CFC Internal Controls & Compliance 4

Question 1

Which concept ensures that IT systems' data inputs, processing, and outputs are complete, accurate, and authorized?

Accepted Answer

Application controls

Answer

Application controls are embedded within specific software applications to ensure the completeness, accuracy, and authorization of data processed by those systems.

Question 2

Under Dodd-Frank, the SEC's whistleblower program provides financial incentives to individuals who report securities law violations. What is the minimum percentage of sanctions that a whistleblower may receive?

Accepted Answer

10%

Answer

Under Dodd-Frank's SEC whistleblower program, eligible whistleblowers may receive between 10% and 30% of sanctions collected when the total exceeds $1 million.

Question 3

A controller discovers that the company's revenue recognition policy allows premature recognition of sales before delivery. Which COSO component has most clearly failed?

Accepted Answer

Control Environment

Answer

The Control Environment includes the ethical tone, policies, and management's commitment to integrity; a policy that allows improper revenue recognition reflects a failed Control Environment.

Question 4

An organization uses a 'three lines of defense' model. Which line is represented by the internal audit function?

Accepted Answer

Third line

Answer

In the three lines of defense model, the third line is internal audit, which provides independent assurance; the first line is operational management, and the second line is risk and compliance functions.

Question 5

A company's external auditors issue an adverse opinion on internal controls over financial reporting. What does this mean for investors?

Accepted Answer

There is a material weakness that could result in a material misstatement

Answer

An adverse ICFR opinion means the auditor has identified one or more material weaknesses, indicating the controls may not prevent or detect material misstatements.

(CFC) Certified Financial Controller Practice Test

(CFC) Certified Financial Controller Practice Test

CFC Internal Controls & Compliance 4