Discover the key considerations for assembling an engagement team to audit a vendor, including the expertise and independence required. CIA exam prep from a certified professional.
Table of Contents
Question
An engagement team is being assembled to audit of one of the organization’s vendors. Which of the following statements best applies to this scenario?
A. The engagement team should include internal auditors who have expertise in investigating vendor fraud.
B. The engagement team should be comprised of certified accountants who are proficient in financial statement analysis and local accounting principles.
C. To preserve independence and objectivity, an auditor who worked for the vendor two years prior may not participate on the engagement team.
D. The engagement team may include an auditor who lacks knowledge of the industry in which the vendor operates.
Answer
When assembling an engagement team to audit one of the organization’s vendors, the best approach is:
D. The engagement team may include an auditor who lacks knowledge of the industry in which the vendor operates.
Explanation
The key considerations when putting together the audit team are:
- Relevant expertise: The team should have auditors with skills and knowledge pertinent to auditing the specific vendor, such as experience with the vendor’s systems, processes, and risks. However, deep industry expertise is not an absolute requirement.
- Independence and objectivity: Auditors must be independent of the vendor being audited. An auditor who worked for the vendor two years ago would likely still be permitted on the team, as long as they have no other conflicts of interest that could impair their objectivity. Most standards consider employment from over a year ago to no longer be an independence issue.
- Well-rounded skillset: While investigative skills related to vendor fraud and knowledge of financial statement analysis/accounting principles can be valuable, they are not the primary factors in assembling the team for a routine vendor audit. The team should have a balanced set of audit skills.
Therefore, while industry knowledge is beneficial, it is not an absolute necessity and an auditor lacking industry expertise can still add value to the vendor audit engagement. The team should be assembled based on having relevant audit skills, being independent of the vendor, and having a mix of complementary abilities.
IIA-CIA-Part2 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-Part2 exam and earn IIA-CIA-Part2 certification.