The statement that best describes the difference between risk appetite and risk tolerance is that risk appetite refers to an organization's general level of acceptance of risk, while risk tolerance is a more specific and subordinate concept. Risk appetite is the broad-based amount of risk an organization is willing to accept in pursuit of its mission, while risk tolerance defines the acceptable level of variation that management is willing to allow for any particular risk as it pursues its objectives.
The Institute of Internal Auditors (IIA) - International Standards for the Professional Practice of Internal AuditingQUESTION NO: 76
An internal auditor discovered fraud while performing an audit of an organization’s procurement process. Which of the following describes the greatest benefit of using forensic auditing techniques in this scenario?
A. Enhanced capability to prevent frauds from occurring.
B. Greater assurance that procurement frauds will be detected in a timely manner
C. Improved capability of evaluating fraud risks within the organization.
D. Greater understanding of fraud through better evidence collection
Answer: D
The greatest benefit of using forensic auditing techniques when fraud is discovered in an organization's procurement process is achieving a greater understanding of fraud through better evidence collection. Forensic auditing techniques are specialized procedures designed to collect, analyze, and evaluate evidence in a way that meets the standards of a legal process, which is crucial for understanding the mechanisms of fraud and potentially pursuing legal actions.References: Forensic auditing practices and literature on fraud investigation techniques.
