Certified Internal Auditor (CIA) Part 2: Practice of Internal Auditing — Question 290

According to IIA guidance, which of the following factors should an internal auditor consider when assessing the likelihood of fraud risk?

Answer options

• A. The effect on the organization's reputation.
• B. Any potential damage to the organization's relationship with customers.
• C. Past fraud allegations and actual occurrences.
• D. The potential and realized financial impacts.

Correct answer: C

Explanation

The correct answer is C because understanding the history of fraud allegations and incidents provides insight into potential vulnerabilities within the organization. Options A and B, while relevant to the overall risk environment, do not directly assess the likelihood of fraud. Option D focuses on financial impacts, which are outcomes rather than indicators of fraud risk.