Compliance and Auditing Internal Controls 3

Question 1

What is 'control testing' in the context of an audit or SOX compliance?

Accepted Answer

Evaluating whether internal controls are designed effectively and operating as intended

Answer

Control testing involves procedures performed to evaluate whether controls are suitably designed and operating effectively to prevent or detect material misstatements.

Question 2

Which term describes a control that detects errors after they have already occurred?

Accepted Answer

Detective control

Answer

Detective controls identify and flag errors, irregularities, or fraudulent activities that have already occurred, triggering investigation and corrective action.

Question 3

What is the purpose of a 'policy and procedure' as an internal control?

Accepted Answer

To provide documented guidance on how activities should be performed consistently

Answer

Policies and procedures serve as control activities by providing clear, documented guidance on how business activities should be conducted consistently to achieve objectives and prevent errors.

Question 4

In IT access controls, what is the 'principle of least privilege'?

Accepted Answer

Granting users only the minimum access rights needed to perform their job functions

Answer

The principle of least privilege requires that users, programs, and systems be granted only the minimum access rights necessary to perform their authorized functions.

Question 5

What is a 'control self-assessment' (CSA) in internal controls?

Accepted Answer

A process where business units evaluate the effectiveness of their own controls

Answer

Control Self-Assessment (CSA) is a process where management and staff within a business area assess the effectiveness of controls over their own processes and risks.

Compliance and Auditing Practice Test

Compliance and Auditing Practice Test

Compliance and Auditing Internal Controls 3