Exam IIA-CIA-Part1 topic 6 question 32 discussion

Actual exam question from IIA's IIA-CIA-Part1

Question #: 32
Topic #: 6

Forty-five percent of an organization's customer payments are submitted online. Eight percent of online payments are rejected. Executive management decides to outsource its online payment services to a contractor that will assume 75 percent of the total value of rejected payments. The organization estimates $1.25 million customer payments due during the contract period.
Which of the following represents the organization's residual risk for online customer payments due?

A. $11, 250
B. $25, 000
C. $33, 750
D. $45, 000

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Suggested Answer: A 🗳️

by koziolmutant at Jan. 2, 2021, 11:04 p.m.

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Kozy

1 month ago

Selected Answer: A

Total customer payments due: $1,250,000 Percentage of payments submitted online: 45% of $1,250,000 = $562,500 Rejection rate of online payments: 8% of $562,500 = $45,000 rejected payments Contractor assumes 75% of rejected payments risk: 75% of $45,000 = $33,750 covered by contractor Residual risk to the organization: $45,000 - $33,750 = $11,250

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koziolmutant

1 year, 1 month ago

why not c?

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koziolmutant

1 year, 1 month ago

probably it is 1.250.000 x0,45x0.08x0.25 (not 0,75 as it is remaining risk on the company side, not on the contractor side), am I right?

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