A chief audit executive (CAE) is planning to issue an annual report concluding on the overall effectiveness of the organization's internal control system. According to the Standards, which of the following is likely the most significant challenge facing the CAE when creating the report?
The most significant challenge facing a chief audit executive (CAE) when creating an annual report on the overall effectiveness of the organization's internal control system is the need to include difficult-to-measure risks such as the risks of management override of controls and collusion among dishonest personnel. These risks are inherently challenging to quantify and assess objectively because they involve intentional and potentially deceptive actions that may not be easily detectable through traditional control measures. This complexity and subjectivity make such risks a significant challenge when forming an opinion on the overall effectiveness of the internal control system.
I mean why B
I think A should be the correct answer
A. The opinion must include difficult-to-measure risks such as the risks of management override of controls and collusion among dishonest personnel. The most significant challenge facing the chief audit executive (CAE) when creating an annual report on the overall effectiveness of the organization's internal control system is likely the difficulty in measuring and assessing certain risks. Risks such as management override of controls and collusion among dishonest personnel are inherently challenging to quantify and assess objectively. These risks involve intentional and potentially deceptive actions that may not be easily detectable through traditional control measures. Option A highlights the complexity and subjectivity associated with assessing certain risks, making it a significant challenge for the CAE when forming an opinion on the overall effectiveness of the internal control system.
A. The opinion must include difficult-to-measure risks such as the risks of management override of controls and collusion among dishonest personnel. The most significant challenge facing the chief audit executive (CAE) when creating an annual report on the overall effectiveness of the organization's internal control system is likely the difficulty in measuring and assessing certain risks. Risks such as management override of controls and collusion among dishonest personnel are inherently challenging to quantify and assess objectively. These risks involve intentional and potentially deceptive actions that may not be easily detectable through traditional control measures. Option A highlights the complexity and subjectivity associated with assessing certain risks, making it a significant challenge for the CAE when forming an opinion on the overall effectiveness of the internal control system.