2026 New IIA-CIA-Part3 Exam Questions Real IIA Dumps [Q16-Q34]

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2026 New IIA-CIA-Part3 Exam Questions Real IIA Dumps

Course 2026 IIA-CIA-Part3 Test Prep Training Practice Exam Download

IIA IIA-CIA-Part3 Exam Syllabus Topics:

Section	Objectives
Information Security and Business Continuity	– Data protection and privacy considerations – Business continuity and disaster recovery – Information security management principles
Business Acumen and Global Business Environment	– Organizational structure and business processes – Global business environment and market influences – Business strategies and objectives alignment
Information Technology and Business Systems	– IT controls and cybersecurity fundamentals – Information systems and data governance – System development lifecycle concepts
Financial Management	– Budgeting and cost control – Financial statements and reporting basics – Managerial accounting concepts
Risk Management and Regulatory Environment	– Enterprise risk management (ERM) principles – Compliance and regulatory frameworks – Internal controls and governance concepts

NO.16 Which of the following is true of matrix organizations?

A unity-of-command concept requires employees to report technically, functionally, and administratively to the same manager.

A combination of product and functional departments allows management to utilize personnel from various Junctions.

Authority, responsibility and accountability of the units Involved may vary based on the project’s life, or the organization’s culture

It is best suited for firms with scattered locations or for multi-line, Large-scale firms.

NO.17 Which of the following statements describes an internal control questionnaire?

Provides detailed evidence regarding the substance of the control system.

Takes less of the engagement client’s time to complete than other control evaluation devices.

Requires that the internal auditor be in attendance to properly administer it.

Provides indirect evidence that might need corroboration.

NO.18 An internal auditor is reviewing the sales and collections processes of an e-commerce organization that is facing budget constraints. The auditor found that the accountant did not perform reconciliations of cash collections in a timely manner. The auditor determined that the reason was timing errors in the interfacing process between the customer payments portal and the accounting system. The current customer payments portal was recently implemented to replace a legacy system. The finance manager is in charge of the customer payments portal. Which of the following recommendations is the most appropriate to address the root cause of this deficiency?

The accountant, in view of the budget constraints, should consider a manual workaround to include unposted transactions into the accounting system in a timely manner

Management should consider investing in a new customer payments portal, as the existing portal is unable to interface accurately with the accounting system

The finance manager should work with IT and the vendor of the customer payments portal to rectify the interfacing errors

The accountant should perform reconciliations of cash collections to customer payment records and investigate exceptions in a timely manner

NO.19 Which of the following methods has the lowest risk of inaccurate authentication?

Fingerprint identification.

Complex passwords.

Signature verification.

Personal security questions.

NO.20 Which of the following is a cybersecurity monitoring activity that involves assessing the strength of an organization’s IT protection?

Boundary defense

Malware defense

Penetration tests

Wireless access controls

NO.21 When executive compensation is based on the organization’s financial results, which of the following situations is most likely to arise?

The organization reports inappropriate estimates and accruals due to poof accounting controls.

The organization uses an unreliable process forgathering and reporting executive compensation data.

The organization experiences increasing discontent of employees, if executives are eligible for compensation amounts that are deemed unreasonable.

The organization encourages employee behavior that is inconsistent with the interests of relevant stakeholders.

When executive compensation is tied to financial results, there is a strong incentive to manipulate financial reporting or focus solely on short-term performance at the expense of stakeholders’ interests.
Potential for Unethical Behavior:
Executives may prioritize profit-driven decisions (e.g., cost-cutting, aggressive revenue recognition) over long-term sustainability.
As per IIA Standard 2110 – Governance, incentive structures should align with ethical business practices and stakeholder interests.
Increased Risk of Fraud and Misrepresentation:
The Committee of Sponsoring Organizations of the Treadway Commission (COSO) Fraud Risk Management Guide highlights how executive incentives can lead to financial statement manipulation.
This could result in actions like aggressive revenue recognition, improper expense deferrals, or overstating earnings to boost compensation.
Misalignment with Stakeholder Interests:
Employees, customers, and investors suffer if executive compensation encourages short-term gains over long- term stability.
IIA GTAG 3: Continuous Auditing supports monitoring financial reporting risks to detect such inconsistencies.
A). The organization reports inappropriate estimates and accruals due to poor accounting controls. (Incorrect) Reason: While poor controls can contribute to misstatements, the root cause in this scenario is compensation structure, not control weakness.
B). The organization uses an unreliable process for gathering and reporting executive compensation data.
(Incorrect)
Reason: This issue relates to HR and payroll data integrity, not the impact of performance-based compensation on behavior.
C). The organization experiences increasing discontent of employees, if executives are eligible for compensation amounts that are deemed unreasonable. (Incorrect) Reason: While excessive executive pay may cause employee dissatisfaction, the question focuses on behavioral impacts on stakeholders, making D the more relevant choice.
IIA Standard 2110 – Governance – Ensures executive compensation aligns with organizational ethics and stakeholder interests.
IIA Standard 2120 – Risk Management – Covers the risks associated with incentive-based compensation.
COSO Fraud Risk Management Guide – Discusses financial fraud linked to executive compensation.
IIA GTAG 3: Continuous Auditing – Supports risk-based monitoring of financial statements.
Why is Answer D Correct?Analysis of Incorrect Answers:IIA References:Thus, the correct answer is D. The organization encourages employee behavior that is inconsistent with the interests of relevant stakeholders.

