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Question 642 - IIA-CIA-Part1 discussion

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In a retail organization, sales teams compete with each other to achieve and exceed sales targets. Each quarter, the members of the top sales team receive a bonus. In this environment, management should closely monitor for the emergence of which of the following potential risks?

A.

Risks related to employee turnover.

Answers
A.

Risks related to employee turnover.

B.

Risks related to data manipulation.

Answers
B.

Risks related to data manipulation.

C.

Risks related to employee competency.

Answers
C.

Risks related to employee competency.

D.

Risks related to not achieving sales targets.

Answers
D.

Risks related to not achieving sales targets.

Suggested answer: B

Explanation:

In a competitive retail environment where sales teams are incentivized to meet or exceed targets, there is a significant risk of data manipulation. Employees may falsify sales records, inflate numbers, or engage in other unethical behaviors to ensure they receive bonuses. This is a common issue in environments with high stakes and rewards tied to performance metrics, as the pressure to succeed can lead individuals to manipulate data to appear more successful than they actually are. Therefore, management should closely monitor data integrity and implement strong controls to detect and prevent such manipulation.

Reference: The IIA's International Standards for the Professional Practice of Internal Auditing (Standards), specifically Standard 2120 - Risk Management, and COSO's Internal Control - Integrated Framework.

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asked 03/11/2024
Brett Tin
37 questions
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