B1 Corporate Gov and Operations Mgmt

Question 1

COSO ERM - entity’s assignment of authority and responsibility

Answer 1

Internal environment

Question 2

COSO ERM - entity’s reporting deficiencies

Answer 2

Monitoring

Question 3

COSO IC framework - entity’s timely reporting of identified IC deficiencies

Answer 3

Monitoring

Question 4

Having a CPA at work gives you

Answer 4

financial reporting competencies

Question 5

SOX AC says that board members or independent auditor needs to be independent

Answer 5

Board member

Question 6

SOX requires companies to have a _____ due to scandals etc.

Answer 6

Audit committee

Question 7

SOX AC requires that one of more members be a financial expert and that they disclose

Answer 7

state the existence of financial expert(s) on the AC or reasons why they don’t

Question 8

benefit of having a financial expert on the AC

Answer 8

financial sophistication and can serve as a resource for the AC

Question 9

Choosing a CPA who is independent for the AC under SOX

Answer 9

evaluate his qualifications and be designated a financial expert based on the mix of knowledge and experience

Question 10

SOX requires a code of ethics, it should include:

Answer 10

compliance with rules, laws, and regulations; honest and ethical conduct; and full, fair, accurate, and timely disclosure in periodic FS

Question 11

SOX requires mgmt’s report on IC include:

Answer 11

statement that the auditor has attested and reported on mgmt’s I/C
statement of mgmt’s responsibilities for maintaining I/C
conclusion about the effectiveness of the company’s I/C

Question 12

SOX provides greater transparency of:

Answer 12

AC, adequacy of I/C, and a code of ethics

Question 13

Communication by external auditor is

Answer 13

external communication

Question 14

Treadway commission was established by:

Answer 14

private sponsoring organizations

Question 15

Committee on sponsoring organizations prepared the IC integrated framework

Answer 15

to help businesses assess IC

Question 16

Response to potential risk - Mgmt elects to divest the company from a risky area

Answer 16

Avoidance

Question 17

Response to potential risk - Mgmt insures the risky area

Answer 17

Sharing

Question 18

Response to potential risk - Mgmt buys land in the risky area and in a non risky area too

Answer 18

Reduction

Question 19

Response to potential risk - Mgmt treats potential damages as a part of their business model

Answer 19

Acceptance

Question 20

Mgmt consults population trends and affluence in the region

Answer 20

Event Inventory

Question 21

Tone at the top includes

Answer 21

orgs commitment to compliance and confidentiality; prohibits conflicts of interest and self dealings; limits gifts and gratuities or establishes required reporting

Question 22

Companies inherent risk

Answer 22

amount of money they could lose without doing anything to stop it

Question 23

Residual risk

Answer 23

risk that remains after mgmt responds to risk

Question 24

Control activities are closely related to:

Answer 24

risk responses

Question 25

for ERm to function effectively there cant be

Answer 25

material weakness in IC

Question 26

criteria for evaluating ERM

Answer 26

components of ERM framework

Question 27

COSO ERM entity’s integrity and ethical values

Answer 27

internal environment

Question 28

Fulfillment of compensation and promotions

Answer 28

HR

Question 29

director’s duty to be loyal to the corporation, when presented with a corporate opportunity

Answer 29

offer the opportunity to the corp and can accept it if the corp rejects it

Question 30

the following are limitations of ERM

Answer 30

operates at different levels with respect to different objectives; deals with risk, which relates to the future and is inherently uncertain; as effective as the people responsible for its functioning

Question 31

Moving a production facility due to sourcing raw materials locally is what type of response to risk

Answer 31

risk reduction

Question 32

COSO ongoing and separate evaluations to identify and address changes in internal control

Answer 32

Change identification

Question 33

necessary to be an AC financial expert to SOX

Answer 33

Experience with internal accounting controls

Question 34

the nature of the Board of director’s relationship to their company is:

Answer 34

fiduciary

Question 35

correspondence to or from the auditor when should the BoD be informed?

Answer 35

when it comes to understanding and exercising oversight related to financial reporting and related internal controls

Question 36

Compliance programs and employee handbooks need to state

Answer 36

sound integrity and ethical values and understood and set the standard of conduct for financial reporting

Question 37

evidence of ongoing monitoring of IC are the following

Answer 37

CEO and CFO are required to formally verify that all disbursements; disaggregated gross margin and operating margin date by line of coverage; CFO reviews changes in liability reserves in excess of a specified threshold

Question 38

board members reevaluate its mission vision and values to determine the accuracy of the strategic statements to refine them. Which activity relates to which component of IC

Answer 38

Monitoring

Question 39

risk appetite has been exceeded when:

Answer 39

likelihood and impact of negative events significantly exceeds residual risks

Question 40

related objectives are the following

Answer 40

reporting, operations, compliance objectives

Question 41

establishment of ethics hotline and related corporate training is treated as?

Answer 41

related compliance objective

Question 42

company wide uniform chart of accounts would be treated as?

Answer 42

related reporting objective

Question 43

conducting focus groups would most likely be?

Answer 43

related operations objective

Question 44

broad, company wide objectives, such as coordinating company-wide resources to produce a service in the top quartile of quality is?

Answer 44

strategic objective