ACCA Risk Management and Internal Controls 4

Question 1

A company decides to stop selling products in a politically unstable country because the risk of asset expropriation is too high. Under the TARA framework, which response is this?

Accepted Answer

Avoid

Answer

Exiting the activity that gives rise to the risk is risk avoidance.

Question 2

Which statement best describes residual risk?

Accepted Answer

The risk remaining after management has implemented controls and responses

Answer

Residual risk is the exposure that remains after risk responses and controls are in place.

Question 3

An internal auditor reports administratively to the CFO and functionally to the audit committee. What is the main purpose of the functional reporting line to the audit committee?

Accepted Answer

To safeguard the independence and objectivity of internal audit

Answer

Reporting functionally to the audit committee protects internal audit from management influence.

Question 4

Under the IIA Three Lines Model, which function is typically part of the second line?

Accepted Answer

Risk management and compliance functions

Answer

Second-line roles provide expertise, monitoring and challenge on risk-related matters, such as risk management and compliance.

Question 5

A payroll system rejects any input where hours worked exceed 80 per week. What type of control is this?

Accepted Answer

Application input control (range/limit check)

Answer

A limit check embedded in an application validates input data and is an application control.

ACCA - Association of Chartered Certified Accountants Practice Test

ACCA - Association of Chartered Certified Accountants Practice Test

ACCA Risk Management and Internal Controls 4