CFS Internal Controls & Auditing 2

Question 1

Which COSO component addresses the organization's risk appetite and tolerance levels?

Accepted Answer

Risk Assessment

Answer

Risk Assessment is the COSO component where management identifies and analyzes risks, including setting acceptable risk appetite and tolerance thresholds.

Question 2

A company requires that journal entries above $10,000 be approved by the CFO. This control is best classified as:

Accepted Answer

Preventive control

Answer

Requiring CFO approval before posting large journal entries is a preventive control because it stops unauthorized entries from being recorded.

Question 3

During an audit, an auditor discovers that the same employee both approves purchase orders and reconciles vendor statements. This represents a failure of:

Accepted Answer

Segregation of duties

Answer

Allowing one employee to both authorize transactions and perform the reconciliation eliminates the segregation of duties needed to prevent and detect fraud.

Question 4

An auditor uses computer-assisted audit techniques (CAATs) primarily to:

Accepted Answer

Test large volumes of transactions efficiently

Answer

CAATs allow auditors to analyze entire populations of transactions quickly, detecting anomalies that sampling might miss.

Question 5

Which of the following best describes a 'tone at the top' weakness that increases fraud risk?

Accepted Answer

Senior management overriding established approval limits

Answer

When senior management routinely overrides controls, it signals that controls are not respected, eroding the ethical culture and increasing fraud risk.

(CFS) Certified Fraud Specialist Practice Test

(CFS) Certified Fraud Specialist Practice Test

CFS Internal Controls & Auditing 2