CDFM Auditing and Internal Controls 3

Question 1

Which OMB circular specifically requires federal agencies to assess and report on internal controls over financial reporting using a recognized framework such as COSO?

Accepted Answer

OMB Circular A-123

Answer

OMB Circular A-123 (Management's Responsibility for Enterprise Risk Management and Internal Control) requires agencies to establish, assess, and report on internal controls.

Question 2

In the context of DoD audits, what is the purpose of a corrective action plan (CAP)?

Accepted Answer

To describe management's planned actions to remediate identified control weaknesses

Answer

A CAP documents the specific steps management will take to remediate control deficiencies or audit findings, including timelines and responsible officials.

Question 3

A preventive internal control is best described as a control that:

Accepted Answer

Stops errors or irregularities from occurring in the first place

Answer

Preventive controls are designed to deter or stop errors and fraud before they occur, such as authorization requirements and access restrictions.

Question 4

Under GAGAS, a performance audit that evaluates whether a program is achieving its intended outcomes is classified as what type of objective?

Accepted Answer

Effectiveness objective

Answer

Effectiveness objectives in performance audits assess the extent to which a program achieves its intended results or outcomes.

Question 5

Which of the following best describes 'segregation of duties' as an internal control in DoD financial operations?

Accepted Answer

Dividing transaction responsibilities so no single individual controls all phases

Answer

Segregation of duties divides authorization, custody, and recording functions among different personnel to reduce the risk of error and fraud.

CDFM - Certified Defense Financial Manager Practice Test

CDFM - Certified Defense Financial Manager Practice Test

CDFM Auditing and Internal Controls 3