Bank Internal Control

Question 1

True or False. The internal control as defined by BSP states that Banks shall have in place adequate and effective internal control framework for the conduct of their business

Answer 1

True

Question 2

The _____________________ shall embody management oversight and control culture; risk recognition and assessment; control activities; information and communication; and monitoring activities and correcting deficiencies.

Answer 2

internal control framework (BSP definition)

Question 3

Is the process designated and effected by the BOD, senior management, and all levels of personnel to provide reasonable assurance on the achievement of objectives.

Answer 3

Internal Control – BSP Definition

Question 4

Ultimately responsible for ensuring that senior management establishes and maintains an adequate, effective and efficient internal control framework

Answer 4

The Board

Question 5

Ensure that the internal audit function has an appropriate stature and authority within the bank and is provided with adequate resources

Answer 5

The Board

Question 6

Overseeing senior management in establishing and maintaining an adequate, effective and efficient internal control framework

Answer 6

Audit Committee

Question 7

Ensure that systems and processes are designed to provide assurance in areas including reporting, monitoring compliance with laws, regulations and internal policies, efficiency and effectiveness of operations, and safeguarding of assets.

Answer 7

Audit Committee

Question 8

maintaining, monitoring and evaluating the adequacy and effectiveness of the internal control system and reporting on the effectiveness of internal controls

Answer 8

Senior Management

Question 9

develop a process that identifies, measures, monitors and controls risks; maintain an organizational structure that clearly assigns responsibility, authority and reporting relationship

Answer 9

Senior Management

Question 10

ensure that delegated responsibilities are effectively carried out

Answer 10

Senior Management

Question 11

Implement internal control policies and ensure that activities are conducted by qualified personnel

Answer 11

Senior Management

Question 12

ensure that bank personnel undertake continuing professional development and that there is an appropriate balance in the skills and resources of the front office, back office, and control functions

Answer 12

Senior Management

Question 13

shall promptly inform the internal audit function of the significant changes in the bank’s risk management systems, policies and processes.

Answer 13

Senior Management

Question 14

need to understand their roles and responsibilities in the internal control process

Answer 14

All Personnel

Question 15

should be fully accountable in carrying out their responsibilities effectively

Answer 15

All Personnel

Question 16

should communicate to the appropriate level of management any problem in operations, action or behavior that is inconsistent with documented internal control processes and code of ethics.

Answer 16

All Personnel

Question 17

Who are the responsible for management oversight and culture?

Answer 17

1. the board
2. audit committee
3. senior management
4. all personnel

Question 18

Risk recognition and assessment involves:

Answer 18

1. Internal control
2. risk assessment

Question 19

shall identify, evaluate and continually assess all material risks that could affect the achievement of the bank’s performance, information and compliance objectives.

Answer 19

Internal Control (Risk Recognition and Assessment)

Question 20

the potential for fraud shall be considered in assessing the risks to the achievement of said objectives

Answer 20

Internal Control (Risk Recognition and Assessment)

Question 21

risk assessment shall cover all risks facing the bank

Answer 21

Internal Control (Risk Recognition and Assessment)

Question 22

identifies and considers both internal and external factors that could affect the internal control framework

Answer 22

Risk Assessment (Risk Recognition and Assessment)

Question 23

shall be conducted at the level of individual business units and across all bank activities/groups/units and subsidiaries

Answer 23

Risk Assessment (Risk Recognition and Assessment)

Question 24

Internal controls shall be revised to address any new or previously uncontrolled or unidentified risks.

Answer 24

Risk Assessment (Risk Recognition and Assessment)

Question 25

Control Activities involves:

Answer 25

1. System that provides for top and functional level reviews 2. Checking compliance with exposure limits and follow-up on non-compliance 3. System of approvals and authorizations, which shall include the approval process for new products and services 4. System of verification and reconciliation

Question 26

Internal Control under Control Activities involves:

Answer 26

1. Clear arrangements for delegating authority 2. Adequate accounting policies, records and processes 3. Robust physical and environmental controls to tangible assets and access controls to information assets 4. Segregation of conflicting functions.

Question 27

Information and communication:

Answer 27

- Reliable management information system - Effective channels of communication - All personnel are cognizant of their duty to promptly report any deficiency to appropriate levels of management or to the board of directors,

Question 28

Monitoring Activities and Correcting Deficiencies (Monitoring)

Answer 28

- Adequately defined by Management - Integrated in the operating environment - Should produce regular reports for review

Question 29

Monitoring Activities and Correcting Deficiencies (Evaluation)

Answer 29

- Done by personnel from the same operational area or from other areas - Adequately documented - Internal control deficiencies and weaknesses identified shall be reported on a timely basis

Question 30

Committee of Sponsoring Organizations (COSO) Internal Control-Integrated Framework

Answer 30

I. Internal control components 1. control environment 2. risk assessment 3. control activities 4. information & communication 5. monitoring

Question 31

internal control components which is responsible for • Demonstrates commitment to integrity and ethical values • Exercises oversight and responsibility • Establishes structure, authority, and responsibility • Demonstrates commitment to competence • Enforces accountability

