Certified Internal Auditor (CIA) Part 1: Business Acumen — Question 142

An internal auditor is finalizing an audit report on the effectiveness of the organization's overall system of internal control. Several audit tests were performed, and the only issue identified was that the CEO frequently asks employees to make exceptions or bypass the organization's standard written policies and procedures. Which of the following conclusions is most appropriate for the auditor to report?

Answer options

• A. The auditor should indicate that the system of internal control is not effective.
• B. The auditor should indicate that the system of internal control is generally effective, except for the minor issue identified.
• C. The auditor should indicate that the system of internal control is effective.
• D. The auditor cannot express a conclusive opinion in the audit report.

Correct answer: A

Explanation

The correct answer is A, as the CEO's frequent requests to bypass established policies indicate a significant weakness in the internal control system, impacting its overall effectiveness. Options B and C incorrectly downplay the severity of the issue by suggesting the system is effective or generally effective, which is not accurate given the circumstances. Option D is also incorrect because the auditor can still provide a conclusive opinion, albeit a negative one.