CGFO Internal Controls 4

Question 1

A government's internal audit function should be organizationally positioned to ensure:

Accepted Answer

Independence from the activities it audits

Answer

Independence is the cornerstone of internal audit credibility, requiring separation from the operations being reviewed.

Question 2

Which of the following scenarios represents a 'management override' of internal controls?

Accepted Answer

A supervisor approves a journal entry outside the normal approval process

Answer

Management override occurs when a manager circumvents established controls, which is a significant fraud risk factor.

Question 3

Under COSO's Enterprise Risk Management (ERM) framework, 'risk appetite' is best described as:

Accepted Answer

The amount of risk an entity is willing to accept in pursuit of its objectives

Answer

Risk appetite is the broad amount of risk an entity is willing to accept in pursuit of value and its mission.

Question 4

A government entity uses an automated system that prevents a purchase order from being issued without a corresponding budget appropriation. This is an example of:

Accepted Answer

An automated application control

Answer

Automated application controls are embedded within software applications and enforce business rules without human intervention.

Question 5

The Sarbanes-Oxley Act's influence on government internal controls is most notable because it:

Accepted Answer

Raised awareness of control environment importance across all sectors

Answer

While SOX applies to public companies, it elevated internal control consciousness and best practices across public and private sectors.

(CGFO) Certified Government Finance Officer Practice Test

(CGFO) Certified Government Finance Officer Practice Test

CGFO Internal Controls 4