Certified Internal Auditor (CIA) Part 2: Practice of Internal Auditing — Question 183

According to the Standards, which of the following would least likely be considered a red flag when evaluating the risk for fraud?

Answer options

• A. Cash receipts appear to be lower than expected from an employee's cash drawer.
• B. Health benefits are detected to be claimed for a deceased employee.
• C. An employee did not approve an internal report detailing expenses for the month.
• D. It is alleged that an employee is receiving vendor kickbacks.

Correct answer: C

Explanation

Option C is the correct answer because not approving a report may indicate a lack of oversight but does not directly point to fraudulent activity. In contrast, options A, B, and D all present clear signs of potential fraud, such as discrepancies in cash receipts, improper claims for deceased employees, and suspicious vendor relationships.