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CPA > BEC Custom > Flashcards

BEC Custom Flashcards

1
Q

What is the anti-retaliation provision of Dodd-Frank?

A

Employees who provide information regarding a securities fraud (whistle-blowing) may sue to seek compensation for any retaliation they suffer

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2
Q

What is the whistle-blowing award percentage under Dodd-Frank for securities fraud information that results in SEC sanctions?

A

Between 10 and 30% of the sanctions imposed

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3
Q

What do corrective controls do?

A

Allow the user to recover from a problem once it has been identified

  • reverse effect of error
  • always with detective controls
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4
Q

What are internal controls?

A

A process designed to provide reasonable assurance

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5
Q

Who creates and maintains internal controls?

A

management, board of directors, and other personnel

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6
Q

Internal control goals?

A

Reasonable assurance of achieving objectives related to -

  • effectiveness and efficiency of operations
  • reliability of financial reporting
  • compliance with laws and regulations
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7
Q

What are preventive controls?

A
  • preventive an error or irregularity

- i.e. building locks, usernames and passwords, segregation of duties

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8
Q

What are detective controls?

A
  • detect error after occurrence
  • i.e. data entry edits and reconciling accounting records to physical assets
    (often also have secondary preventive benefits)
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9
Q

What do feedback controls do?

A

evaluate and respond to the results of a process

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10
Q

What do feed-forward controls do?

A

project future results and alter inputs in response

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11
Q

What are general controls?

A
  • apply broadly to most computerized functions
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12
Q

What are application controls?

A
  • focus on accounting applications that include data entry, update and reporting
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13
Q

What are detective controls more costly than?

A

preventive and corrective controls

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14
Q

In COSO, what does information and communication enable?

A

an organization’s people to identify, process, and exchange the information needed to manage and control operations

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15
Q

What is COSO?

A
  • est. 1987 - created by five organizations to develop an integrated internal control model
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16
Q

What are the five components of a control system on the COSO Cube?

A
  • monitoring
  • information and communication
  • control activities
  • risk assessment
  • control environment
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17
Q

Why do we have internal control according to COSO (three components)?

A
  • effectiveness and efficiency of operations
  • reliability of financial reporting
  • compliance with laws and regulations
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18
Q

What is a sustainability report primarily?

A
  • external, non-financial report
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19
Q

What are the five principles of the control environment?

A
  • commitment to integrity and ethical values
  • board of directors demonstrates independence of management, and oversees the development and monitoring of internal control
  • management establishes structures, reporting lines, and appropriate authorities and responsibilities to achieve objectives
  • competence
  • accountability
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20
Q

What are the four principles of risk assessment?

A
  • objectives
  • assessment
  • fraud - considering potential fraud in assessing risks to achieving objectives
  • change management
21
Q

What are the three principles of control activities?

A
  • risk reduction
  • technology controls
  • policies
22
Q

what are the three principles of information and communication?

A
  • quality - relevant, high-quality information supports the internal control processes
  • internal - internal communication supports internal control processes
  • external - communication with outsiders supports internal control processes
23
Q

What are the two principles of monitoring?

A
  • ongoing and periodic - to evaluate internal control functioning
  • address deficiencies
24
Q

What does ERM stand for?

A

Enterprise risk management

25
Q

What are the four objectives of the COSO ERM Model?

A
  • strategic
  • operations
  • reporting
  • compliance
26
Q

What are the eight control components of the COSO ERM Model?

A
  • internal environment
  • objective setting
  • event identification
  • risk assessment
  • risk response
  • control activities
  • information and communication
  • monitoring
27
Q

What does risk response include under COSO ERM?

A

management’s decision to avoid, accept, reduce, or share risk and to develop a set of actions to align risk with the entity’s risk preferences

28
Q

What are the two primary attributes of effective evaluators according to COSO?

A

competence and objectivity

29
Q

What is competence in the context of evaluating controls?

A

evaluator’s knowledge of controls and related processes, including their operation and what constitutes a control deficiency

30
Q

What is board monitoring?

A
  • monitoring by board or its committees

- includes evaluating management’s monitoring process and assessment of risk of management override of controls

31
Q

Control objectives

A

specific targets against which the effectiveness of IC is evaluated

32
Q

Compensating controls

A

Accomplish the same objective as another control and can “compensate” for deficiencies in that control

33
Q

Key performance indicators

A

metrics that assess critical success factors

34
Q

Key risk indicators

A

forward-looking metrics that help identify potential problems

35
Q

Assessing Changes in IC Effectiveness Model (monitoring-for-change continuum)

A

four-stage process

  • Establish control baseline
  • change identification
  • control re-validation
  • change management
36
Q

What are the three steps in the COSO Control Monitoring Process Model?

A
  • establish a foundation
  • design and execute
  • assess and report
37
Q

Foundation for Monitoring (COSO)

A
  • proper tone at the top
  • effective organizational structure
  • generate “baseline” of known effective IC
38
Q

Design and execute monitoring procedures (COSO)

A
  • generate persuasive information about key controls about meaningful risks
  • prioritize risks
  • implement monitoring
39
Q

Assess & report results (COSO)

A
  • prioritize findings
  • report results
  • follow up with corrective action
40
Q

Change Identification (COSO)

A

the monitoring for change process that would include ongoing and separate evaluations intended to identify and address changes in internal control effectiveness

41
Q

What part of establishing a foundation for monitoring does establishing a baseline of an internal control known to be effective belong to?

A

it is a sub-activity, not a major step, in the COSO model of control monitoring

42
Q

What is the starting point for a system of internal control?

A

setting organizational objectives

43
Q

What does the IIA International Professional Practices Framework include among its “mandatory” guidance?

A
  1. definition of internal auditing
  2. core principles
  3. code of ethics
  4. international standards
44
Q

What does the IIA International Professional Practices Framework include among its “strongly recommended guidance”?

A
  1. position papers
  2. practice advisories
  3. practice guides
45
Q

What are the four principles under IIA code of ethics?

A
  1. integrity
  2. objectivity
  3. confidentiality
  4. competency
46
Q

What are the two categories of standards under the IIA international standards?

A
  • attribute standards - involve characteristics of entities and individuals performing internal auditing
  • performance standards - involve the criteria to evaluate the quality of internal audit services
47
Q

assurance relationship parties in internal auditing

A

3 party -

  1. the process owner
  2. the user
  3. the internal auditor
48
Q

consulting relationship parties in internal auditing

A

2 party -

  1. the client
  2. the internal auditor
49
Q

Who are the IIA’s standards issued by?

A

Internal Auditing Standards Board (IASB)

CPA (16 decks)

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