Internal Controls & Risk Management Flashcards
6 cards from real CCA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Internal Controls & Risk Management flashcards as text
What is the main purpose of internal controls in a corporation?
Answer: To ensure accurate and compliant operations
Internal controls safeguard assets, ensure reliable financial reporting, and promote compliance with laws and policies.
Which is an example of a preventive control?
Answer: Approval requirements for purchases
Preventive controls are designed to stop errors or irregularities before they occur, like requiring approvals for transactions.
What is risk assessment in financial management?
Answer: Analyzing threats to financial goals
Risk assessment involves identifying, analyzing, and prioritizing risks that could affect the achievement of objectives.
Which of the following is a component of the COSO internal control framework?
Answer: Monitoring activities
Monitoring activities are part of the COSO framework, helping ensure controls continue to operate effectively over time.
Why is segregation of duties important in accounting?
Answer: It helps prevent fraud and error
Segregation of duties reduces the risk of error or fraud by ensuring that no single individual has control over all parts of a transaction.
What is inherent risk?
Answer: Natural risk before mitigation
Inherent risk refers to the susceptibility of an account or process to error or fraud without considering controls.
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