Helping Hand Questions for IIA-CIA-Part1

Data analytics provides the most effective procedure for identifying potential employee-owned vendors because information from the vendor master file can be compared against employee records. Matching vendor addresses, bank accounts, telephone numbers, tax identifiers, or other attributes to employee data may identify undisclosed relationships and suspicious payments. Reviewing approval documentation demonstrates whether payments were authorized but may not reveal that the vendor is owned by an employee. Interviews depend on personnel disclosing relevant information and are less effective for identifying concealed conflicts. Reviewing approval of vendor-master changes evaluates change controls but does not necessarily detect a vendor that was legitimately created while secretly connected to an employee. Therefore, matching vendor payment or master-file information against employee addresses through data analytics is the procedure most likely to identify the specified fraud risk.

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.

IIA Standards, Standard 1130: Impairment to Independence or Objectivity

IIA Practice Guide: Independence and Objectivity

When assessing fraud risks, internal auditors should first consider any prior fraud investigations related to the engagement. This approach helps in understanding the historical context of fraud within the organization and identifying patterns or recurring issues that need attention. Reviewing prior investigations (Option B) is a foundational step as it provides a basis for understanding past incidents and informs the assessment of current fraud risks. This is in line with the guidance provided by the IIA, which emphasizes understanding the history of fraud as a critical part of the risk assessment process.

IIA Practice Guide: Internal Auditing and Fraud

IIA Standards, Standard 1210.A2: Internal auditors must have sufficient knowledge to evaluate the risk of fraud

An example of an entity-level control pertaining to the finance area of an organization is " The establishment of a finance and audit committee. " This is a governance control that provides oversight of financial reporting, internal controls, and audit functions, and is designed to ensure integrity and accuracy in financial statements and compliance with laws and regulations.