Certified Internal Auditor (CIA) Part 2: Practice of Internal Auditing — Question 262

During an assurance engagement, it was discovered that cooling water from production facilities was being pumped to a local lake without being filtered. Local management acknowledged the environmental violation, claimed it was an accident, and committed to an immediate response. A few weeks later, the chief audit executive (CAE) received an anonymous call and learned that nothing had changed at the production site. Which of the following is the most appropriate next step for the CAE to take?

Answer options

• A. Ensure that a follow-up audit engagement is included in the next annual internal audit plan.
• B. Escalate the issue to the board, as it is an intolerable environmental risk.
• C. Request local management to demonstrate outcomes of corrective actions.
• D. Investigate whether it is possible to identify the anonymous whistleblower for more questioning.

Correct answer: C

Explanation

The correct answer is C because the CAE should first seek evidence of corrective actions from local management to verify their claims of addressing the issue. Options A and B, while important, do not directly address the immediate need for verification of corrective actions, and option D could compromise the whistleblower's anonymity and may not be appropriate in this context.