GAP Auditing Principles & Procedures 3

Question 1

Under a GAP audit framework, what does 'dual control' refer to in the context of claims processing?

Accepted Answer

Requiring two authorized individuals to approve or process a transaction

Answer

Dual control is an internal control requiring two authorized individuals to review or approve transactions, reducing the risk of fraud or error in claims processing.

Question 2

Which of the following is a key indicator of potential misrepresentation that a GAP auditor should flag during contract review?

Accepted Answer

A vehicle purchase price significantly below book value with no explanation

Answer

A vehicle purchase price significantly below market value without documentation raises a red flag for potential misrepresentation or fraud in the underlying transaction.

Question 3

What is the auditor's responsibility when they discover a potential violation of state insurance regulations during a GAP program audit?

Accepted Answer

Document the finding and escalate it to appropriate compliance or legal personnel

Answer

Auditors must document all findings, including potential regulatory violations, and escalate them to compliance or legal personnel who can determine the appropriate response.

Question 4

In GAP auditing, what does 'stratification' of a contract population help an auditor accomplish?

Accepted Answer

Divide contracts into subgroups by characteristics (e.g., loan term, LTV) to target sampling more effectively

Answer

Stratification groups contracts by shared characteristics so auditors can design samples that adequately represent higher-risk subgroups within the overall population.

Question 5

Which internal control is most effective at preventing a GAP certificate from being issued after a total loss has already occurred?

Accepted Answer

System-level date validation that cross-checks certificate issuance date against the reported loss date

Answer

Automated date validation controls prevent back-dating by cross-referencing the issuance date against loss dates, making post-loss enrollment technically impossible.

(GAP) Guaranteed Asset Protection Certified Practice Test

(GAP) Guaranteed Asset Protection Certified Practice Test

GAP Auditing Principles & Procedures 3