Which of the following actions should the internal audit activity take during an audit engagement when examining the effectiveness of risk management…

 Risk Management Evaluation: During an audit engagement examining the effectiveness of risk

management processes, the internal audit activity should focus on evaluating how the organization

manages various types of risks, including fraud risk.

 Fraud Risk Management: This involves assessing the organization’s mechanisms for identifying,

assessing, and responding to fraud risks. It also includes reviewing the effectiveness of controls in

place to prevent and detect fraudulent activities.

 IIA Standards: Standard 2120 – Risk Management emphasizes that internal auditors must evaluate

the potential for the occurrence of fraud and how the organization manages fraud risk.

 Comprehensive Approach:

Risk Assessment: Ensuring that the organization conducts thorough risk assessments to identify

potential fraud risks.

Control Environment: Evaluating the control environment to ensure it supports ethical behavior and

reduces opportunities for fraud.

Fraud Prevention and Detection: Reviewing the policies and procedures in place to prevent and

detect fraud, including whistleblower mechanisms and fraud response plans.

 Reference:

Internal auditors play a crucial role in assessing the adequacy of fraud risk management, which is

integral to the overall risk management process. By evaluating fraud risk management, auditors can

provide assurance that the organization is effectively mitigating fraud risks.