CISA Information System Auditing Process Practice Question
An IS auditor is planning a risk-based audit of a financial system. Which TWO of the following factors should the auditor consider when assessing inherent risk? (Select two.)
Answer choices
Why each option matters
Answer the question above first, then reveal the full breakdown to understand why each option is right or wrong.
Correct answer & explanation
✓
Complexity of transactions
Inherent risk is the susceptibility to misstatement before considering controls. Complexity of transactions and volume of transactions increase inherent risk. Control effectiveness is part of control risk, and auditor experience relates to detection risk.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✓
Complexity of transactions
Why this is correct
Complexity of transactions is a direct indicator of inherent risk because intricate processes and calculations are inherently more susceptible to errors or misstatements, even before considering internal controls. For a financial system, highly complex transactions, such as those involving derivatives or multi-currency conversions, present a greater predisposition to material misstatement. An IS auditor must recognise this increased susceptibility when assessing the risk profile of the system.
- ✓
Volume of transactions
Why this is correct
High volume increases the chance of errors, increasing inherent risk.
- ✗
Auditor's experience with similar systems
Why it's wrong here
This affects detection risk.
- ✗
Results of prior audits
Why it's wrong here
Prior results may influence overall risk assessment but not specifically inherent risk.
- ✗
Effectiveness of internal controls
Why it's wrong here
This relates to control risk, not inherent risk.
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JA
Written by Johnson Ajibi, MSc IT Security
Senior Network & Security Engineer · founder of Courseiva
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