IIA-CIA-PART2 Question #325: Real Exam Question with Answer & Explanation

The correct answer is B. Financial and nonfinancial factors related to the risk. When estimating the impact of an inherent risk, internal auditors should consider both financial and nonfinancial factors. Financial factors include direct monetary impacts, while nonfinancial factors may include reputational damage, operational disruptions, and compliance issues

Question

When estimating the impact of an inherent risk, which of the following should internal auditors consider?

Options

AThe probability and frequency of occurrence
BFinancial and nonfinancial factors related to the risk
CThe number of risks identified on the heat map
DThe residual risk following implementation of appropriate controls

Explanation

When estimating the impact of an inherent risk, internal auditors should consider both financial and nonfinancial factors. Financial factors include direct monetary impacts, while nonfinancial factors may include reputational damage, operational disruptions, and compliance issues. Considering a broad range of factors provides a comprehensive understanding of the potential impact of the risk, which is essential for effective risk assessment and management.

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