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Exam IIA-CIA-Part1 topic 1 question 32 discussion

Actual exam question from IIA's IIA-CIA-Part1
Question #: 32
Topic #: 1
[All IIA-CIA-Part1 Questions]

During a payroll audit of a large organization, an auditor noted that the assistant personnel director is responsible for many aspects of the computerized payroll system, including adding new employees in the system; entering direct-deposit information for employees; approving and entering all payroll changes; and providing training for system users. After discussions with the director of personnel, the auditor concluded that the director was not comfortable dealing with information technology issues and felt obliged to support all actions taken by the assistant director. The auditor should:

  • A. Continue to follow the engagement program because the engagement scope and objectives have already been discussed with management.
  • B. Review the engagement program to ensure testing of direct deposits to employee bank accounts is adequately covered.
  • C. Recommend to the chief audit executive that a fraud investigation be started.
  • D. Test a sample of payroll changes to ensure that they were approved by the assistant director before being processed.
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Suggested Answer: B 🗳️
by AzeemIIA at March 7, 2021, 7 p.m.

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Mikoyan
2 days, 14 hours ago
Selected Answer: B
Initially I was confused by the options. I guess that's what the IIA is testing here. Option A is not valid as there is certainly additional considerations in light of the fact that the Director is depending on his Additional Director for technological issues (i.e. undocumented process is in effect) + SoD control ineffective; Option C is a bit more drastic as the auditor does not have any indication that a fraud has taken place. Option D: testing proper authorisation by the Associate Director is not going to solve the SoD problem. [Personally I am getting the feeling that the best strategy is process of elimination as the options listed are not what we generally thing/ experience in practice]. That leaves us with option B, as there is not adequate SoD, the next best alternative is to assess what we call "Checker-maker/ maker-payer" concept.
upvoted 1 times
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Elvoo
1 month, 3 weeks ago
Why is D false? Can someone please explain?
upvoted 1 times
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Mary1982
2 years, 8 months ago
My understanding as to why it is B is because there a red flag (Lack of Segregation of duties - Inappropriate combo of work). Have to perform additional work to ensure there is a possibility of fraud before requesting an investigation.
upvoted 3 times
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AzeemIIA
3 years, 4 months ago
how come the auditor is okay with the situation of single person doing multiple tasks related to one function.. and what's the logic behind Answer B
upvoted 1 times
TarekAlhakawati
3 years, 1 month ago
The auditor continued the engagement taking into consideration inappropriate combinations of job duties in order to make sure an investigation is needed or not
upvoted 4 times
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