CPA Risk Assessment & Underwriting

Question 1

What is the first step in CPA risk assessment?

Accepted Answer

Identifying potential hazards and threats

Answer

Risk assessment begins with systematic identification of all potential hazards, forming the foundation for all subsequent analysis.

Question 2

What is the hierarchy of controls in CPA risk management?

Accepted Answer

Elimination, substitution, engineering, administrative, then PPE

Answer

The hierarchy prioritizes the most effective controls first, from eliminating the hazard to using PPE as last resort.

Question 3

What is a risk matrix used for in CPA practice?

Accepted Answer

Evaluating risks by plotting likelihood against impact severity

Answer

A risk matrix plots probability against consequences to prioritize which risks need immediate attention.

Question 4

What does residual risk mean in CPA practice?

Accepted Answer

Risk remaining after all controls are implemented

Answer

Residual risk is the level remaining after practical controls are applied. Some is usually accepted as eliminating all risk is rarely feasible.

Question 5

Why is regular review important in CPA risk management?

Accepted Answer

Conditions change and new risks emerge requiring updates

Answer

Regular reviews ensure assessments remain current as conditions change and lessons from incidents are incorporated.

(CPA) Certified Practicing Accountant Practice Test