Exam IIA-CIA-Part1 topic 6 question 137 discussion

Actual exam question from IIA's IIA-CIA-Part1

Question #: 137
Topic #: 6

During the annual fraud risk assessment, an organization identified that an employee in the accounts payable department has the ability to both enter a new vendor into the system and process payments to the vendor. Which of the following is a preventative control that an auditor would propose to reduce the risk in this scenario?

A. New vendors may only be added into the vendor management system by employees in the procurement department.
B. Vendor payments may only be processed by employees in the accounts payable department.
C. An anonymous employee hotline is established for employees to report any suspicious activity they witness regarding payments to vendors.
D. The vendor management system activity log is reviewed by management on a weekly basis for suspicious transactions.

Show Suggested Answer

Suggested Answer: B 🗳️

by Carrie888 at Sept. 4, 2023, 11:31 p.m.

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Carrie888

Highly Voted 1 year, 11 months ago

why not A????

upvoted 6 times

f30b972

11 months, 3 weeks ago

Because vendors shouldn’t be set up by procurement. That would allow procurement to place orders to potentially fake vendors whom may submit fake invoices that AP will process.

upvoted 1 times

umlaww1987

8 months, 2 weeks ago

But the option B seems to the scenario without any difference. The question already mentioned that the vendor payment is processed by an employee in account payable department.

upvoted 2 times

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Kozy

Most Recent 1 month ago

Selected Answer: A

The risk arises from inadequate segregation of duties, where the same employee can both: Add a new vendor, and Process payments to that vendor. This creates an opportunity for fraudulent vendor creation and payment processing. Preventative controls are designed to stop fraud before it occurs. In this case: Restricting vendor setup to a separate department (procurement) ensures no single employee can both create vendors and issue payments, reducing fraud risk through proper segregation of duties.

upvoted 1 times

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