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How should an internal auditor approach preparing a detailed risk assessment during engagement planning?
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Question 205 - IIA-CIA-Part2 discussion

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An internal auditor at a bank informed the branch manager of a malfunctioning lock on one of the vaults. The risk associated with this issue was deemed significant by the chief audit executive (CAE), and immediate remediation was recommended However during a follow-up engagement the branch manager told the CAE that the risk was actually not significant, hence no action was taken. What is the most appropriate next step for the CAE?

A.
Inform senior management that the branch manager deeded to cancel the committed action plan without any previous communication
Answers
A.
Inform senior management that the branch manager deeded to cancel the committed action plan without any previous communication
B.
Discuss the issue with the board which has ultimate responsibility to resolve the risk
Answers
B.
Discuss the issue with the board which has ultimate responsibility to resolve the risk
C.
Have another discussion with the branch manager attempt to change his view, and encourage him to movement the recommendations
Answers
C.
Have another discussion with the branch manager attempt to change his view, and encourage him to movement the recommendations
D.
Document the branch manager's decision to accept the risk otherwise, no other speak: course of action is required.
Answers
D.
Document the branch manager's decision to accept the risk otherwise, no other speak: course of action is required.
Suggested answer: B

Explanation:

If the branch manager decides not to act on a significant risk that was previously acknowledged, the CAE should escalate the issue to the board. The board has ultimate responsibility for risk management and needs to be informed about significant risks and the decisions made by management regarding these risks. This ensures transparency and allows the board to take appropriate action if necessary.

The Institute of Internal Auditors (IIA) Standards

Risk Management Frameworks and Reporting

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asked 18/09/2024
Quintin van Rooyen
44 questions
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