Certified Internal Auditor (CIA) Part 1: Business Acumen — Question 102

Which of the following actions by a chief audit executive would be most effective in preventing fraud?

Answer options

• A. Ensure that the board is aware of all fraud that has been identified or reported.
• B. Train the internal audit staff in identifying fraud indicators.
• C. Review the adequacy of all policies that describe prohibited activities.
• D. Submit an annual report to the board on all fraud that has been detected.

Correct answer: C

Explanation

Reviewing the adequacy of policies that outline prohibited activities is crucial because it ensures that the organization has clear guidelines to prevent fraud. While training staff and informing the board are important, they are reactive measures rather than proactive improvements to the policies themselves. Submitting annual reports does not prevent fraud but rather reports on it after the fact.