Certified Internal Auditor (CIA) Part 1: Business Acumen — Question 55

An organization has a policy requiring two signatures on all checks written for amounts in excess of $10, 000. When evaluating controls over disbursements, an auditor would conclude that a greater risk exists if.

Answer options

• A. The auditor located two checks for $9, 000 each that contained one authorized signature.
• B. The $10, 000 was an immaterial amount to the organization and very few cash disbursements required an amount in excess of $10, 000.
• C. The director of accounting was not one of the authorized signers.
• D. There were several instances in which successively numbered checks for amounts between $5, 000 and $10, 000 were made payable to the same vendor.

Correct answer: D

Explanation

Option D indicates a pattern that could suggest potential fraud or manipulation, as it raises concerns over the control measures in place for disbursements. Options A and C do not indicate a systemic risk, while option B implies that the amount is not significant enough to warrant concern, thus presenting lower risk levels.