Question

Which of the following is an appropriate conclusion that can be drawn when

the internal auditor identifies an observation from testing controls?
a. The process objectives cannot be achieved.
b. The area may be vulnerable to fraud.
c. Certain risks are not effectively mitigated.
d. Overall, the process is not operating effectively.

Answer 1

An appropriate conclusion that can be drawn when the internal auditor identifies an observation from testing controls is that the area may be vulnerable to fraud.

Step-by-step explanation:

An appropriate conclusion that can be drawn when the internal auditor identifies an observation from testing controls is that the area may be vulnerable to fraud.

When the internal auditor identifies an observation from testing controls, it indicates that there may be weaknesses or gaps in the control procedures. These weaknesses can create opportunities for fraudulent activities to occur. Therefore, the conclusion that the area may be vulnerable to fraud is appropriate.

For example, if the internal auditor identifies a lack of segregation of duties in the control procedures, it means that one person has too much control over a certain process. This can increase the risk of fraud as the person with excessive control can manipulate the process to their advantage.