Corporate Governance Risk Management & Internal Controls

Question 1

What framework is most widely used for evaluating internal controls over financial reporting?

Accepted Answer

COSO Internal Control – Integrated Framework

Answer

ISO 31000

Answer

COBIT 5

Answer

Basel III

Question 2

What does SOX Section 404 require of management?

Accepted Answer

An annual assessment of the effectiveness of internal controls over financial reporting

Answer

Quarterly certifications of all material accounting estimates

Answer

A real-time audit of all financial transactions

Answer

Annual disclosure of all related-party transactions

Question 3

What is 'enterprise risk management' (ERM)?

Accepted Answer

A framework for identifying, assessing, and managing risks across the entire organization to achieve strategic objectives

Answer

An IT security system protecting company databases from breaches

Answer

A financial model used to stress-test a company's balance sheet

Answer

A regulatory requirement for banks to maintain capital reserves

Question 4

Which of the following is a 'preventive' internal control?

Accepted Answer

Segregation of duties

Answer

Bank reconciliation

Answer

Variance analysis

Answer

Audit trail review

Question 5

What is a 'material weakness' in internal controls?

Accepted Answer

A significant deficiency that creates a reasonable possibility of a material misstatement in financial statements

Answer

A minor bookkeeping error identified during year-end close

Answer

An audit finding that results in a restatement of prior-year earnings

Answer

A control gap limited to a single non-critical business unit

Question 6

Which board committee is primarily responsible for overseeing the company's risk management framework?

Accepted Answer

Risk Committee or Audit Committee

Answer

Compensation Committee

Answer

Nominating Committee

Answer

Audit Committee