Certified Internal Auditor (CIA) Part 1: Business Acumen — Question 30

Forty-five percent of an organization's customer payments are submitted online. Eight percent of online payments are rejected. Executive management decides to outsource its online payment services to a contractor that will assume 75 percent of the total value of rejected payments. The organization estimates $1.25 million customer payments due during the contract period.
Which of the following represents the organization's residual risk for online customer payments due?

Answer options

Correct answer: A

Explanation

The correct answer is $11,250, which represents 8% of the 45% of the $1.25 million estimated customer payments, with the contractor covering 75% of the rejected payments. The other options are incorrect because they do not accurately calculate the residual risk based on the given percentages and total payment value.