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Question 597 - IIA-CIA-Part1 discussion

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The same internal auditor has audited the regional purchasing department annually for the last three years. The audits have shown several significant control deficiencies that have not been corrected by management. New management is in charge of this regional purchasing department, and it is time to audit the department again. What concerns should be considered prior to assigning the audit to the same auditor?

A.

Intimidation threats may compromise the auditor's objectivity due to multiple negative audit reports completed by the auditor.

Answers
A.

Intimidation threats may compromise the auditor's objectivity due to multiple negative audit reports completed by the auditor.

B.

The auditor has reviewed the department annually for the last three years, leading to familiarity, which can impact the internal audit activity's independence.

Answers
B.

The auditor has reviewed the department annually for the last three years, leading to familiarity, which can impact the internal audit activity's independence.

C.

A negative cognitive bias may be in place that affects the employee's objectivity due to the recent audits with uncorrected control deficiencies.

Answers
C.

A negative cognitive bias may be in place that affects the employee's objectivity due to the recent audits with uncorrected control deficiencies.

D.

The auditor may have formed a cultural bias, as the department under review is in the auditor's geographic area.

Answers
D.

The auditor may have formed a cultural bias, as the department under review is in the auditor's geographic area.

Suggested answer: B

Explanation:

When an internal auditor has audited the same department repeatedly, familiarity threat is a significant concern. The IIA Standards emphasize maintaining objectivity and avoiding circumstances that could impair the auditor's unbiased attitude. Auditing the same department annually for several years can lead to familiarity, which can compromise the internal audit activity's independence and objectivity (Option B). According to Standard 1130: Impairment to Independence or Objectivity, auditors must avoid auditing areas where repeated engagements might lead to a lack of objectivity due to familiarity.

Reference:

IIA Standards, Standard 1130: Impairment to Independence or Objectivity

IIA Practice Guide: Independence and Objectivity

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asked 03/11/2024
Aaron Ford Jr
46 questions
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