Certified Internal Auditor (CIA) Part 2: Practice of Internal Auditing — Question 253

An internal auditor examined a nonstatistical sample of open accounts receivable balances and discovered that 10 out of 60 exceeded the approved, unsecured credit limit threshold defined by the organization's policy. What should the auditor document in the workpapers?

Answer options

• A. Credit limit overdrafts are not monitored in accordance with the organization's policy.
• B. Seventeen percent of customers' open balances in the sample exceed their approved, unsecured credit limit.
• C. The threshold for credit limits defined by the organization's policy is not adequate.
• D. Management should perform monthly monitoring of open customer balances.

Correct answer: B

Explanation

The correct answer, B, accurately reflects the findings from the sample, indicating that 17% of the accounts exceed the credit limit. Option A is incorrect as it does not address the specific findings, C misinterprets the adequacy of the threshold without evidence, and D suggests a proactive measure rather than documenting the current state of the accounts.