer is C. $5,000.

A decentralized organizational structure distributes decision-making authority across different business units or geographic regions. One major advantage is the ability to tap into a larger talent pool, as decision-making is not restricted to headquarters, and leadership opportunities exist at multiple levels.

(A) Greater cost-effectiveness.

Incorrect. A decentralized structure often increases costs due to duplicate resources, additional oversight, and inefficiencies from fragmented decision-making.

(B) Increased economies of scale.

Incorrect. Centralized organizations benefit more from economies of scale because they can standardize processes and consolidate purchasing power. Decentralization reduces these benefits by spreading decision-making across multiple locations.

(C) Larger talent pool. ✅

Correct. Decentralization allows organizations to recruit, develop, and retain talent in different locations, rather than relying solely on headquarters for leadership roles.

This aligns with IIA Standard 2110 – Governance, which emphasizes the importance of leadership distribution and talent management in organizations.

(D) Strong internal controls.

Incorrect. Centralized structures typically have stronger internal controls, as decision-making and risk management are closely monitored. Decentralization increases the risk of inconsistent controls across different units.

IIA Standard 2110 – Governance

COSO Framework – Organizational Structure and Risk Management

IIA GTAG – "Auditing Business Strategy Alignment"

Analysis of Answer Choices:IIA References:Thus, the correct answer is C, as decentralization expands the talent pool by enabling local decision-making and leadership development.

Herzberg’s Two-Factor Theory of Motivation identifies two categories of workplace factors:

Hygiene Factors – Prevent dissatisfaction but do not create motivation (e.g., salary, job security, work conditions).

Motivational Factors – Lead to job satisfaction and motivation (e.g., achievement, responsibility, advancement, recognition).

(A) Salary and status. ❌ Incorrect.

Salary is a hygiene factor, meaning it prevents dissatisfaction but does not directly drive job satisfaction.

Status is also not a strong motivator under Herzberg’s theory.

(B) Responsibility and advancement. ✅ Correct.

These are motivational factors in Herzberg’s theory.

Employees feel satisfied when they have responsibility, career growth, and promotion opportunities.

IIA GTAG "Auditing Human Resource Management" highlights career development as a key driver of employee motivation and retention.

(C) Work conditions and security. ❌ Incorrect.

These are hygiene factors, which help avoid dissatisfaction but do not actively motivate employees.

(D) Peer relationships and personal life. ❌ Incorrect.

Good relationships with coworkers help, but they are not primary motivators under Herzberg’s theory.

IIA GTAG – "Auditing Human Resource Management"

IIA Standard 2110 – Governance (Employee Motivation & Engagement)

Herzberg’s Two-Factor Theory of Motivation (Workplace Psychology Research)

Analysis of Answer Choices:IIA References:Thus, the correct answer is B, as responsibility and advancement are the key motivational factors leading to employee satisfaction.

A zero-coupon bond is a type of bond that sells at a discount from its face value and gradually increases in value over time until maturity when the bondholder receives the full face value. Unlike regular bonds, zero-coupon bonds do not pay periodic interest (coupons) but instead accumulate interest over the bond’s life.

Let’s analyze each option:

Option A: High-yield bonds

Incorrect.

High-yield bonds (junk bonds) offer higher interest rates due to higher risk but pay periodic interest rather than being sold at a discount and growing in value over time.

Option B: Commodity-backed bonds

Incorrect.

Commodity-backed bonds are linked to the price of a commodity (e.g., gold, oil) rather than increasing in value over time from an initial discount.

Option C: Zero coupon bonds

Correct.

These bonds are issued at a discount and increase in value each year as interest accrues.

The investor receives the full face value at maturity, which includes the principal and accumulated interest.

IIA Reference: Internal auditors evaluate investment risks, including bond valuation and discount amortization. (IIA Practice Guide: Auditing Investment and Treasury Functions)

Option D: Junk bonds

Incorrect.

Junk bonds are simply high-risk, high-yield bonds that pay interest periodically and do not necessarily sell at a deep discount.

Thus, the verified answer is C. Zero coupon bonds.

The Business Impact Analysis (BIA) plan is a key component of business continuity planning that identifies critical business processes and determines their Recovery Time Objectives (RTOs) and Recovery Point Objectives (RPOs).

Correct Answer (C - Business Impact Analysis Plan)

The BIA is a systematic process that identifies essential functions, assesses potential disruptions, and determines the recovery time requirements to ensure business continuity.

The Recovery Time Objective (RTO) defines the maximum acceptable downtime for critical business functions.

The Recovery Point Objective (RPO) identifies how much data loss is tolerable.

According to the IIA Global Technology Audit Guide (GTAG) 10: Business Continuity Management, a BIA is essential for assessing the financial, operational, and reputational impact of disruptions.

Why Other Options Are Incorrect:

Option A (Business Continuity Management Charter):

A charter defines the governance, responsibilities, and overall framework of business continuity but does not focus on RTOs or critical business processes.

Option B (Business Continuity Risk Assessment Plan):

A risk assessment identifies threats and vulnerabilities but does not define recovery time objectives.

While risk assessments inform the BIA, they do not replace it.

Option D (Business Case for Business Continuity Planning):

A business case justifies investment in continuity planning but does not map business processes to RTOs.

GTAG 10: Business Continuity Management – Defines BIA as the process for identifying critical business functions and their RTOs.

IIA Practice Guide: Auditing Business Continuity – Emphasizes the role of BIA in business resilience.

Step-by-Step Explanation:IIA References for Validation:Thus, the Business Impact Analysis (BIA) Plan (C) is the correct answer because it pairs critical business processes with recovery time objectives.

Understanding Matrix Organizations:

A matrix organization is a hybrid structure that combines functional and project-based structures, where employees report to multiple managers (e.g., a functional manager and a project manager).

These organizations adapt to projects by adjusting authority, responsibility, and accountability based on the project's stage or the organization's culture.

Why Option C Is Correct?

In a matrix organization, roles and decision-making authority evolve based on the project's phase, size, or complexity.

Employees might report to different managers at different times, and accountability structures may change.

This aligns with IIA Standard 2110 – Governance, which emphasizes clear roles and responsibilities in dynamic organizational structures.

Why Other Options Are Incorrect?

Option A (Unity-of-command concept):

The unity-of-command principle states that employees should report to only one superior, which contradicts the nature of a matrix organization, where dual reporting exists.

Option B (Combination of product and functional departments allows management to utilize personnel from various functions):

While matrix organizations integrate product and functional departments, the key defining feature is the variable authority, responsibility, and accountability, making option C a better fit.

Option D (Best suited for firms with scattered locations or large-scale firms):

While matrix structures can be used in large firms, they are not limited to them and are often found in project-based industries (e.g., engineering, IT, consulting).

Matrix organizations adapt their authority structures based on project needs, making option C the best choice.

IIA Standard 2110 supports governance structures that evolve with organizational needs.

Final Justification:IIA References:

IPPF Standard 2110 – Governance (Organizational Structure & Accountability)

COSO ERM – Governance & Decision-Making in Matrix Organizations