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IIA Exam IIA-CHAL-QISA Topic 2 Question 15 Discussion

Actual exam question for IIA's IIA-CHAL-QISA exam
Question #: 15
Topic #: 2
[All IIA-CHAL-QISA Questions]

When taken by a chief audit executive, which of the following actions would be most likely to prevent division management from exaggerating sales reports

1. Announcing a series of internal audit engagements focusing on compliance with corporate sales-reporting policies.

2. Asking the president and the board to issue a statement of corporate policy stressing the importance of accurate management reporting and the negative consequences of intentional misreporting

3. Setting up a hotline for employees to report fraudulent behavior anonymously.

4. Assisting the controller in developing and monitoring a series of business process indicators, which are historically correlated with, but independent of. sales.

Show Suggested Answer Hide Answer
Suggested Answer: C

Corporate Policy Statement: Having the president and the board issue a statement stressing the importance of accurate management reporting and the negative consequences of intentional misreporting can help set a tone at the top. This reinforces the significance of ethical behavior and compliance with reporting policies across the organization.


Business Process Indicators: Assisting the controller in developing and monitoring business process indicators that are historically correlated with, but independent of, sales can provide an objective means to validate sales reports. This reduces the opportunity for management to exaggerate sales figures as these indicators can act as a control mechanism.

Other Options:

Internal Audit Engagements: While announcing a series of internal audit engagements (option 1) might deter some misreporting, it might not be as effective as a strong policy statement combined with objective monitoring indicators.

Hotline for Reporting Fraud: Setting up a hotline (option 3) is useful for detecting fraud but might not directly prevent exaggeration in sales reports as effectively as business process indicators.

by Annita at Sep 14, 2024, 11:40 PM

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Danica
24 days ago
Option 4 is a genius idea! Monitoring those business process indicators will really help catch any funny business with the sales numbers. Plus, it's probably more fun than reading through endless compliance reports.
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Shanice
22 hours ago
Option 4 sounds like a great way to keep an eye on things.
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Lasandra
27 days ago
Hmm, I'm not sure about the hotline. That seems like it might just open up a can of worms and lead to a lot of frivolous complaints. Let's stick to the more proactive options.
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Thad
18 days ago
1. I agree, setting up a hotline might create more problems than it solves.
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Corazon
1 months ago
I think setting up a hotline for anonymous reporting could also be effective in preventing fraudulent behavior.
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Jerry
1 months ago
I agree, announcing internal audit engagements and stressing the importance of accurate reporting would definitely deter management from misreporting.
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Brinda
1 months ago
I think option 1 and 2 would be the best choices to prevent exaggeration of sales reports.
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Boris
2 months ago
I agree with Mickie. Option 2 and 4 cover both the policy and the monitoring aspects, which are crucial in preventing exaggerated sales reports.
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Natalie
26 days ago
Yeah, it's important to have both a clear policy and monitoring in place to prevent misreporting.
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Loren
27 days ago
I think having a hotline for employees to report fraudulent behavior anonymously is important too.
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Goldie
1 months ago
Option 2 and 4 seem like a good combination to prevent exaggerating sales reports.
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Mickie
2 months ago
Option 2 and 4 seem like the most comprehensive approach to addressing the issue. Establishing a corporate policy and setting up independent indicators to monitor sales reporting is a smart move.
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Kattie
2 months ago
User 2
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Ma
2 months ago
User 1
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