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Question 182

An internal auditor finds during an engagement that payment for the organization's general insurance policy is two months overdue. The issue is informally mentioned to the finance department which immediately submits the invoice for payment. The auditor decides to exclude this finding from the final audit report as the oversight was immediately corrected and there were no consequences because of this late payment.

Which of the following rules of conduct as described in the IIA Code of Ethics, did the auditor fail to uphold?

    Correct Answer: B

    The auditor failed to uphold the rule of conduct relating to Objectivity. The IIA Code of Ethics requires internal auditors to disclose all material facts known to them, which, if not disclosed, could misrepresent the audited organization's activities. By deciding to exclude the finding from the final audit report, the auditor compromised objectivity by not fully and accurately reporting the situation, despite the oversight being corrected immediately and having no direct consequences.

Discussion
John1237Option: B

The lack of communication of material facts in an engagement report relates to objectivity. An omission influenced by someone else is a breach to objectivity. Intentional omission is clearly a breach to integrity (honesty), as well as behaviors that are dishonorable to the profession. Failure to disclose facts required by law or the profession of IAA relates to integrity. Unintentional omission means that there is a lack of diligence or even responsibility (integrity).

cidifiveOption: B

2. Objectivity Internal auditors: 2.3. Shall disclose all material facts known to them that, if not disclosed, may distort the reporting of activities under review.

sfkaiOption: C

why not C?

Mustafamelhim

Because the auditor decide to exclude this finding , he must disclose all material fact known to CAE

John1237

Because the IA had no intention of not disclosing the facts.