Exam IIA-CIA-Part2 topic 5 question 144 discussion

Actual exam question from IIA's IIA-CIA-Part2

Question #: 144
Topic #: 5

At a construction company, an internal auditor is planning an audit of the company's process for designing and building grid connections. The process involves customers making payments in three parts:

- The first payment of 10% after approval of the customer's application.
- The second payment of 70% prior to construction.
- The third payment of 20% after construction is complete.

Which of the following key controls should the auditor test to ensure that the company is not taking any unwanted credit risks?

A. Controls that ensure that grid connection design is finalized before construction is approved to begin.
B. Controls that ensure construction orders are initiated after the second invoice is paid.
C. Controls that ensure all three invoices are calculated correctly according to the total project cost.
D. Controls that ensure that applications are verified for approval prior to initiating design and construction.

Show Suggested Answer

Suggested Answer: B 🗳️

by emtofid at Sept. 9, 2024, 1:36 p.m.

Comments

Submit Cancel

emtofid

8 months ago

Selected Answer: B

To mitigate credit risk, the company should ensure that construction only begins after the second payment (70%) is received. This ensures that the majority of the project cost is covered before significant work is done, reducing the risk of customers failing to pay after the construction has begun. A and D are related to project planning and approval but do not directly address credit risk. C relates to ensuring correct invoicing but does not focus on the timing of payments or preventing credit risk.

upvoted 3 times

...

Exam IIA-CIA-Part2 All Questions

View all questions & answers for the IIA-CIA-Part2 exam

Exam IIA-CIA-Part2 topic 5 question 144 discussion

Comments

emtofid

SY0-701