Sure Pass Exam IIA-CIA-Part3 PDF

Understanding The IIA’s Three Lines Model:

The Three Lines Model defines responsibilities for risk management and control across different organizational functions:

First Line: Operational management (owns and manages risks).

Second Line: Risk and compliance functions (monitors and facilitates risk management).

Third Line: Internal audit (provides independent assurance).

Why Third-Party and Supplier Assessments Are Shared Across All Three Lines:

First Line (Operational Teams & IT Security): Ensures that vendors comply with security standards.

Second Line (Risk & Compliance Teams): Conducts due diligence and ensures compliance with cybersecurity regulations.

Third Line (Internal Audit): Independently evaluates supplier risk management processes.

Why Other Options Are Less Relevant:

B. Recruitment and retention of certified IT talent – Primarily a first-line management responsibility (HR and IT departments).

C. Classification of data and design of access privileges – Typically a first-line IT security function, with oversight from the second line.

D. Creation and maintenance of secure network configurations – Falls under first-line IT operations with oversight but not shared by all three lines.

IIA’s Three Lines Model (2020 Update): Emphasizes shared responsibilities in areas like third-party risk.

IIA Practice Guide on Third-Party Risk Management: Internal audit must assess supplier security and compliance.

COSO ERM Framework: Highlights vendor risk management as a cross-functional responsibility.

Relevant IIA References:✅ Final Answer: Assessments of third parties and suppliers (Option A).

Capital budgeting techniques help organizations evaluate long-term investment decisions by assessing future cash flows and their present value. A present value of an annuity table is commonly used in methods that involve discounted cash flows over multiple periods.

Let's analyze the options:

A. Cash payback technique.

Incorrect. The payback period simply calculates the time needed to recover an investment and does not use discounting or present value tables.

B. Discounted cash flow technique: net present value (NPV).

Incorrect. While NPV involves discounting future cash flows, it does not specifically rely on the present value of an annuity table. Instead, NPV uses individual present values of cash flows at a specific discount rate.

C. Annual rate of return.

Incorrect. This method calculates return on investment based on accounting numbers and does not involve discounting future cash flows.

D. Discounted cash flow technique: internal rate of return (IRR). ✅ (Correct Answer)

Correct. The IRR method determines the discount rate that equates the present value of cash inflows to the initial investment (i.e., NPV = 0).

The present value of an annuity table is essential in IRR calculations, especially when future cash flows occur at regular intervals.

IRR is widely used in capital budgeting to compare different investment opportunities.

IIA GTAG (Global Technology Audit Guide) – Auditing Capital Budgeting Decisions – Discusses techniques used for investment evaluation.

COSO ERM Framework – Financial Decision-Making – Covers capital budgeting risks and techniques.

GAAP & IFRS – Investment Decision Guidelines – Explains the importance of present value calculations in investment evaluations.

IIA Standard 2130 – Control Over Capital Investments – Focuses on internal audit’s role in assessing capital budgeting techniques.

IIA References:

A Value-Added Network (VAN) is a private, third-party managed network that provides secure electronic data interchange (EDI) and other communication services between business partners. VANs offer enhanced security, reliability, and efficiency in transmitting business-critical data, making them ideal for companies engaged in manufacturing and distribution that require secure and structured communication channels with trading partners.

Secure Network for Business Partners: The scenario describes a network that facilitates EDI between a company and its trading partners. A VAN specializes in providing secure and structured business communications.

Enhanced Efficiency and Customer Service: VANs streamline business operations by reducing transaction errors, improving order fulfillment, and increasing operational efficiencies.

Third-Party Management: Unlike traditional internal networks, VANs are managed by external service providers that offer additional security, compliance, and encryption measures.

Alignment with Internal Auditing Standards: The IIA emphasizes the importance of secure and reliable communication networks in governance, risk management, and internal controls. Secure data exchanges through a VAN mitigate risks associated with unauthorized access and data breaches.

B. A Local Area Network (LAN): LANs are confined to a limited geographical area, such as an office or a factory, and are used for internal communication rather than secure external partner communication.

C. A Metropolitan Area Network (MAN): MANs connect multiple LANs within a city or a metropolitan region but are not specifically designed for business-to-business data exchange.

D. A Wide Area Network (WAN): While WANs connect geographically dispersed networks, they do not inherently provide the secure, structured EDI services that a VAN does.

IIA Standard 2110 - Governance: Emphasizes the importance of IT governance and secure communication channels in protecting business data.

IIA Standard 2120 - Risk Management: Highlights the need for secure data transmission to mitigate cyber risks.

IIA Standard 2201 - Planning the Engagement: Requires auditors to assess IT infrastructure, including networks used for business operations.

COBIT Framework (Control Objectives for Information and Related Technologies): Supports the use of secure, managed networks like VANs for business data exchange.

Key Reasons Why Option A is Correct:Why Other Options Are Incorrect:IIA References:Thus, the correct answer is A. A Value-Added Network (VAN).

In project integration management, the coordination of technical and organizational interfaces typically occurs during the Project Plan Execution phase. At this stage, project managers and teams work together to:

Implement the project plan.

Manage interdependencies between technical and business processes.

Ensure all project components are aligned.

Coordinate different stakeholders, vendors, and internal teams.

(A) Project plan development:

This phase involves defining objectives, scope, timelines, and resource allocation but does not focus on coordination of interfaces.

(B) Project plan execution (Correct Answer):

This phase involves implementing the project and actively managing its technical and organizational interfaces, making it the correct answer.

(C) Integrated change control:

This process ensures that project changes are properly managed, but it does not focus on initial coordination of interfaces.

(D) Project quality planning:

This phase focuses on setting quality standards and criteria, but not on the integration of technical and organizational interfaces.

IIA Practice Guide: Auditing Projects – Highlights that project execution is where coordination across different teams and stakeholders is critical.

PMBOK Guide (Project Management Body of Knowledge) – States that integration management during execution ensures that all elements of the project work together effectively.

COSO ERM Framework – Supports the alignment of business processes and technical execution as part of risk management.

Analysis of Each Option:IIA References:Conclusion:Since technical and organizational coordination is essential during project execution, option (B) is the correct answer.