FREE CRMA Knowledge Questions and Answers

Which of the following best defines the term "risk appetite" in the context of risk management?

The quantitative assessment of risk in financial terms.

The maximum level of danger that an organization can tolerate.

The overall effect risks that an organization is ready to bear in order to achieve its goals.

An organization's documented risk-management plan.

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What is the major responsibility of leadership in creating a risk-aware culture in an organization?

Leading by example and exhibiting risk-aware conduct

Reduced transparency in risk management practices

Assigning all risk management responsibilities to subordinates

Discourages candid communication regarding hazards

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An internal auditor for a multinational retail chain thinks that a shop manager has been skimming money from cash sales by recording the transactions as accounts receivable and then writing down the accounts as bad debts. Which of the following anomalies is the most likely source of the auditor's concern?

A significantly greater rate of past-due accounts receivable than in comparable establishments.

A significantly larger percentage of past-due accounts receivable than in prior years.

Bad debt expenditure is substantially greater as a proportion of sales than in prior years.

Bad debt expenditure is substantially greater as a percentage of sales than at comparable retailers.

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Which of the following circumstances represents a possible internal control weakness?

The employee who makes bank deposits also produces the monthly bank reconciliation.

The same person who restrictively approves consumer checks also creates the bank's check deposit slips.

The same person that accepts cash from consumers creates a prelisting of cash receipts.

The same individual who enters cash received into the accounts receivable subsidiary ledger ensures that the information is immediately updated.

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An organization has introduced a new automated payroll system that includes a table of pay rates based on employee job categories. Which control should an internal auditor recommend to guarantee that the table is accurately updated and only utilized for legitimate pay changes?

A supervisor in the department who has the capacity to update the table must compare the modifications to a signed management authorization.

Any employee compensation modifications must be authorized and signed off on by a manager who is independent of the system and is unable to modify the table.

Restrict data-table access to management and line supervisors with the power to set pay rates.

Ensure that the automated system includes enough edit and reasonableness checks.

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An organization's chief audit executive (CAE) finds that the internal audit personnel lacks the necessary expertise to undertake a financial derivatives audit. Which of the following is the best line of action for the CAE to take?

Determine the necessary expertise and receive appropriate auditor training, even if the training would severely delay the project's timeline as set by the audit committee.

Notify the audit committee of the concern, and appoint the most qualified auditors on staff to conduct the audit engagement.

Employ a financial derivatives specialist to consult on the project, and reinforce the consultation with a financial derivatives seminar held locally.

Outsource the audit engagement to a qualified external auditing firm to avoid burdening the audit committee with the choice.

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Which of the following controls is unsuitable for sales in a manufacturing organization?

For credit sales transactions, the sales department must approve them.

Customers' orders are processed quickly.

Goods sent are matched to valid client orders.

The receiving department inspects returned goods for damage to ensure correct disposal.

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A manufacturing company realizes that the waste water discharged does not match permissible standards. Which control function will be the least successful in resolving the issue?

Pollutants are diluted by cleansing sinks and floor drains with significant amounts of clean water on a daily basis.

Prior to disposal, do a chemical analysis of the water for the permit-specified components.

Developing a preventative maintenance plan for the pretreatment system.

Posting signs informing staff about which chemicals can be disposed of through sinks and floor drains in the facility.

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A computer system will automatically lock a user's account after three unsuccessful login attempts. What kind of control does this circumstance represent?

Compensating control

Detective control

Preventive control

Corrective control

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Which of the following behaviors demonstrates a lack of proper professional care by an internal auditor auditing a store's cash function?

The auditor found a suspected fraud case and quickly reported it to management, but did not notify authorities outside the firm.

The audit report contained a well-supported suggestion for staff reductions, despite the fact that such reductions might have a negative impact on morale.

The auditor evaluated transaction samples to see how the cash function's process flows worked.

After concluding that the cash function's internal controls were effective, the audit report satisfied top management that no fraud had occurred.

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According to the Standards, how long should internal auditors who previously conducted or had managerial responsibility for an operation wait before participating in future internal audit work related to that operation?

2 years

1 year

5 months

2 months

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