SOC Risk Assessment & Management 3

Question 1

When assessing the severity of a risk in a SOC engagement, an auditor considers both the likelihood of a risk occurring and its:

Accepted Answer

Potential impact on service commitments

Answer

Risk severity is determined by combining the likelihood of occurrence with the potential impact on the entity's ability to meet its service commitments.

Question 2

A financial services firm uses a SOC 1 Type II report to assess a payroll processor. The Type II report differs from a Type I report in that it:

Accepted Answer

Includes testing of operating effectiveness over a period

Answer

A Type II report covers a defined period (minimum six months) and includes the auditor's tests of operating effectiveness, unlike the Type I which only addresses design.

Question 3

Which risk assessment framework is most commonly referenced alongside COSO when evaluating internal controls in a SOC engagement?

Accepted Answer

COSO Internal Control – Integrated Framework

Answer

COSO's Internal Control – Integrated Framework is the primary framework referenced in SOC engagements for evaluating control design and effectiveness.

Question 4

An entity's board sets a policy that no single transaction can expose the company to more than $500,000 in loss. This policy best represents the concept of:

Accepted Answer

Risk tolerance

Answer

Risk tolerance refers to the acceptable level of variation in outcomes relative to the achievement of objectives, often expressed in quantitative terms.

Question 5

During a SOC 2 examination, the auditor notes that the service organization's risk assessment process does not consider fraud risk. This is most likely a deficiency related to:

Accepted Answer

CC3.3 – Considers the potential for fraud in assessing risks

Answer

CC3.3 specifically requires that the risk assessment process consider the potential for fraud, including fraudulent financial reporting and misappropriation of assets.

(SOC) System and Organization Controls Certification Practice Test

(SOC) System and Organization Controls Certification Practice Test

SOC Risk Assessment & Management 3