Certified Internal Auditor (CIA) Part 2: Practice of Internal Auditing — Question 55

Which characteristic of risk assessment makes it a useful tool for audit planning?

Answer options

• A. It provides a list of auditable activities in the organization.
• B. It ranks the severity of potentially adverse effects on the organization.
• C. It provides a process for identifying and analyzing potentially adverse effects.
• D. It evaluates the probability that an event or action may adversely affect the organization.

Correct answer: C

Explanation

The correct answer, C, highlights that risk assessment provides a structured approach to identify and evaluate potential adverse impacts, which is essential for effective audit planning. Options A, B, and D, while relevant to risk assessment, do not specifically address the process of identifying and analyzing effects, making them less useful for the purpose of audit planning.