CIG Governance & Internal Controls 5

Question 1

The principle of 'management override' is considered the most significant limitation of internal control because it:

Accepted Answer

Allows senior executives to circumvent established controls

Answer

Management override allows those with authority to bypass established controls, which cannot be fully prevented by the control system itself and represents its most significant inherent limitation.

Question 2

When an IG issues a management advisory rather than a formal audit report, the PRIMARY governance implication is that:

Accepted Answer

The matter is advisory in nature and management response is not mandated by statute

Answer

Management advisories communicate control concerns informally without the statutory follow-up and response requirements triggered by formal audit reports.

Question 3

Which scenario BEST demonstrates a control activity addressing authorization and approval?

Accepted Answer

Requiring the CFO to approve all contracts over $100,000

Answer

Requiring CFO approval above a dollar threshold is a classic authorization control that ensures transactions meet management's criteria before execution.

Question 4

In the context of federal oversight, 'functional independence' for an IG MOST critically means the IG:

Accepted Answer

Can conduct audits and investigations without management approval or interference

Answer

Functional independence means the IG can plan, conduct, and report on audits and investigations without agency management controlling, limiting, or impeding the work.

Question 5

A newly appointed IG finds that the agency has no documented risk assessment process. Under the COSO framework, this gap MOST directly undermines which control objective?

Accepted Answer

Achievement of operational objectives through informed control design

Answer

Without risk assessment, controls cannot be appropriately designed to address relevant threats, undermining the agency's ability to achieve objectives through effective control design.

(CIG) Certified Inspector General Practice Test

(CIG) Certified Inspector General Practice Test

CIG Governance & Internal Controls 5