CCO Internal Controls and Audit 2

Question 1

What is a control self-assessment (CSA)?

Accepted Answer

A process where business units assess their own controls against defined criteria, often facilitated by internal audit or compliance

Answer

CSAs engage business management and employees in evaluating the effectiveness of their own controls, building ownership and providing an early warning of control gaps.

Question 2

What is the difference between preventive and detective controls?

Accepted Answer

Preventive controls stop violations before they occur; detective controls identify violations after they have occurred

Answer

Preventive controls (e.g., approval requirements) block violations before they happen, while detective controls (e.g., reconciliations) identify them after the fact.

Question 3

What is an internal audit charter?

Accepted Answer

A formal document that defines the internal audit function's purpose, authority, responsibility, and independence within the organization

Answer

The internal audit charter establishes the function's organizational authority, independence, scope, and accountability structure, typically approved by the Audit Committee.

Question 4

What does 'reasonable assurance' mean in the context of internal controls?

Accepted Answer

That controls provide a high but not absolute level of assurance that objectives will be met, given inherent limitations of any control system

Answer

Reasonable assurance acknowledges that no control system is perfect and that there are inherent limitations — cost/benefit tradeoffs and human fallibility mean absolute assurance is unachievable.

Question 5

What is a management response to an audit finding?

Accepted Answer

A formal response from management agreeing with or disputing the finding and committing to specific corrective actions with timelines

Answer

Management responses commit the business to remediation actions, owners, and deadlines for each audit finding, creating accountability for resolving control deficiencies.

CCO - Chief Compliance Officer Practice Test

CCO - Chief Compliance Officer Practice Test

CCO Internal Controls and Audit 2