RCC Risk Management and Internal Controls 2

Question 1

Which risk management framework is most commonly referenced by U.S. public companies for internal control over financial reporting?

Accepted Answer

COSO Internal Control – Integrated Framework

Answer

The COSO Internal Control – Integrated Framework is the predominant standard referenced by U.S. public companies under SOX requirements.

Question 2

A control that prevents an error or irregularity from occurring in the first place is best described as a:

Accepted Answer

Preventive control

Answer

Preventive controls are designed to stop errors or fraud before they occur, unlike detective controls that identify issues after the fact.

Question 3

Under enterprise risk management, 'risk appetite' is best defined as:

Accepted Answer

The amount of risk an organization is willing to accept in pursuit of its objectives

Answer

Risk appetite represents the level of risk an organization is prepared to accept while pursuing its strategic objectives.

Question 4

Which of the following best describes the 'three lines of defense' model?

Accepted Answer

Operations, risk/compliance functions, and internal audit

Answer

The three lines of defense model assigns risk ownership to operational management (first), oversight to risk and compliance functions (second), and independent assurance to internal audit (third).

Question 5

A company discovers that a single employee can both authorize and process payments. This is an example of a failure in:

Accepted Answer

Segregation of duties

Answer

Segregation of duties requires that no single individual controls all phases of a transaction to reduce the risk of error or fraud.

(RCC) Regulatory Compliance Certification Practice Test

(RCC) Regulatory Compliance Certification Practice Test

RCC Risk Management and Internal Controls 2