NO.22 A hospital is evaluating the purchase of software to integrate a new cost accounting system with its existing financial accounting system. Which of the following describes the most effective way for the internal audit activity to be involved in the procurement process?

The internal audit activity evaluates whether performance specifications are consistent with the hospital’s needs.

The internal audit activity evaluates whether the application design meets internal development and documentation standards.

The internal audit activity determines whether the prototyped model is validated and reviewed with users before production use begins.

The internal audit activity has no involvement since the system has already been developed externally.

NO.23 The following transactions and events occurred during the year:

– $300,000 of raw materials were purchased, of which $20,000 were returned because of defects
– $600,000 of direct labor costs were incurred.
– S750.000 of manufacturing overhead costs were incurred.
What is the organization’s cost of goods sold for the year?

$1.480.000

$1 500 000

$1,610.000

$1650 000

NO.24 Which of the following is false with regard to Internet connection firewalls?

Firewalls can protect against computer viruses.

Firewalls monitor attacks from the Internet.

Firewalls provide network administrators tools to retaliate against hackers.

Firewalls may be software-based or hardware-based.

NO.25 Which of the following physical access control is most likely to be based on ”something you have” concept?

A retina characteristics reader

A P3M code reader

A card-key scanner

A fingerprint scanner

NO.26 An organization’s balance sheet indicates that the total asset amount and the total capital stock amount remained unchanged from one year to the next, and no dividends were declared or paid. However, the organization reported a loss of $200,000. Which of the following describes the most likely year-over-year change to the organization’s total liabilities and total stockholder equity?

The total liabilities and total stockholder equity both increased.

The total liabilities and total stockholder equity both decreased.

The total liabilities decreased, and the total stockholder equity increased.

The total liabilities increased, and the total stockholder equity decreased.

NO.27 Which of the following IT-related activities is most commonly performed by the second line of defense?

Block unauthorized traffic.

Encrypt data.

Review disaster recovery test results.

Provide an independent assessment of IT security.

NO.28 Which of the following best describes the purpose of fixed manufacturing costs?

To ensure availability of production facilities.

To decrease direct expenses related to production.

To incur stable costs despite operating capacity.

To increase the total unit cost under absorption costing

Fixed manufacturing costs refer to costs that do not vary with the level of production activity within a relevant range. These costs include expenses such as depreciation, rent, property taxes, and salaries of permanent employees in the production facility. Their primary purpose is to ensure the availability and operational readiness of production facilities, regardless of fluctuations in production levels.
(A) Correct – To ensure availability of production facilitiesFixed manufacturing costs are incurred to maintain and operate production facilities, ensuring that they remain functional and available for production when needed. These costs exist even if no units are produced, emphasizing their role in sustaining the production infrastructure.
(B) Incorrect – To decrease direct expenses related to productionFixed manufacturing costs are unrelated to direct expenses, such as raw materials and labor, which vary with production volume. Instead, they remain constant regardless of output levels.
(C) Incorrect – To incur stable costs despite operating capacityWhile fixed costs remain stable within a relevant range, their primary purpose is not just cost stability but ensuring production facilities’ availability and functionality.
(D) Incorrect – To increase the total unit cost under absorption costingUnder absorption costing, fixed manufacturing costs are allocated to units produced, affecting per-unit cost calculations. However, this is an accounting treatment rather than the core purpose of fixed manufacturing costs.
IIA’s Global Internal Audit Standards – Managing Resources Effectively
Fixed manufacturing costs ensure operational resources are available and managed efficiently.
IIA’s Guide on Cost Management and Internal Control
Highlights the role of cost structures, including fixed costs, in ensuring business continuity.
IIA’s Practice Advisory on Cost Accounting Controls
Discusses the importance of maintaining production facilities to ensure operational readiness.
Breakdown of Answer Choices:IIA References and Internal Auditing Standards:Would you like further clarification on any point?

NO.29 Based on the Year 2 year-end balance of accounts receivable and the Year 2 income statement, the company had an average collection period for Year 2 of:

49 days.

52 days

73 days.

78 days.

NO.30 The measurement basis most often used to report a long-term payable representing a commitment to pay money at a determinable future date is:

Historical cost.

Current cost.

Net realizable value

Present value of future cash flows.

NO.31 If bonds are sold at a discount and the effective interest method of amortization is used, interest expense will:

Increase from one period to another.

Remain constant from one period to another.

Equal the cash interest payment each period.

Be less than the cash interest payment each period.

NO.32 During a review of a web-based application used by customers to check the status of their bank accounts, it would be most important for the internal auditor to ensure that:

Access to read application logs is restricted to authorized users.

Account balance information is encrypted in the database.

The web server used to host the application is located in a physically secure area.

Sensitive data, such as account numbers, are submitted using encrypted communications.

NO.33 The management of working capital is most crucial for which of the following aspects of business?

Liquidity

Profitability

Solvency

Efficiency

NO.34 A controller became aware that a competitor appeared to have access to the company’s pricing information. The internal auditor determined that the leak of information was occurring during the electronic transmission of data from branch offices to the head office.
Which of the following controls would be most effective in preventing the leak of information?

Asynchronous transmission.

Encryption.

Use of fiber-optic transmission lines.

Use of passwords.