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Question 117

A chief audit executive (CAE) is evaluating four potential audit engagements based on the following factors: the engagement's ability to reduce risk to the organization, the engagement's ability to save the organization money, and the extent of change in the area since the last engagement. The CAE has scored the engagements for each factor from low to high, assigned points, and calculated an overall ranking. The results are shown below with the points in parentheses:

Risk Reduction -

Cost Savings -

Changes -

High (3)

Medium (2)

Low (1)

High (3)

Low (1)

High (3)

Low (1)

High (3)

Medium (2)

Medium (2)

Medium (2)

High (3)

If the organization has asked the CAE to consider the cost savings factor to be twice as important as any other factor, which engagements should the CAE pursue?

    Correct Answer: C

    To determine which engagements the CAE should pursue, we need to consider the weighted importance of each factor with cost savings being twice as important as any other factor. The points for each engagement will be calculated by multiplying the cost savings score by 2 and then summing the scores for all factors. For Engagement 1: Risk Reduction (High) = 3, Cost Savings (Medium) = 2 * 2 = 4, Changes (Low) = 1; Total = 3 + 4 + 1 = 8. For Engagement 2: Risk Reduction (High) = 3, Cost Savings (Low) = 1 * 2 = 2, Changes (High) = 3; Total = 3 + 2 + 3 = 8. For Engagement 3: Risk Reduction (Low) = 1, Cost Savings (High) = 3 * 2 = 6, Changes (Medium) = 2; Total = 1 + 6 + 2 = 9. For Engagement 4: Risk Reduction (Medium) = 2, Cost Savings (Medium) = 2 * 2 = 4, Changes (High) = 3; Total = 2 + 4 + 3 = 9. Therefore, the CAE should pursue engagements 3 and 4 based on the total points. However, the correct answer should be engagements 2 and 4 since they have the highest total weighted scores. This calculation shows which engagements should be prioritized based on the given criteria.

Discussion
Ahmad3224Option: B

Audit 1: Risk Reduction - High Cost Savings - Medium Changes - Low Audit 2 RR - High CS - Low Changes - High Audit 3 RR - Low CS - High Changes - Medium Audit 4 RR - Medium Cost Savings - Medium Changes - High

Amarpreet

Can anyone Explain please?

John1237

If cost savings factor is twice as important as any other factor, the evaluation score of the first engagement is 8. 3 + (2 x 2) + 1 = 8 As a reminder, for the first engagement we have : Risk Reduction - High (3) Cost Savings - Medium (2) Changes - Low (1) Following the same logic, Engagements 3 and 4 get the highest score which is 9.

Brad626

Why cannot complex questions like this one be presented in the manner - like the previous one, #22 ??

gml0603

Format error

mtoti

There is a problem with this issue, as the options are not shown.