Certified Internal Auditor (CIA) Part 3: Business Knowledge for Internal Auditing — Question 6

An organization facing rapid growth decides to employ a third party service provider to manage its customer relationship management function. Which of the following is true regarding the supporting application software used by that provider compared to an in-house developed system?
1. Updating documentation is always a priority.
2. System availability is usually more reliable.
3. Data security risks are lower.
4. Overall system costs are lower.

Answer options

Correct answer: C

Explanation

The correct answer is C, as third-party service providers often benefit from economies of scale, leading to lower overall system costs and usually more reliable system availability due to their dedicated resources. In contrast, the other options incorrectly assert that documentation updates and data security risks are consistently managed better in third-party solutions, which may not always be the case.