Certified Internal Auditor (CIA) Practice Test

What is a key reason internal auditors must evaluate the means of safeguarding assets?

1. Misapplication of accounting principles.

2. Procedures that are not cost justified.

3. Exposure to the elements.

4. Underusage of physical facilities.

The correct answer is: Exposure to the elements.

Evaluating the means of safeguarding assets is crucial for internal auditors because exposure to the elements can lead to significant physical damage or loss of those assets. For instance, assets that are not adequately protected from environmental factors such as weather conditions, fire hazards, or theft are at a higher risk of being compromised. Internal auditors play a vital role in assessing whether the organization has implemented appropriate measures to mitigate these risks and ensure the longevity and integrity of its assets. This assessment encompasses verifying whether physical assets are stored in suitable locations, protected by appropriate barriers, or adequately insured against possible losses. By identifying vulnerabilities related to exposure to the elements, internal auditors can provide recommendations to strengthen asset protection strategies and contribute to the overall risk management framework of the organization.