CBA Banking Operations Audit 2 — Questions and Answers
Question 1: During an audit of wire transfer operations, an auditor discovers that a single employee can initiate, approve, and release funds. This is best described as a failure of:
- Dual control
- Segregation of duties (Correct answer)
- Reconciliation procedures
- Transaction monitoring
Correct answer: Segregation of duties
Segregation of duties requires that no single individual controls all phases of a transaction to prevent fraud and errors.
Question 2: A bank's teller cash drawer limit is set at $10,000. An auditor finds that several tellers regularly carry $15,000–$18,000 in their drawers. The PRIMARY audit concern is:
- Excess bonding exposure
- Violation of operational policy limits (Correct answer)
- Inaccurate daily cash counts
- Failure to file Currency Transaction Reports
Correct answer: Violation of operational policy limits
Exceeding established drawer limits violates operational policy and exposes the bank to uncontrolled cash risk.
Question 3: Which control is MOST effective at detecting kiting schemes in a bank's demand deposit operations?
- Daily proof and balancing of teller transactions
- Float analysis and interbank account reconciliation (Correct answer)
- Customer signature verification on checks
- Automated clearing house file audits
Correct answer: Float analysis and interbank account reconciliation
Float analysis and interbank reconciliation reveal artificially inflated balances created by exploiting check clearing delays.
Question 4: An auditor reviewing safe deposit box operations finds that access logs are maintained manually and have gaps. The MOST significant risk is:
- Customer dissatisfaction with access hours
- Inability to detect unauthorized box access (Correct answer)
- Non-compliance with fire safety regulations
- Failure to charge annual rental fees
Correct answer: Inability to detect unauthorized box access
Incomplete access logs remove the audit trail needed to detect and investigate unauthorized entry to safe deposit boxes.
Question 5: Under Regulation CC, which of the following hold periods applies to a non-local check deposited by a new account holder (account opened fewer than 30 days)?
- Next business day
- 2 business days
- Up to 9 business days (Correct answer)
- 5 business days
Correct answer: Up to 9 business days
Regulation CC allows banks to impose an exception hold of up to 9 business days for new accounts to mitigate fraud risk.
Question 6: When auditing overdraft protection programs, the auditor should PRIMARILY evaluate whether the program complies with:
- The Bank Secrecy Act
- Regulation E opt-in requirements for ATM and one-time debit transactions (Correct answer)
- FFIEC cybersecurity guidelines
- Regulation D reserve requirements
Correct answer: Regulation E opt-in requirements for ATM and one-time debit transactions
Regulation E requires banks to obtain affirmative opt-in consent before charging overdraft fees on ATM and one-time debit card transactions.
Question 7: An auditor testing the bank's branch reconciliation process discovers that outstanding items older than 90 days are automatically cleared by the system without investigation. This represents a weakness in:
- Branch profitability reporting
- Stale-item management and escheatment controls (Correct answer)
- Anti-money laundering transaction monitoring
- Teller balancing procedures
Correct answer: Stale-item management and escheatment controls
Auto-clearing unresolved outstanding items bypasses investigation requirements and may violate state escheatment laws for unclaimed property.
CBA Banking Operations Audit 2
During an audit of wire transfer operations, an auditor discovers that a single employee can initiate, approve, and release funds.
This is best described as a failure of: