Helping Hand Questions for IIA-CIA-Part2

Issuing an opinion on the overall effectiveness of internal control inherently carries the risk of increased audit risk and associated legal implications. This is because the opinion represents a high level of assurance, and any errors or omissions in the underlying audit work can lead to significant consequences, including potential legal liability. Therefore, auditors must be thorough and ensure that their conclusions are well-supported by the evidence obtained during the audit process.

References:

The Institute of Internal Auditors (IIA) Practice Guide: Forming an Opinion on the Overall Adequacy and Effectiveness of Internal Controls

IIA Standard 2400 - Communicating Results

The most effective step in helping the auditor determine whether fraud exists after observing a double payment transaction on a supplier invoice is to perform data analytics on the supplier's information, invoiced amounts, and payments performed. Data analytics allows the auditor to systematically analyze large volumes of transactions to identify patterns, anomalies, and potential fraudulent activities. This approach is more comprehensive and effective in uncovering fraud than simply extending the audit scope or switching to a fraud investigation engagement without a thorough initial analysis.

References:

IIA Standards: 1220.A1 - Due Professional Care

IIA Practice Guide: Auditing for Fraud