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Question 584 - IIA-CIA-Part1 discussion

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An internal auditor assessed the controls within his organization's payroll process and suspects that erroneous payments may have been made to a fraudulent bank account. What is the best course of action for the auditor to take?

A.

Speak to the payroll manager so he may investigate the auditor's observations.

Answers
A.

Speak to the payroll manager so he may investigate the auditor's observations.

B.

Continue to investigate the payments to confirm the accuracy of the observations, and determine whether further fraudulent payments have been made.

Answers
B.

Continue to investigate the payments to confirm the accuracy of the observations, and determine whether further fraudulent payments have been made.

C.

Stop the audit and report the findings to senior management immediately.

Answers
C.

Stop the audit and report the findings to senior management immediately.

D.

Escalate the concern to the engagement supervisor.

Answers
D.

Escalate the concern to the engagement supervisor.

Suggested answer: D

Explanation:

When an internal auditor suspects fraudulent activity, such as erroneous payments to a fraudulent bank account, the appropriate course of action is to escalate the concern to the engagement supervisor (Option D). This step ensures that the issue is handled with the necessary urgency and oversight. According to the IIA Standards, particularly Standard 2060: Reporting to Senior Management and the Board, the CAE must communicate significant risk exposures and control issues, including fraud risks, to senior management and the board. Escalating the concern ensures the appropriate levels of the organization are aware and can take timely action.

Reference:

IIA Standards, Standard 2060: Reporting to Senior Management and the Board

IIA Practice Guide: Internal Auditing and Fraud

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asked 03/11/2024
Christopher Harden
46 questions
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