Comprehensive and Detailed Step-by-Step Explanation:

Reference to IIA Standards:

Standard 2120 - Risk Management: Internal audit must assess and evaluate the risk management processes of the organization.

Identifying risk scenarios supports engagement objectives by determining vulnerabilities and threats to process objectives.

Reasoning:

Option A is correct because risk scenarios provide insights into potential events or conditions that could hinder achieving objectives. This allows auditors to assess risk exposure and evaluate controls effectively.

Option B (control effectiveness) is a subsequent step in the audit process but does not explain the need for identifying risk scenarios.

Option C focuses on evaluating management’s process, which is broader than identifying specific risks for the engagement.

Practical Application:

Risk scenarios guide auditors in tailoring their approach to address areas of greatest vulnerability.