Chapter 3

Question 1

WHAT ARE THE 3 SUBSETS OF THE KEY GOVERNANCE ELEMENTS

Answer 1

1. GOVERNANCE
2. RISK MGMT
3. INTERNAL CONTROL

Question 2

THE COMBINATION OF PROCESSES AND STRUCTURES IMPLEMENTED BY THE BOARD TO INFORM, DIRECT, MANAGE, AND MONITOR THE ACTIVITIES OF THE ORG TOWARD THE ACHIEVEMENT OF ITS OBJECTIVES

Answer 2

GOVERNENANCE

Question 3

WHAT ARE THE TWO BROAD AREAS OF GOVERNANCE UNDER THE RESPONSIBILITY OF THE BOD

Answer 3

1. STRATEGIC DIRECTION

2. GOVERNANCE OVERSIGHT

Question 4

HOW MANAGEMENT PLANS TO ACHIEVE THE ORG’S OBJECTIVES

Answer 4

STRATEGY OR STRATEGIC DIRECTION

Question 5

THE BOD ROLE IN MANAGING AND MONITORING THE ORG’S OPERATIONS

Answer 5

GOVERNANCE OVERSIGHT

Question 6

KEY MEMBERS OF THE GOVERNANCE OVERSIGHT PROCESS

Answer 6

1. BOD
2. SENIOR MGMT
3. INTERNAL AUDIT
4. EXTERNAL AUDIT

Question 7

ANY PARTY WITH A DIRECT OR INDIRECT INTEREST IN AN ORGANIZATION’S ACTIVITIES AND OUTCOMES

Answer 7

STAKEHOLDER

Question 8

3 TYPES OF STAKEHOLDERS

Answer 8

1. DIRECTLY INVOLVED
2. INTERESTED
3. INFLUENCED

Question 9

4 TYPES OF OUTCOMES TO CONSIDER WHEN ASSESSING RISK

Answer 9

1. FINANCIAL
2. COMPLIANCE
3. OPERATIONS
4. STRATEGIC

Question 10

THE AMOUNT OF RISK, ON A BROAD LEVEL. AN ORG IS WILLING TO ACCEPT IN PURSUIT OF ITS BUSINESS OBJECTIVES

Answer 10

RISK APPETITE

Question 11

THE ACCEPTABLE LEVELS OF RISK SIZE AND VARIATION RELATIVE TO THE ACHIEVEMENT OF OBJECTIVE, WHICH MUST ALIGN WITH THE ORG’S RISK APPETITE

Answer 11

RISK TOLERANCE

Question 12

WHAT ARE THE GOVERNANCE RESPONSIBILITIES OF SENIOR MGMT

Answer 12

1. ENSURING FULL SCOPE OF DIRECTION AND AUTHORITY DELEGATED IS UNDERSTOOD
2. IDENTIFY PROCESSES AND ACTIVITIES INTEGRAL TO EXECUTING THE GOVERNANCE DIRECTION PROVIDED BY THE BOARD
3. EVALUATE ABILITY TO DELEGATE LOWER RISK ITEMS TO LOWER MGMT

Question 13

WHAT ARE THE RESPONSIBILITIES OF RISK OWNERS

Answer 13

1. EVALUATING RISK MGMT ACTIVITIES ARE DESIGNED ADEQUATELY
2. ASSESS ONGOING CAPABILITY OF THE ORG TO EXECUTE RISK MGMT ACTIVITIES
3. DETERMINE WHETHER RM ACTIVITIES ARE OPERATING AS DESIGNED
4. CONDUCT DAY TO DAY MONITORING ACTIVITIES
5. ENSURE INFORMATION NEEDED BY THE BOARD IS ACCURATE AND READILY AVAILABLE

Question 14

WHAT IS THE ROLE OF THE INTERNAL AUDIT FUNCTION IN GOVERNANCE ACTIVITIES

Answer 14

ASSESSING AND MAKING APPROPRIATE RECOMMENDATIONS FOR IMPROVING THE GOVERNANCE PROCESS IN ITS ACCOMPLISHMENT OF OBJECTIVES

Question 15

4 IA OBJECTIVES IN EVALUATING GOVERNANCE

Answer 15

1. PROMOTING APPROPRIATE ETHICS AND VALUES WITHIN THE ORG
2. ENSURING EFFECTIVE ORG PERFORMANCE MGMT AND ACCOUNTABILITY
3. COMMUNICATING RISK CONTROL INFORMATION TO APPROPRIATE ARES OF THE ORG
   COORDINATING ACTIVITIES OF AND COMMUNICATING INFORMATION AMONG THE BOARD, AUDITORS, AND MGMT

Question 16

REPRESENTS THE INTERNAL CONTROL ACTIVITIES CONDUCTED BY INDIVIDUALS AND MGMT

Answer 16

FIRST LINE OF DEFENSE

Question 17

OTHER ASSURANCE ACTIVITIES SUCH AS CONTROLLERS, COMPLIANCE OFFICERS, HEALTH & SAFETY SPECIALIST, AND QUALITY ASSURANCE EXPERTS

CAN ALSO PROVIDE INDEPENDENT ASSURANCE TO THE BOD OR SENIOR MGMT

Answer 17

SECOND LINE OF DEFENSE

Question 18

THE MOST INDEPENDENT AND OBJECTIVE FORM OF ASSURANCE WHICH INCLUDES INTERNAL AND EXTERNAL AUDIT

Answer 18

THIRD LINE OF DEFENSE

Question 19

WHERE DO THE 3 LINES REPORT

Answer 19

FIRST LINE = SENIOR MGMT
SECOND LINE = SENIOR MGMT
THIRD LINE = SENIOR MGMT AND BOD

Question 20

DIFFERENT ASSURANCE ACTIVITIES DO NOT COORDINATE AND COLLABORATE SUFFICIENTLY RESULTING IN REDUNDANT AND UNNECESSARY ASSURANCE ACTIVITIES

Answer 20

AUDIT FATIGUE

Question 21

COORDINATED PLAN DEVELOPED TO FACILITATE AWARENESS OF WHAT ASSURANCE ACTIVITY WILL PERFORM ASSESSMENTS WHEN, AND HOW OTHER ASSURANCE ACTIVITIES CAN RELY ON THAT WORK

COMBATS AUDIT FATIGUE

Answer 21

COMBINED ASSURANCE MODEL