Can you provide an example of a situation where you identified a significant risk or control deficiency during an audit engagement and how you addressed it?

Internal Auditor Interview Question: Can you provide an example of a situation where you identified a significant risk or control deficiency during an audit engagement and how you addressed it?

During one of my previous audit engagements, I encountered a situation where there was a significant risk of fraud due to lack of segregation of duties in the accounts payable department. Upon identifying this control deficiency, I immediately initiated thorough testing and analysis to gather evidence of the issue.

To address the risk, I proposed implementing a segregation of duties policy that clearly defined roles and responsibilities within the accounts payable team. I also conducted training sessions to educate staff on the importance of segregation of duties and the potential consequences of not following the policy.

Additionally, I recommended implementing regular monitoring procedures to detect any unusual activities and prevent fraudulent transactions. By taking these proactive measures, we were able to mitigate the risk of fraud and strengthen internal controls within the accounts payable department.