Certified Internal Auditor (CIA) Part 2: Practice of Internal Auditing — Question 118

A chief audit executive (CAE) determined that operational management did not address an open internal control issue, which creates a risk of material misstatement of the organization's financial statements. Which of the following is the best course of action for the CAE to take?

Answer options

• A. Immediately report the issue to the board.
• B. Take the necessary corrective action to address the issue.
• C. Escalate the issue to senior management.
• D. Inform the external auditors about the issue.

Correct answer: C

Explanation

The best action for the CAE is to escalate the issue to senior management, as they are responsible for operational oversight and can take appropriate action. Reporting to the board or informing external auditors may not lead to immediate resolution, and taking corrective action directly may overstep the CAE's role and responsibilities.