Certified Internal Auditor (CIA) Part 1: Business Acumen — Question 86

One of the goals of the finance department is to ensure payments are made to designated receivers only. For that purpose, the following controls are established:

• The first clerk enters data to initiate a payment transaction to the bank.
• The second clerk compares the payment data entered with the original invoice and ap-proves the disbursement.
• The third clerk prints bank statements weekly and compares them to invoices processed.

What should the internal auditor conclude?

Answer options

• A. The goal is achieved, because segregation of duties is established in the payment process.
• B. Unauthorized payments can be prevented due to reviews conducted by the third clerk.
• C. There seems to be a lack of controls in the invoice authorization process.
• D. The controls between the first and second clerk need to be strengthened.

Correct answer: C

Explanation

The correct answer is C because the description highlights a weakness in the invoice authorization process, which is essential for ensuring that only valid payments are made. Options A and B incorrectly suggest that existing controls are sufficient when they do not address the critical authorization step, and option D implies strengthening is needed without identifying the core issue of lack of controls.