CCS Internal Controls & Auditing 3

Question 1

Which of the following BEST describes a 'walkthrough' in the context of internal controls?

Accepted Answer

Tracing a transaction from initiation through completion to verify controls operate as described

Answer

A walkthrough involves following a single transaction end-to-end to confirm that documented controls are actually in place and functioning as described.

Question 2

The Institute of Internal Auditors (IIA) Standards require that internal audit activities maintain independence from:

Accepted Answer

Activities they audit

Answer

IIA Standards require organizational independence so that internal auditors are not auditing activities for which they have operational responsibility.

Question 3

A 'material weakness' in internal controls is defined as:

Accepted Answer

A significant deficiency where a reasonable possibility exists that a material misstatement will not be prevented or detected

Answer

A material weakness is a deficiency or combination of deficiencies creating a reasonable possibility that a material financial misstatement will not be prevented, detected, or corrected.

Question 4

Which control activity is MOST effective in deterring collusion among employees?

Accepted Answer

Mandatory vacation and job rotation policies

Answer

Mandatory vacations and job rotations expose schemes that require continuous oversight by the perpetrator, making collusion and long-running fraud harder to conceal.

Question 5

In a risk-based audit approach, audit resources are allocated based on:

Accepted Answer

Areas with the highest likelihood and impact of risk materialization

Answer

Risk-based auditing directs resources toward areas where the combination of likelihood and potential impact of risk is greatest.

(CCS) Certified Compliance Specialist Practice Test

(CCS) Certified Compliance Specialist Practice Test

CCS Internal Controls & Auditing 3