IIA-CIA-Part1 Exam - Topic 10 Question 69 Discussion

Actual exam question for IIA's IIA-CIA-Part1 exam

Question #: 69
Topic #: 10

Which of the following circumstances would most likely be considered a potential red flag for fraud by the internal audit activity?

AThe monthly payroll reports are not vetted to ensure terminated employees have been removed from the payroll system.

BThe volume of nonroutine journal entries has steadily increased over time.

CThe database of approved suppliers has not been reviewed in the last year.

DThe recent employee survey indicates that some employees remain unaware of the organization's whistleblower hotline.

Show Suggested Answer

Suggested Answer: B

An increase in nonroutine journal entries is a classic red flag for potential fraud, as such entries may be used to adjust financials inappropriately. IIA guidance identifies unusual patterns in financial transactions as significant indicators of potential fraud risks.

by Kanisha at Jan 27, 2025, 05:33 PM

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Cordell

3 months ago

Wait, how can people not know about the whistleblower hotline? That's surprising!

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Gregoria

4 months ago

D? Really? Not knowing about a hotline seems minor to me.

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Kasandra

4 months ago

C is a problem, suppliers need regular checks to avoid kickbacks.

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Erasmo

4 months ago

B seems suspicious too, increasing nonroutine entries can hide fraud.

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Maybelle

4 months ago

A is definitely a red flag! Terminated employees should be off the payroll.

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Vi

4 months ago

D seems less about fraud and more about employee awareness, but I guess if people don't know about the hotline, it could lead to unreported issues.

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Melodie

5 months ago

I feel like C might be a concern too, but I can't recall if not reviewing suppliers is a major fraud risk.

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Herminia

5 months ago

I'm not entirely sure, but I think B about the increase in nonroutine journal entries could indicate manipulation. It sounds familiar from our practice questions.

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Katie

5 months ago

I remember discussing how unvetted payroll reports could lead to ghost employees, so A seems like a strong red flag for fraud.

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Leslee

5 months ago

I'm a bit unsure about this one. The options all seem plausible, but I'm not sure which one would be the top priority for the internal audit team. I'll need to carefully weigh the implications of each scenario and try to put myself in the auditors' shoes.

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Bo

5 months ago

Ah, this is right up my alley! I've studied fraud detection extensively, so I'm confident I can identify the best answer here. I'll apply my knowledge of common fraud schemes and internal control weaknesses to select the most appropriate option.

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Brandee

5 months ago

Hmm, this is a tricky one. I'll need to really think through the different scenarios and consider which one would be the biggest warning sign for the auditors. The wording of the options is quite specific, so I'll need to pay close attention.

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Corazon

5 months ago

This seems like a straightforward question about potential fraud red flags. I'll carefully review each option and think about the key indicators of fraud that the internal audit team would be looking for.

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King

1 year ago

B all the way! Nonroutine journal entries? That's like a highway sign for fraud, flashing 'COME TAKE A LOOK HERE!'

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Ryan

11 months ago

D) The recent employee survey indicates that some employees remain unaware of the organization's whistleblower hotline.

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Dewitt

12 months ago

C) The database of approved suppliers has not been reviewed in the last year.

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Bok

12 months ago

B) The volume of nonroutine journal entries has steadily increased over time.

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Eladia

1 year ago

A) The monthly payroll reports are not vetted to ensure terminated employees have been removed from the payroll system.

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Candida

1 year ago

I think option D is a red flag too, lack of awareness of whistleblower hotline can lead to unreported fraud.

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Mitsue

1 year ago

D sounds a bit like a trick question. Even if employees don't know about the whistleblower hotline, that doesn't necessarily mean fraud is happening. Still, it's a good idea to promote that hotline more.

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Nan

1 year ago

Hmm, I'm going with C. An outdated approved supplier database could mean shady deals with unapproved vendors. Better keep an eye on that.

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Lottie

1 year ago

I'd say A is the most concerning. Allowing terminated employees to remain on the payroll is just asking for trouble. That's a major vulnerability that needs to be addressed.

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Avery

12 months ago

D) The recent employee survey indicates that some employees remain unaware of the organization's whistleblower hotline.

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Alton

1 year ago

C) The database of approved suppliers has not been reviewed in the last year.

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Kattie

1 year ago

B) The volume of nonroutine journal entries has steadily increased over time.

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Adolph

1 year ago

A) The monthly payroll reports are not vetted to ensure terminated employees have been removed from the payroll system.

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Teresita

1 year ago

I believe option A is also important, ensuring terminated employees are removed from payroll is crucial.

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Lavonna

1 year ago

I agree with Jettie, increasing nonroutine journal entries could indicate manipulation.

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Lenna

1 year ago

Definitely B. The increase in nonroutine journal entries is a classic sign of potential fraud. It's a red flag that needs to be investigated thoroughly.

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