Corporate Governance & IC

Question 1

According to SOX Section 407, what does it take to become a financial expert?

Answer 1

(1) an understanding of GAAP and financial statements
(2) experience in (a) preparation of financial statements and (b) application of such principles in connection with the accounting for estimates, accruals, and reserves
(3) experience with internal accounting controls; and
(4) an understanding of audit committee functions

Question 2

In the COSO “cube” model, which component of internal control enables an organization’s people to identify, process, and exchange the information needed to manage and control operations?

Answer 2

Information and communication.

Question 3

In the COSO “cube” model, what is not a control objective?

Answer 3

Monitoring.

Question 4

According to the 17 COSO control principles, risk reduction primarily relates to which fundamental component of internal control?

Answer 4

Control activities.

Question 5

According to the 17 COSO control principles, what does establishing a whistle-blower hot line contributes to?

Answer 5

Both internal and external organizational communication

Question 6

According to the 17 COSO control principles, organizational objectives primarily relate to which fundamental component of internal control?

Answer 6

Risk assessment

Question 7

According to the 17 COSO control principles, change management primarily relates to which fundamental component of internal control

Answer 7

Risk assessment

Question 8

What can recognizing potential impediments to communication between system user and system designer can be useful in doing?

Answer 8

Managing change in the system of internal control

Question 9

Which of the following is most useful when risk is being prioritized?

Answer 9

Expected value

Question 10

In which organization might segregation of duties be easiest to achieve?

Answer 10

A large organization that has implemented SoD software

Question 11

In a large public corporation, who should be responsible for evaluating internal control procedures?

Answer 11

Internal audit staff who report to the board of directors

Question 12

According to COSO, the use of ongoing and separate evaluations to identify and address changes in internal control effectiveness can best be accomplished in which stage of the monitoring-for-change continuum?

Answer 12

Change identification

Question 13

The IIA’s Code of Ethics identifies four “Principles” around which the 12 Rules of Conduct are organized. which key word or phrases is not associated with these Principles?

Answer 13

Continuous Improvement

Question 14

The IIA’s International Professional Practices Framework does not include among its “mandatory” guidance

Answer 14

Practice Guides

Question 15

What term identifies the type of internal auditing standards used to describe the characteristics associated with organizations and individuals who provide internal audit services?

Answer 15

Attribute Standards

Question 16

What term is used in the IIA’s International Standards to identify the person responsible for managing an organization’s internal audit activity?

Answer 16

Chief Audit Executive

Question 17

What term identifies the guidance in the International Standards for the Professional Practice of Internal Auditing that distinguishes between requirements for “assurance” services and “consulting” services?

Answer 17

Implementation standards

Question 18

There are seven additional Performance Standards that relate to Standard 2000, “Managing the Internal Audit Activity.” The general theme of these standards associated with Managing the Internal Audit Activity is best characterized the following statement?

Answer 18

These standards primarily address the chief audit executive’s responsibilities for overseeing the internal audit activity and for adding value to the organization

Question 19

The Performance Standards focus on seven primary themes around which the remaining Performance Standards are organized. Which is not a key word or phrase associated with these seven primary themes?

Answer 19

Purpose, authority, and responsibility

Question 20

The Performance Standards focus on seven primary themes around which the remaining Performance Standards are organized. Which is not a key word or phrase associated with these seven primary themes?

Answer 20

Proficiency and Due Professional Care.