Internal Controls & Compliance Flashcards
7 cards from real CBA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Internal Controls & Compliance flashcards as text
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?
Answer: 10 business days
Regulation E requires banks to complete error resolution investigations within 10 business days, though a provisional credit can extend this period to 45 days.
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:
Answer: An incompatible duties concentration
Having one person control authorization, custody, and record-keeping functions creates an incompatible duties concentration that increases the risk of undetected fraud.
Which of the following BEST describes a 'key risk indicator' (KRI) in the context of bank compliance?
Answer: A forward-looking metric that signals increasing risk exposure before a breach occurs
KRIs are prospective metrics that alert management when risk levels are rising, enabling proactive intervention before a compliance breach materializes.
The Community Reinvestment Act (CRA) requires banks to:
Answer: Meet the credit needs of all communities they serve, including low- and moderate-income areas
CRA requires banks to affirmatively help meet the credit needs of their entire communities, with particular attention to low- and moderate-income neighborhoods.
When auditing a bank's loan review function, an auditor should PRIMARILY assess:
Answer: The accuracy of credit risk ratings and adequacy of the allowance for loan losses
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.
Which federal regulation governs the disclosure of terms and conditions for consumer deposit accounts, including fees and interest rates?
Answer: Regulation DD
Regulation DD implements the Truth in Savings Act and requires clear disclosure of deposit account terms, including interest rates, fees, and conditions.
A bank's compliance management system (CMS) is MOST effective when it includes:
Answer: Board and management oversight, compliance program, response to consumer complaints, and compliance audit
An effective CMS per regulatory guidance includes board/management oversight, a robust compliance program, a complaint management process, and independent compliance audits.