Learn about the key type of risk internal auditors assess during a risk assessment according to IIA CIA Part 2 exam content. Boost your CIA exam prep with this concise explanation.
Table of Contents
Question
When internal auditors perform a risk assessment, they generally focus on which of the following types of risk?
A. Inherent risk.
B. Audit risk.
C. Detection risk.
D. Control risk.
Answer
When conducting a risk assessment, internal auditors primarily focus on inherent risk (choice A).
Explanation
Inherent risk refers to the natural level of risk in a process, system or environment if there were no controls in place. It represents the underlying susceptibility to error, loss, fraud or other adverse outcomes based on factors like the nature and complexity of the area being audited.
Internal auditors assess inherent risk to understand where the greatest threats lie so they can prioritize audit activities and recommend appropriate risk mitigation measures. Evaluating inherent risk is a key part of audit planning.
The other risk types mentioned are less of a focal point during the risk assessment phase:
- Audit risk (B) is the risk the audit fails to detect material issues
- Detection risk (C) is the risk audit procedures miss significant problems
- Control risk (D) is the risk controls fail to prevent or detect issues
So in summary, inherent risk (A) is the main type of risk internal auditors analyze when performing a risk assessment. Examining the fundamental risks allows auditors to target areas that most need their attention.
IIA-CIA-Part2 certification exam practice question and answer (Q&A) dump with detail explanation and reference available free, helpful to pass the IIA-CIA-Part2 exam and earn IIA-CIA-Part2 certification.