1: corporate governance

Question 1

What are the four topics that pertain to financial reporting?

Answer 1

Public Accounting audit Committees
corporate responsibility for financial reports
improper influence on conduct of audits
forfeiture of certain bonuses and profits

Question 2

What are the responsibilities of the audit committee?

Answer 2

Appoint, compensate and oversee auditor

Question 3

What are the independence requirements for an audit committee member?

Answer 3

independent member of board
cannot accept consulting fees
cannot be an affiliated person

Question 4

An audit committee establishes complaint procedures that include:

Answer 4

receive, retain, and treat complaints regarding accounting, auditing, and internal controls.
confidential or anonymous submissions.

Question 5

Corporate responsibility of CEO and CFO

Answer 5

must certify that annual and quarterly reports are reviews, contain no material untruth, and statements are fairly stated.

Question 6

Corporate responsibility of CEO and CFO regarding internal controls

Answer 6

must certify that officers are responsible for establishing and maintaining internal controls, designed to ensure that material info is provided to internal and external users, evaluate effectiveness.

Question 7

What must the CEO and CFO report to audit and audit committee?

Answer 7

all significant deficiencies in the design or operation of internal controls
any fraud, material or not, that involve management

Question 8

SOX prohibits improper influence on the conduct of audits defined as:

Answer 8

No officer can influence, coerce, manipulate, or mislead an independent CPA engaged in an audit.

Question 9

What are the financial Penalties on officers who are responsible for materiel misstatements resulting from their misconduct?

Answer 9

refund any bonus during last 12 months,

refund any profits from sale of securities in last 12 months

Question 10

Disclosures related to periodic reports

Answer 10

financial statements disclose all material off balance sheet transactions
proforma financial statements shall include all relevant info and shall not include misleading info

Question 11

what qualifies an individual as a financial expert?

Answer 11

understanding of GAAP
experience in presentation of auditing FS
application of GAAP
experience with internal controls
understanding of audit committee functions

Question 12

Components of COSO internal control integrated framework

Answer 12

Control Environment- managements philosophy towards controls. core of any system of internal control

Risk Assessment- process of identifying, analyzing and managing risk

Information and Communication- identify, process, exchange into needed to manage and control operations

Monitoring-ongoing reliability of info by monitoring and testing data

Control Activities-policies and procedures that ensure actions are taken to address risks related to achievement of management objectives

Question 13

what are the 5 principles associated with controls enviorment

Answer 13

commitment to ethics and integrity
board independence and oversight
organizational structure
commitment to competence
accountability

Question 14

what are the 4 principles associated with risk assessment

Answer 14

specify objectives
identify and analyze risk (risk assessment)
consider potential for fraud
identify and assess change management

Question 15

what are the 3 principles associated with control activities

Answer 15

select and develop control activities (risk reduction)
select and develop tech controls
deploy through policies and procedures

Question 16

what are the 3 principles associated with info and communication

Answer 16

obtain and use info
internally communicate info
communicate with external parties

Question 17

what are the 2 principles associated with monitoring

Answer 17

ongoing and separate evaluation

communication of deficiencies

Question 18

name and describe 3 objectives within coso framework

Answer 18

operating: effectiveness and efficiency of entitys operations
reporting: reliability, timeliness and transparency of an entitys reporting
compliance: necessary to ensure the entity is adhering to all laws and regulations

Question 19

What themes does the ERM framework encompass?

Answer 19

aligning risk appetite and strategy
enhancing risk response decisions
reducing operating surprises and losses
identifying and managing multiple and cross enterprise risks
seizing opportunities
improving deployment of capital

Question 20

What are the components of COSO ERM framework?

Answer 20

internal environment
objective setting
event identification
accountability
risk response
control activities
info and communication
monitoring

Question 21

how does the internal professional practices framework define internal auditing?

Answer 21

internal auditing is an independent and objective assurance and consulting activity designed to add value and improve an orgs operations
internal auditing adds value and helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of the following: risk management, control, governance processes

Question 22

describe the attribute standards of internal standards for the practice of internal auditing

Answer 22

address issues related to auditor independence, technical proficiency, and professional care

Question 23

describe the performance standards of the international standards for the practice of internal auditing

Answer 23

address planning and supervision of the engagement, documentation of evidence or basis for conclusions and generic reporting requirements

Question 24

what are implementation standards of internal standards for the practice of internal auditing

Answer 24

embedded within the attribute and reporting standards to address the requirements of implementing both assurance and consulting activities

Question 25

identify and describe the 4 elements of the code of ethics adopted by international standards

Answer 25

integrity: internal auditors are to perform work with honesty, diligence, and responsibility, observing both law and organization objectives
objectivity: internal auditors exhibit professional objectivity in gathering, evaluating, and communication info and should not participate in relationships that represent conflicts of interest
confidentiality: internal auditors do not disclose info without appropriate authority or use info for personal gain
competency: internal auditors apply the knowledge, skills, and experience needed in the performance of internal auditing services.

Question 26

what are the 4 headings of attribute standards

Answer 26

purpose, authority, and responsibility
independence and objectivity
proficiency and due professional care
quality assurance and improvement program

Question 27

what are the 7 headings of performance standards

Answer 27

managing the internal audit activity
nature of work
engagement planning
performing the engagement
communicating results
monitoring progress
managements acceptance of risk