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Question 227 - IIA-CIA-Part2 discussion

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An internal auditor s testing tor proper authorization of contracts and finds that the rate of deviations discovered in the sample is equal to the tolerable deviation rate. When of the following is the most appropriate conclusion for the internal auditor to make based on this result?

A.
The internal auditor concludes that management may be placing undue reliance on me specified control
Answers
A.
The internal auditor concludes that management may be placing undue reliance on me specified control
B.
The internal auditor concludes that the specified control is more effective than it really is.
Answers
B.
The internal auditor concludes that the specified control is more effective than it really is.
C.
The internal auditor concludes that the specified control is acceptably effective
Answers
C.
The internal auditor concludes that the specified control is acceptably effective
D.
The internal auditor concludes that additional testing will be required to evaluate the specified control
Answers
D.
The internal auditor concludes that additional testing will be required to evaluate the specified control
Suggested answer: C

Explanation:

When the rate of deviations discovered in the sample equals the tolerable deviation rate, it means that the control is functioning at the level deemed acceptable by the auditor's predefined criteria. This does not necessarily imply that the control is flawless, but rather that its effectiveness meets the minimum standards set by the audit plan. Therefore, the internal auditor can conclude that the control is acceptably effective, but should also note the potential need for improvement.

Reference:

The Institute of Internal Auditors (IIA) - Standards for the Professional Practice of Internal Auditing, Standard 2320 - Analysis and Evaluation

COSO Framework - Control Activities

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asked 18/09/2024
Jesse Serrano
37 questions
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