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IIA-CIA-Part2 Exam - Topic 8 Question 96 Discussion

Actual exam question for IIA's IIA-CIA-Part2 exam
Question #: 96
Topic #: 8
[All IIA-CIA-Part2 Questions]

While reviewing the organization's financial year-end processes, an internal auditor discovered an erroneous journal entry. If the error is not addressed, it will result in a material misstatement of the financial records. The internal auditor needs an additional four weeks to complete the audit engagement. How should the auditor communicate this finding?

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Suggested Answer: C

The correct approach aligns with the International Standards for the Professional Practice of Internal Auditing (Standards), particularly Standard 2400: Communicating Results. The auditor must promptly discuss material errors to prevent ongoing misstatements. Immediate correction ensures timely remediation and reduces the risk of material misstatement persisting in the financial records. Additionally, if the error is resolved before the engagement concludes, it may not necessitate inclusion in the final report, as per the guidance on handling material findings (Practice Advisory 2410-1). This approach also demonstrates collaboration and alignment with management, fostering trust.


by Alita at Jan 24, 2025, 01:07 AM

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Craig
3 months ago
Four weeks extra for an audit? That's a long time!
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Latosha
3 months ago
Wait, can they really just bypass management? That seems extreme!
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Fannie
4 months ago
Definitely need to discuss with accounting first.
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Laquanda
4 months ago
I disagree, the final report should highlight high-risk items.
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Alpha
4 months ago
Sounds like an interim report is the way to go.
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Tora
4 months ago
I doubt bypassing management is the right move. It seems extreme to report directly to authorities without giving management a chance to correct the error first.
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Delfina
4 months ago
I'm a bit uncertain about whether discussing the finding with accounting staff is enough. It seems risky to not include it in the final report if it’s a material misstatement.
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Paris
5 months ago
I think I saw a similar question where the auditor had to decide whether to report findings immediately or wait for the final report. I feel like option A might be the right choice since it addresses the issue sooner.
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Catarina
5 months ago
I remember we discussed the importance of timely communication in audits. Issuing an interim report seems like a good option, but I'm not entirely sure if that's the best approach here.
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Thaddeus
5 months ago
Whoa, bypassing management and reporting directly to regulators? That seems a bit extreme, unless there are some serious ethical concerns I'm missing.
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Aimee
5 months ago
Okay, I've got this. The auditor should issue an interim report to management before the final report, that way they can address the issue in a timely manner.
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Karan
5 months ago
Hmm, this is a tricky one. I'm not entirely sure which option is best, but I think I'll lean towards discussing it with the accounting staff first to see if they can correct it quickly.
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Loreta
5 months ago
This seems like a straightforward audit issue, but I'll need to carefully review the professional standards to determine the appropriate communication protocol.
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Jolanda
1 year ago
Oh, man, this is a real head-scratcher. I bet the accounting staff will try to bribe the auditor with donuts if they go with option C. 'Hey, we'll fix it, just don't tell anyone!'
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Dante
12 months ago
Yeah, that way they can correct the error immediately and avoid it being included in the audit report.
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Veronika
12 months ago
I think the auditor should go with option C and discuss the finding with the accounting staff.
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Dulce
1 year ago
Option D is a bit extreme, don't you think? Bypassing management and going straight to the authorities? That's just asking for trouble. I'd stick with the good ol' C approach.
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Stefany
12 months ago
Once the correction is made, there may not be a need to report it in the final audit.
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Gerald
12 months ago
It's important to address the error with the accounting staff first.
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Page
12 months ago
I think option C is the best approach in this situation.
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Mollie
1 year ago
I agree, option D seems too drastic.
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Katina
1 year ago
In that case, the auditor should report directly to regulatory authorities.
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Chara
1 year ago
But what if management tries to cover up the error?
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Olive
1 year ago
I'm torn between B and C. Ultimately, it's a material misstatement, so the auditor should probably include it in the report, but discreetly working with the staff to correct it first is the way to go.
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Katy
1 year ago
In that case, it might not need to be included in the report.
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Xochitl
1 year ago
True, but maybe they can correct it before the audit is concluded.
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Jerry
1 year ago
But if it's a high-risk item, shouldn't it be included in the final report?
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Refugia
1 year ago
I think discussing with the accounting staff first is a good idea.
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Isadora
1 year ago
Agreed, it's important to address the error internally before escalating it.
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Gracia
1 year ago
I think discussing it with the accounting staff first is a good idea.
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Kimberely
1 year ago
I agree with Lachelle, it's important to keep management informed.
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Lachelle
1 year ago
I think the auditor should issue an interim report to management.
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Emerson
1 year ago
Definitely go with option C. It's the most practical solution - work with the accounting staff to fix the issue right away, and no need to include it in the final report if it's resolved. Saves everyone a headache.
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Gerardo
1 year ago
Working with the accounting staff to correct the issue immediately is the most efficient way to handle this.
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Laila
1 year ago
It's important to address the error promptly to avoid any material misstatements in the financial records.
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Valentin
1 year ago
I agree, option C seems like the best course of action in this situation.
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