IIA Exam IIA-CIA-Part1 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

Limited Time Offer

25%

Off

Get Premium IIA-CIA-Part1 Questions as Interactive Web-Based Practice Test or PDF

Contribute your Thoughts:

Submit Cancel

King

2 months ago

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

upvoted 0 times

Ryan

19 days ago

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

upvoted 0 times

...

Dewitt

24 days ago

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

upvoted 0 times

...

Bok

1 months ago

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

upvoted 0 times

...

Eladia

1 months ago

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

upvoted 0 times

...

Candida

2 months ago

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

upvoted 0 times

...

Mitsue

2 months 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.

upvoted 0 times

...

Nan

2 months 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Hmm, I'm going with C. An outdated approved supplier database could mean shady deals with unapproved vendors.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.

upvoted 0 times

...

Lottie

2 months 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.

upvoted 0 times

Avery

1 months ago

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

upvoted 0 times

...

Alton

1 months ago

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

upvoted 0 times

...

Kattie

1 months ago

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

upvoted 0 times

...

Adolph

2 months ago

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

upvoted 0 times

...

Teresita

2 months ago

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

upvoted 0 times

...

Lavonna

3 months ago

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

upvoted 0 times

...

Lenna

3 months 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.

upvoted 0 times