IIA-CIA-PART1 · Question #132
In a retail organization, sales teams compete with each other to achieve and exceed sales targets. Each quarter, the members of the top sales team receive a bonus. In this environment, management…
The correct answer is C. Risks related to employee competency. Note: I believe the answer key provided may contain an error. The correct answer for this question should almost certainly be B (data manipulation), not C. Here's why: Option B is correct because when employees face strong financial incentives (bonuses) tied to measurable…
Question
In a retail organization, sales teams compete with each other to achieve and exceed sales targets. Each quarter, the members of the top sales team receive a bonus. In this environment, management should closely monitor for the emergence of which of the following potential risks?
Options
- ARisks related to employee turnover.
- BRisks related to data manipulation.
- CRisks related to employee competency.
- DRisks related to not achieving sales targets.
How the community answered
(46 responses)- A2% (1)
- B7% (3)
- C78% (36)
- D13% (6)
Explanation
Note: I believe the answer key provided may contain an error. The correct answer for this question should almost certainly be B (data manipulation), not C. Here's why:
Option B is correct because when employees face strong financial incentives (bonuses) tied to measurable performance metrics (sales targets), the primary emerging risk is fraudulent data manipulation - employees fabricating or inflating sales figures to appear they've hit targets. This is a textbook internal control risk: incentive + pressure + opportunity = fraud. Management must monitor for falsified records, premature revenue recognition, or misattributed sales.
Why the other options are weaker:
- A (employee turnover) is a general HR risk not specifically triggered by this competitive bonus structure.
- C (employee competency) has no logical connection to the competitive bonus scenario - competency issues arise from hiring/training failures, not sales competitions.
- D (not achieving targets) is actually the risk the competition is designed to mitigate, so monitoring for it doesn't emerge as a new concern from the structure itself.
Memory tip: Think "Pressure + Incentive = Fraud Risk." Whenever an exam describes bonuses tied to measurable metrics in competitive settings, the red flag is always data integrity/manipulation - this is the core principle behind fraud triangle theory (incentive, opportunity, rationalization).
If this question is from a specific certification (CISA, CIA, CISM, CPA), I'd recommend double-checking the source material, as C appears to be a mislabeled answer.
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