Certified Internal Auditor (CIA) Part 1: Business Acumen — Question 109

A whistleblower notified internal audit of a conflict of interest between an organization’s employee and a major supplier. Which of the following steps should be undertaken first?

Answer options

• A. Interview the employee identified by the whistleblower.
• B. Attain an understanding of the employee’s role, responsibilities, and relationship with the supplier.
• C. Notify senior management, the board, and the external auditor about the alleged fraud.
• D. Review all the orders issued to the supplier to investigate potential fraud.

Correct answer: B

Explanation

The correct initial step is to attain an understanding of the employee’s role, responsibilities, and relationship with the supplier, as this provides the necessary context for any further actions. Interviewing the employee (A) or notifying management and auditors (C) without first understanding the situation may lead to premature conclusions. Reviewing orders (D) might be necessary later, but understanding the context is crucial first.