Internal audit teams must collectively possess audit and fraud investigation skills to perform fraud engagements, though not every member needs previous experience. Learn best practices for staffing fraud audits.
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Question
An internal audit activity uncovered a potential fraud during a recent engagement and will perform an investigative fraud audit. How would the internal audit activity demonstrate that the team has the necessary experience to perform this engagement?
A. The team must consist of internal auditors who have previous fraud auditing experience and possess a certification in fraud examination.
B. The internal audit activity must outsource the engagement to an independent, qualified consulting firm specializing in fraud investigations.
C. The team must collectively possess the necessary audit and fraud skills, although not every member of the team would need previous experience conducting an investigation.
D. The team should include at least one individual in the area of the suspected fraud to provide valuable advice, due to their familiarity with the business processes, although it is not required.
Answer
According to IIA standards, the best answer is:
C. The team must collectively possess the necessary audit and fraud skills, although not every member of the team would need previous experience conducting an investigation.
Explanation
The IIA Standards state that internal auditors must collectively possess the knowledge, skills, and competencies needed to perform their responsibilities, but do not require that each internal auditor possesses all the required competencies.
For a fraud investigation, it’s important that the audit team as a whole has a mix of both general audit skills as well as specialized fraud examination knowledge and techniques. However, as long as those skills exist collectively within the team, it’s not mandatory for every single team member to have direct prior experience with fraud audits and investigations.
Having the entire team composed of certified fraud examiners with investigation experience (Choice A) is not required. Completely outsourcing to a consulting firm (Choice B) is not necessary if the internal team has the right collective skill set. And while having a team member familiar with the area of the suspected fraud (Choice D) could be very helpful, it’s not an absolute requirement per the standards.
The key is for the Chief Audit Executive to ensure that between the various internal auditors assigned, the team collectively covers all the bases needed to capably perform the fraud investigation engagement. Let me know if you need any clarification or have additional questions!
IIA-CIA-Part1 certification exam assessment practice question and answer (Q&A) dump including multiple choice questions (MCQ) and objective type questions, with detail explanation and reference available free, helpful to pass the IIA-CIA-Part1 exam and earn IIA-CIA-Part1 certification.