GRC Internal Controls & Audit Processes 4

Question 1

During a risk-based audit, auditors prioritize testing based on:

Accepted Answer

Areas with the greatest inherent risk and weak controls

Answer

Risk-based auditing allocates resources to areas with high inherent risk and insufficient controls to address that risk.

Question 2

What distinguishes a 'significant deficiency' from a 'material weakness' in internal controls?

Accepted Answer

A material weakness represents a reasonable possibility of material misstatement; a significant deficiency is less severe

Answer

A material weakness is more severe, indicating a reasonable possibility of a material misstatement; a significant deficiency is noteworthy but less severe.

Question 3

Which sampling technique gives every item in the population an equal chance of selection?

Accepted Answer

Random sampling

Answer

Random sampling uses statistical methods to ensure every item has an equal probability of being chosen.

Question 4

The 'three lines of defense' model assigns internal audit to which line?

Accepted Answer

Third line

Answer

Internal audit is the third line of defense, providing independent assurance over the first (operations) and second (risk/compliance) lines.

Question 5

What is the purpose of an 'audit trail'?

Accepted Answer

A chronological record of transactions and events that enables reconstruction and verification

Answer

An audit trail captures a time-stamped sequence of records to allow reconstruction of transactions and detection of unauthorized activity.

(GRC) Governance, Risk, and Compliance Certification Practice Test

(GRC) Governance, Risk, and Compliance Certification Practice Test

GRC Internal Controls & Audit Processes 4