AICPA Risk Management & Internal Control 3

Question 1

Which control environment factor refers to the competence and ethical values demonstrated by top management?

Accepted Answer

Tone at the top

Answer

Tone at the top reflects the ethical values, integrity, and commitment to competence modeled by senior leadership.

Question 2

A key risk indicator (KRI) differs from a key performance indicator (KPI) in that a KRI:

Accepted Answer

Signals potential future risk exposure

Answer

KRIs are forward-looking metrics that provide early warning signals of increasing risk exposure before losses occur.

Question 3

Under COSO, 'monitoring' activities are designed to:

Accepted Answer

Detect and correct control deficiencies over time

Answer

Monitoring assesses the quality of internal control performance over time and corrects identified deficiencies.

Question 4

Which type of audit opinion indicates that one or more material weaknesses in internal control over financial reporting exist?

Accepted Answer

Adverse opinion

Answer

An adverse opinion on internal controls means management's assessment is materially misstated or material weaknesses exist.

Question 5

The practice of limiting each employee's computer system access to only the functions needed for their job is known as:

Accepted Answer

Least privilege principle

Answer

The least privilege principle restricts user access rights to only what is necessary to perform their job functions.

(AICPA) Association of International Certified Professional Accountants Practice Test