CBA Internal Controls & Compliance 3

Question 1

Under Regulation E, a bank must investigate a consumer's claim of an unauthorized electronic fund transfer within how many business days of receiving notice?

Accepted Answer

10 business days

Answer

Regulation E requires banks to complete error resolution investigations within 10 business days, though a provisional credit can extend this period to 45 days.

Question 2

An internal auditor identifies that the same employee is responsible for approving vendor invoices, authorizing payments, and reconciling the accounts payable ledger. This situation BEST illustrates:

Accepted Answer

An incompatible duties concentration

Answer

Having one person control authorization, custody, and record-keeping functions creates an incompatible duties concentration that increases the risk of undetected fraud.

Question 3

Which of the following BEST describes a 'key risk indicator' (KRI) in the context of bank compliance?

Accepted Answer

A forward-looking metric that signals increasing risk exposure before a breach occurs

Answer

KRIs are prospective metrics that alert management when risk levels are rising, enabling proactive intervention before a compliance breach materializes.

Question 4

The Community Reinvestment Act (CRA) requires banks to:

Accepted Answer

Meet the credit needs of all communities they serve, including low- and moderate-income areas

Answer

CRA requires banks to affirmatively help meet the credit needs of their entire communities, with particular attention to low- and moderate-income neighborhoods.

Question 5

When auditing a bank's loan review function, an auditor should PRIMARILY assess:

Accepted Answer

The accuracy of credit risk ratings and adequacy of the allowance for loan losses

Answer

A loan review audit focuses on evaluating the integrity of the risk rating system and whether the allowance for loan losses (ALLL/ACL) is adequate and properly calculated.

(CBA) Certified Bank Auditor Practice Test

(CBA) Certified Bank Auditor Practice Test

CBA Internal Controls & Compliance 3