Answer 31

control environment

Question 32

internal control components responsible for: • Specifies suitable objectives • Identifies and analyzes risks • Assesses fraud risk • Identifies and analyzes significant change

Answer 32

risk assessment

Question 33

internal control components responsible for: • Selects & develops control activities • Selects & develops general controls over technology • Deploys through policies and procedures

Answer 33

control activities

Question 34

internal control components responsible for: • Uses relevant information • Communicates internally • Communicates externally

Answer 34

information & communication

Question 35

internal control components responsible for: • Conducts ongoing and/or separate evaluations • Evaluates and Communicates deficiencies

Answer 35

monitoring

Question 36

Which part of the MORB is the BSP – Internal Control Framework referenced to?

Answer 36

MORB section 162

Question 37

The principles under The Institute of Internal Auditors (IIA) Three Lines Model includes:

Answer 37

1. governance 2. governing body roles 3. management and 1st and 2nd line roles 4. 3rd line roles 5. 3rd line independence 6. creating and protecting value

Question 38

accountability to stakeholders for organizational oversight

Answer 38

governing body

Question 39

governing body roles

Answer 39

- integrity - leadership - transparency

Question 40

actions (including managing risk) to achieve organizational objectives

Answer 40

management

Question 41

what are the 2 line roles of management as stated in the Institute of Internal Auditors (IIA) Three Lines Model?

Answer 41

1. first line roles 2. second line roles

Question 42

provision of products/services to clients; managing risk

Answer 42

first line roles (management)

Question 43

expertise, support, monitoring, and challenge on risk-related matters

Answer 43

second line roles (management)

Question 44

independent assurance

Answer 44

internal audit

Question 45

independent and objective assurance and advice on all matters related to the achivement of objectives.

Answer 45

third line roles (internal audit)

Question 46

key stated in the Institute of Internal Auditors (IIA) Three Lines Model

Answer 46

- ⬆️ accounting, reporting - ⬇️ delegation, direction, resources, oversight - ↔️ alignment, communication, coordination, collaboration

Question 47

External assurance providers under the Institute of Internal Auditors (IIA) Three Lines Model are:

Answer 47

1. governing body 2. management 3. internal audit

Question 48

Management control techniques’ means of control involves:

Answer 48

- Organization - Policies - Procedures - Personnel - Accounting - Budgeting

Question 49

An approved intentional structuring of roles assigned to people within the entity so that it can achieve its objectives efficiently and economically.

Answer 49

organization

Question 50

responsibilities of organization

Answer 50

1. division of responsibility 2. management authority 3. individual responsibility 4. effective system of follow-up 5. exercise authority without close supervision

Question 51

Any stated principle that requires, guides, or restricts action.

Answer 51

policies

Question 52

policies’ qualifications

Answer 52

1. clearly stated in writing 2. systematically communicated 3. conform with applicable laws and regulations 4. provide satisfactory degree of assurance that resources are safeguarded 5. periodically reviewed

Question 53

Methods employed to carry out activities in conformity with prescribed policies

Answer 53

procedures

Question 54

requirements in writing procedures

Answer 54

1. Coordinated (one’s work is automatically checked by another) 2. Not so detailed as tostifle the use of judgement 3. simple and inexpensive 4. not overlapping, conflicting, or duplicative 5. periodically reviewed and improved

Question 55

People hired or assigned should have the qualifications to do the jobs.

Answer 55

personnel

Question 56

under the personnel, it involves:

Answer 56

1. New employees should be investigated as to honesty and reliability 2. Employees should be given necessary training 3. Employees should be given information on the duties and responsibilities of other segments of the organization 4. Employee performance should be periodically reviewed

Question 57

Indispensable means of financial control over activities and resources; financial scorekeeper of the organization

Answer 57

accounting

Question 58

under accounting, it involves:

Answer 58

1. Fit the needs of managers for rational decision- making 2. Based on lines of responsibility 3. Permits controllable costs to be identified

Question 59

A __________ is a statement of expected results expressed in numerical terms.

Answer 59

budget

Question 60

A budget is a statement of expected results expressed in numerical terms. It sets a standard for input of resources and what should be achieved as output.

Answer 60

budgeting

Question 61

under budgeting, it involves:

Answer 61

1. Persons responsible for meeting a budget should participate in its preparation and should be provided with adequate information that compares budgets with actual events 2. Subsidiary budgets should tie into the overall budget 3. Budgets should set measurable objectives 4. Should help sharpen the organizational structure

Question 62

Reports received by Management are the basis of its decision.

Answer 62

reporting

Question 63

reports should:

Answer 63

1. be in accordance with assigned responsibilities 2. be a simple as possible and consistent with the nature of the subject matter 3. be timely 4. be polled periodically (report recipients) 5. Individuals/Units should be required to report only on those matters for which they are responsible 6. Cost of accumulating data and preparing reports should be weighed against the benefits to be obtained

Question 64

___________________ refers to the disclosure or filing of a complaint by an employee, group of employees, or other stakeholders who in good faith, believes that the Bank or any of his/their colleagues is engaging/has engaged in acts of fraud, malpractice, conflict of interest or violation of internal/regulatory policies, procedures and controls.

