IIA Exam IIA-CIA-Part2 Topic 4 Question 88 Discussion

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

Question #: 88
Topic #: 4

An internal audit activity has to confirm the validity of the activities reported by a grantee that received a charitable contribution from the organization. Which of the following methods would best help meet this objective?

AVisiting the grantee to assess whether the execution of the project was in line with the defined grant scope.

BVerifying that the grantee's final report is in line with what was depicted in the initial budget request.

CReconciling general ledger accounts used by management of the area under review for reflecting expenses on charitable contributions.

DInterviewing employees of the corporate affairs department, which is responsible for charitable activities.
by a grantee that received a charitable contribution, the most effective method is to visit the grantee and directly assess whether the project execution aligns with the scope defined in the grant. This method provides firsthand evidence of the grantee's activities and ensures that the charitable contributions are used as intended.
Detailed Explanation:
IIA Standard 2310 -- Identifying Information:
This standard requires that internal auditors gather sufficient, reliable, relevant, and useful information to achieve the engagement objectives. Visiting the grantee allows auditors to observe and verify the actual execution of the project, which provides the most direct and reliable evidence.
Field Visits:
Conducting a site visit enables auditors to see the project in action, interview relevant personnel, and compare actual activities to what was promised in the grant proposal. This method helps ensure that the grantee is fulfilling its obligations and that the organization's charitable funds are being used effectively.
Direct Evidence:
Direct observation of the grantee's activities provides the highest level of assurance regarding the validity of the reported activities. This aligns with IIA's emphasis on obtaining the best available evidence to support audit findings.
Why Not Other Options?
Option B (Verifying final report vs. initial budget): This only compares reports, which might not accurately reflect the actual activities conducted by the grantee.
Option C (Reconciling general ledger accounts): This focuses on financial records, which may not provide sufficient detail about the actual activities conducted.
Option D (Interviewing corporate affairs employees): While informative, this method only provides secondhand information and does not directly verify the grantee's activities.
Conclusion: Option A is correct because visiting the grantee provides the most reliable and direct evidence that the activities are in line with the grant's defined scope, ensuring the validity of the grantee's reported activities.

Show Suggested Answer

Suggested Answer: A

by Dean at Sep 12, 2024, 09:16 PM

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Kiley

2 months ago

I mean, why would you not want to see the project in action? Visiting the grantee is like going on a field trip, but with a purpose - and a lot less juice boxes.

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3 months ago

Visiting the grantee is definitely the way to go! You can't just rely on financial records or secondhand information. Gotta get out there and see it for yourself.

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Alethea

2 months ago

Direct observation provides the highest level of assurance regarding the validity of reported activities.

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Charlie

2 months ago

Visiting the grantee allows auditors to observe and verify the actual execution of the project.

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Cruz

2 months ago

I agree. It's important to ensure that charitable contributions are being used as intended.

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Sarah

3 months ago

Absolutely! Visiting the grantee gives you firsthand evidence of their activities.

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Rodolfo

3 months ago

I think the best method is to visit the grantee and assess the project execution.

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