An internal audit reveals that employees in a regional office are consistently bypassing established financial authorization controls. Which of the following is the most appropriate corrective action to resolve this issue and prevent recurrence?
Select an answer to reveal the explanation.
Short Explanation
If a regional office keeps bypassing financial authorization controls, don’t just blast the staff or sweep it under the rug. You need to find out why the controls are failing, then train the team and update the procedures so compliance sticks.
Full Explanation
The most appropriate corrective action is conducting a root-cause analysis and a 'lessons learned' review with the regional staff, followed by training and updated control procedures. Effective corrective action requires identifying and addressing the root cause of a compliance failure, rather than just treating the symptoms or applying punitive measures indiscriminately. By conducting a root-cause analysis and collaborating with the regional staff in a 'lessons learned' format, compliance and management can determine if the bypass occurred due to a lack of awareness, flawed system design, conflicting operational pressures, or intentional misconduct. Once the root cause is established, implementing targeted remediation—such as system reconfigurations, updated standard operating procedures, and focused training—helps ensure long-term compliance.
The company-wide email broadcast naming and publicly shaming the regional staff is incorrect because public shaming damages company culture, discourages employees from reporting issues, and does not address the underlying operational reason why the controls were bypassed.
Terminating the employment of the entire regional office staff immediately without conducting an investigation is incorrect because terminating an entire office is an extreme, disproportionate response that disrupts business continuity, ignores individual accountability, and fails to determine if the controls themselves were poorly designed.
Ignoring the finding because the bypass only occurred at a localized level and did not affect corporate headquarters is incorrect because ignoring compliance failures in regional locations creates systemic vulnerabilities, exposes the firm to localized fraud, and fails to demonstrate a commitment to an effective compliance program.