Answer 64

Whistle blowing

Question 65

who are covered in metrobank’s whistle blowing program?

Answer 65

all employees

Question 66

true or false. principles of Metrobank MOPP L2 - whistleblowing apply in instances when an employee or stakeholder deems it more prudent to report violations or offenses to another authorized unit/person within the Bank for proper handling, investigation and resolution

Answer 66

true

Question 67

true or false. principles of Metrobank MOPP L2 - whistleblowing states that When the matter which is brought to the attention of the immediate superior or Bank personnel is not acted upon in accordance with the standard reporting procedures, or is concealed, or the immediate superior or Bank personnel is himself involved in the infraction, or the reporting employee or stakeholder fears reprisal.

Answer 67

true

Question 68

responsible persons/units of metrobank whistleblowing program

Answer 68

1. IAG Head 2. IAG and HRMG

Question 69

the designated recipient of complaints from Reporting Employees and other stakeholders

Answer 69

IAG Head

Question 70

These units ensures that investigations are undertaken in case of whistleblowing

Answer 70

IAG and HRMG

Question 71

These units identifies the appropriate unit(s) in the Bank responsible to conduct the investigation

Answer 71

IAG and HRMG

Question 72

These units disseminates and communicates the whistle blowing policy to all employees

Answer 72

IAG and HRMG

Question 73

Identity of the Reporting Employee or stakeholder (if provided) shall be treated as ________

Answer 73

Confidential

Question 74

Identity of the Reporting Employee or stakeholder (if provided) shall be treated as Confidential

Answer 74

protection of reporting person

Question 75

exceptions from the protection of the reporting person:

Answer 75

1. person agrees to be identified 2. Identification is necessary to allow the Bank to investigate or respond effectively 3. Required by Law

Question 76

_________________ may be filed through the Bank’s website or sent via email

Answer 76

Complaints/concerns

Question 77

True or false. It is required for the Reporting Employee/ complainant to disclose his identity and details on the complaint/concern should be submitted

Answer 77

false. There is no requirement for the Reporting Employee/ complainant to disclose his identity but details on the complaint/concern should be submitted

Question 78

when filing for complaints/concerns, these details should be submitted:

Answer 78

• Full name, position and unit of the person subject of the complaint • Brief statement on relevant and material facts • Evidence of the act committed, if any

Question 79

___________ refers to an act of reprisal, discrimination, harassment, intimidation or adverse personnel action by the Bank’s directors, officers, executives, supervisors or employees whether directly or indirectly, against a Reporting Employee or a witness.

Answer 79

Retaliation

Question 80

true or false. Retaliation is allowed against any Reporting Employee or stakeholder.

Answer 80

false. Retaliation shall not be allowed against any Reporting Employee or stakeholder.

Question 81

_______________ shall be considered as misconduct and erring officers/staff involved shall be dealt with following existing policies on Omissions, Errors, and Offenses

Answer 81

Retaliatory actions

Question 82

Details on the complaint/concern

Answer 82

• Name and position of the director, officer, employee alleged to have retaliated • Brief description and date of the complaint to which the alleged retaliation relates • Brief description and details of the alleged retaliation • Relevant evidence

Question 83

true or false. Complaints in writing may not be filed directly with the Chairman of the Board

Answer 83

false. Complaints in writing may be filed directly with the Chairman of the Board

Question 84

The __________________ may deputize IAG/HRMG to assist in the investigation.

Answer 84

Chairman of the Board

Question 85

If a Reporting Employee or Stakeholder or Witness believes he has been retaliated upon for filing a complaint or for participating or cooperating in an investigation, a written complaint may be filed with the IAG Head within ______________ from the occurrence of the alleged act or retaliation incident

Answer 85

one month

Question 86

all of the following are under organization except (management control techniques): a. division of responsibilities b. effective system of follow-up c. individual responsibility d. none of the above

Answer 86

d. none of the above

Question 87

which is not under policies (management control techniques): a. simple and inexpensive b. not overlapping, conflicting, or duplicative c. based on lines of responsibility d. all of the above

Answer 87

d. all of the above

Question 88

all of the following are under procedures (management control techniques) except? a. should help sharpen the organizational structure b. coordinated (automatically checked by another employee) c. not so detailed as to stifle the use of judgement d. periodically reviewed and improved

Answer 88

a. should help sharpen the organizational structure

Question 89

Management control technique’s personnel states that New employees should be investigated as to _______ and ________.

Answer 89

honesty, reliability

Question 90

true or false. Management control technique’s personnel states that Employees should be given necessary training

Answer 90

true

Question 91

true or false. Management control technique’s personnel states that Employees should not be given information on the duties and responsibilities of other segments of the organization

Answer 91

false. Employees should be given information on the duties and responsibilities of other segments of the organization