CFS Internal Controls & Auditing 3

Question 1

Which type of audit opinion is issued when financial statements are free of material misstatement but the auditor has a scope limitation?

Accepted Answer

Qualified opinion

Answer

A qualified opinion is issued when the financial statements are fairly presented except for a specific matter, including certain scope limitations.

Question 2

The three-lines-of-defense model assigns which responsibility to internal audit?

Accepted Answer

Third line: independent assurance

Answer

Internal audit is the third line of defense, providing independent assurance over the effectiveness of governance, risk management, and internal controls.

Question 3

When performing a walkthrough, an auditor is primarily trying to:

Accepted Answer

Confirm that controls are described accurately in documentation

Answer

A walkthrough traces a transaction from initiation through recording to verify that the process works as documented, confirming the accuracy of control descriptions.

Question 4

A key risk indicator (KRI) for accounts payable fraud would most likely be:

Accepted Answer

Increasing number of new vendors with P.O. box addresses only

Answer

Vendors with only P.O. box addresses and no physical location are a red flag for fictitious vendor schemes in accounts payable.

Question 5

Management override of internal controls is considered particularly dangerous because:

Accepted Answer

Controls cannot detect or prevent actions by those who designed them

Answer

Controls are typically designed by management, so management has the authority and knowledge to circumvent them, making management override a significant inherent limitation.

(CFS) Certified Fraud Specialist Practice Test

(CFS) Certified Fraud Specialist Practice Test

CFS Internal Controls & Auditing 3