CFC Internal Controls & Compliance 3

Question 1

An organization's internal audit function discovers that IT access controls allow users to override journal entries without a secondary approval. This is an example of which type of control gap?

Accepted Answer

Application control deficiency

Answer

Application controls are controls built directly into software applications, and the ability to override journal entries without approval is an application-level control deficiency.

Question 2

Under the FCPA (Foreign Corrupt Practices Act), what is required of issuers regarding their books and records?

Accepted Answer

Books must accurately reflect transactions and assets in reasonable detail

Answer

The FCPA's books and records provision requires issuers to keep records that accurately and fairly reflect transactions and asset dispositions in reasonable detail.

Question 3

A financial controller implements a monthly bank reconciliation process. Which control objective does this primarily serve?

Accepted Answer

Completeness and accuracy of cash balances

Answer

Bank reconciliations are detective controls that verify the completeness and accuracy of recorded cash transactions by comparing book balances to bank statements.

Question 4

When a company relies on a third-party service organization to process payroll, management should obtain which report to understand the controls at that organization?

Accepted Answer

A SOC 1 Type II report

Answer

A SOC 1 Type II report (formerly SAS 70) evaluates the design and operating effectiveness of controls at a service organization relevant to user entities' financial reporting.

Question 5

Which of the following control activities is MOST effective at preventing fraudulent disbursements?

Accepted Answer

Dual signatures required for checks above a materiality threshold

Answer

Requiring dual signatures for large disbursements is a preventive control that stops unauthorized payments before they are made.

(CFC) Certified Financial Controller Practice Test

(CFC) Certified Financial Controller Practice Test

CFC Internal Controls & Compliance 3