CBA Banking Operations Audit 3 — Questions and Answers
Question 1: A bank auditor reviewing ATM operations finds that ATM cassette loading is performed by a single technician with no witness present. Which risk does this control gap MOST directly create?
- System downtime risk
- Cash skimming or misappropriation (Correct answer)
- Regulatory reporting failures
- Network connectivity loss
Correct answer: Cash skimming or misappropriation
Without a witness during cassette loading, a single technician can pocket cash without detection, creating a theft risk.
Question 2: Which of the following is the BEST indicator that a bank's account reconciliation controls are operating effectively?
- Reconciliations are completed by branch managers monthly
- All reconciling items are researched and resolved within 30 days (Correct answer)
- Reconciliation software produces automated exception reports
- The GL balance matches the prior month's balance
Correct answer: All reconciling items are researched and resolved within 30 days
Timely resolution of reconciling items demonstrates that exceptions are investigated and corrected, not just identified.
Question 3: During an audit of ACH operations, an auditor finds the bank lacks a formal return item monitoring process. The PRIMARY exposure is:
- Violation of NACHA rules and potential financial loss from undetected unauthorized debits (Correct answer)
- Failure to meet Regulation E disclosure timelines
- Increased cost of funds
- Non-compliance with Check 21 requirements
Correct answer: Violation of NACHA rules and potential financial loss from undetected unauthorized debits
NACHA rules impose return rate thresholds, and failure to monitor returns can result in financial loss and NACHA sanctions.
Question 4: An internal auditor testing dormant account controls discovers that several accounts have been reactivated and funds withdrawn without documented customer contact. This pattern MOST likely suggests:
- A system error in the dormancy classification logic
- Potential employee fraud through unauthorized account reactivation (Correct answer)
- Proper exercise of bank lien rights
- Compliance with state escheatment laws
Correct answer: Potential employee fraud through unauthorized account reactivation
Unauthorized reactivation of dormant accounts followed by withdrawals is a classic pattern of internal employee fraud.
Question 5: What is the purpose of a 'proof of cash' in banking operations audits?
- To verify the physical currency held in vault matches the GL
- To reconcile beginning balance, deposits, disbursements, and ending balance across periods (Correct answer)
- To confirm customer deposit slips against teller totals
- To certify branch petty cash fund accuracy
Correct answer: To reconcile beginning balance, deposits, disbursements, and ending balance across periods
A proof of cash is a four-column reconciliation that validates both beginning/ending balances and total debits/credits for a period.
Question 6: A bank's night depository audit reveals that envelopes are opened by a single employee before being logged. The auditor should recommend:
- Installing a camera above the depository slot
- Requiring dual control when opening night depository envelopes (Correct answer)
- Limiting night depository use to commercial customers only
- Increasing the frequency of night depository audits
Correct answer: Requiring dual control when opening night depository envelopes
Dual control when opening night deposits ensures no single employee can misappropriate funds without a witness.
Question 7: Which regulatory requirement MOST directly governs a bank's obligation to return ACH debit entries originated without customer authorization?
- Regulation Z
- NACHA Operating Rules (Correct answer)
- Regulation DD
- Bank Secrecy Act
Correct answer: NACHA Operating Rules
NACHA Operating Rules establish the timeframes and procedures for returning unauthorized ACH debit entries.
CBA Banking Operations Audit 3
A bank auditor reviewing ATM operations finds that ATM cassette loading is performed by a single technician with no witness present.
Which risk does this control gap MOST directly create?