Can you describe a time when you identified a significant risk during an audit and how you recommended mitigating actions to address it?

Identifying and Mitigating Risks During an Audit

During one of my previous audits, I encountered a significant risk related to financial discrepancies in the company's inventory management. Upon further investigation, I discovered several areas where internal controls were weak, increasing the likelihood of errors and potential fraud.

Recommendation for Mitigating Actions:

1. Implementing Tighter Inventory Control Procedures: I suggested implementing strict inventory tracking measures, including regular reconciliations and physical counts to ensure accuracy.
2. Enhancing Segregation of Duties: I recommended separating responsibilities within the inventory management process to prevent any single individual from having unchecked authority over inventory transactions.
3. Increasing Management Oversight: I proposed having regular reviews and approvals by senior management to enhance accountability and oversight in inventory-related operations.
4. Providing Staff Training: I advised conducting training sessions to ensure that all employees involved in inventory management understand the importance of accuracy and compliance with established procedures.

By implementing these mitigating actions, the company can significantly reduce the identified risks and strengthen its overall control environment.