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Foundations > enforcement > Flashcards

enforcement Flashcards

1
Q

Informal supervisory actions are used to correct practices that warrant a less severe form of action. Informal actions are not legally enforceable nor are they made publicly available.

A

TRUE

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2
Q

Types of Informal Enforcement Actions

A

Commitments, Board Resolution, MOU

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3
Q

Types of Formal Enforcement Actions

A

Written Commitment, Cease & Desist, Temporary Cease & Desist, Prohibition and Removal, Prompt corrective action directives, Termination of Federal Reserve membership and FDIC Insurance; and Appointment of a conservator

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4
Q

Formal supervisory actions may be taken against a financial institution or any institution?affiliated party and are legally enforceable and made publicly available.

A

TRUE

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5
Q

4(m) Agreement

A

Corrective action against any FHC that fails to maintain compliance with the requirements to become a FHC.

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6
Q

Formal actions are drafted by the Board in conjunction with a Reserve Bank and can be issued against individuals and financial institutions.

A

TRUE

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7
Q

Primary institutions supervised by the FRB

A

State member banks; BHCs; FBOs, Edge and Argeement Corps, State and Federal Branches/Agencies of Foreign Banks,

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8
Q

At what point do you assign a rating to a non-bank subsidiary of a BHC?

A

TA of >= $10 MM or 5% of consolidated captial

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9
Q

4 goals of BS&R

A
  1. protect depositors 2. protect consumers 3. stabilize the monetary system 4. ensure safety and soundness
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10
Q

The FRS acts as ____for the US Treasury

A

a fiscal agent

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11
Q

Dual control of the vault should include

A
  1. combination lock/separate key 2. movement log
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12
Q

5 components of the COSO internal control framework

A
  1. control environment 2. control activities 3. information and communication 4. monitoring 5. risk assessment
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13
Q

Segregation of duties should NOT combine

A
  1. authorization to execute the transaction 2. ability to record the transaction 3. custody of the asset
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14
Q

Section 201 of Sarbanes Oxley

A

Prohibits accounting firm from acting as the external auditor of public company during same period the firm provides internal audit work

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15
Q

Part 363 of FDIC Regs

A

Privately held institutions w/assets of $500MM or more adhere to Section 201. Small non-public depository institution, less than $500MM in TA, are encouraged to follow Section 201.

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16
Q

according to FDICIA 112 an independent audit committee comprised entirely of outside directors is necessary for institutions

A

with assets > or = $500MM

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17
Q

Part 363 Annual Report

A

Due 90 after end of fiscal year, if publicly traded. Due 120 days if not public

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18
Q

Management letter sent to regulators

A

within 15 days of receipt

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19
Q

Audit Committee of institution more than $3 Billion in TA

A

Must include members with banking or related financial mgmt expertise, have access to own outside legal counsel, and not include large customers of institution.

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20
Q

Detective Control

A

Reveals errors and irregularities AFTER they have already occurred

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21
Q

Preventative Control

A

minimizes the likelihood that an undesirable event can occur

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22
Q

Directive Control

A

verbal and written directives from management and the board. policies and procedures that establish limits and define procedures

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23
Q

Compensating Control

A

alternative controls when at least one of the above, especially preventative, is
weak or absent

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24
Q

The ultimate responsibility for an effective audit function rest with whom?

A

The Board of Directors

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25
Q

The components of Operational Risk

A

Board and Senior Management Oversight, Policies, Procedures, and Limits, Risk Identification and Assessment, Risk Monitoring and Reporting, and Risk Transfer

26
Q

Internal Audit SCARE factors

A

Safeguarding assets; Compliance with policies, plans, procedures & laws; Accomplishment of objectives; Reliability of financial information; Economical use of resources.

27
Q

Primary objectives of internal control

A
  1. effectiveness and efficiency of operations 2. reliability of financial reporting 3. compliance with applicable laws and regs
28
Q

4 Segregation of Duties Steps

A

Authorization, Recording/Reporting, Safekeeping, and Reconciliation

29
Q

Internal Control definition per COSO

A

a process, implemented by an entity’s board and mgmt, designed to provide reasonable assurance regarding the achievement of the primary objectives of internal controls

30
Q

Internal Control: Control Activities

A

Independent Review; segregation of duties, exposure Limits

31
Q

Internal Control: Information and Communication

A

systems enabling bank to communicate

32
Q

Internal Control: Monitoring

A

mgmt’s reviews and reconcilements

33
Q

Internal Control: Risk Assessment

A

board’s awareness of bank’s risk

34
Q

Internal Control: Control Environment

A

reflects mgmts attitude regarding controls implementation (mgmt philosophy, organizational structure, integrity)

35
Q

Internal Audit’s responsibility

A

to independently monitor the effectiveness of the internal control system

36
Q

2 components of internal controls

A

administrative controls, accounting controls

37
Q

7 types of internal controls

A
  1. competent, trustworthy personnel with clear lines of authority and responsibility 2. adequate segregation of duties 3. proper procedures for authorization 4. adequate documents and records 5. property procedures for record keeping 6. physical control over assets and records 7. independent checks on performance
38
Q

The need for Internal Auditor depends on

A

The size of the institution and # of locations; # and complexity of operations; division of operational resposibilities, existence of an external audit

39
Q

To discharge IA responsibilities to the BOD and Sr Mgmt

A

Be accountable only to BOD or a board committee; have the board and mgmt support; have sufficient delegated responsibility; be independent of all audited activities

40
Q

Auditor Competence

A

educational background, professional job qualifications, training, relevant work experience, quality of work

41
Q

Types of Audit Reports

A

unqualified opinion; explanitory language; qualified opinion; adverse opinion; disclaimer of opinion

42
Q

Generally Accepted Accounting Procedures

A

Concerned w/practices and procedures; professional standards that guide public accountants

43
Q

Generally Accepted Auditing Procedures

A

Concerned w/independent public accountant’s professional qualifications

44
Q

Services a registered accounting firm may provide

A

Tax services, if board provide advance approval

45
Q

Public Company Accounting Oversight Board (PCAOB)

A

establish auditing standards for registered accounting firms

46
Q

American Institute of CPAs - Code of Conduct

A

Independence and Integrity and Objectivity

47
Q

Auditors independence not impared if their loans

A

Auto loans/leases, loans in amount of cash surrender value of life insurance, loan fully collateralized by cash deposit, CC or cash advances with unpaid balance of $5,000 or less

48
Q

Under FDICA and Sarbanes Oxley, whose responsibility is to establish and maintain a system of financial controls?

A

The Board of Directors and Sr Management

49
Q

Compliations

A

Offers no assurances about the financials; simply providing info that’s the representation of mgmt in financial statement form; no opinion rendered; no independence requirement, must disclose lack of independence

50
Q

Reviews

A

Accountant makes some inquiries and performs analytical procedures; give limited assurance they’re not aware of material changes; no opinion rendered; doesn’t obtain understanding of internal controls or test records;

51
Q

Agreed-upon Procedures

A

client hires accountant to issue report of findings based upon specific procedures; no opinion rendered on financials.

52
Q

The 4 characteristics considered by an independent CPA when evaluating an accting system

A

Validity, Timeliness, Disclosure, Valuation

53
Q

Numbers printed at bottom of a check

A

MICR #. Routing #, Federal Reserve District #, Account #, Check #

54
Q

Components of the Uniform Rating Systems for Info Tech (URSIT)

A

Audit; Management; Development & Acquisition; Support & Delivery *Composite Rating

55
Q

IT risk elements (SR 98-9)

A
  1. Mgmt process 2. architecture 3. integrity 4. security 5. availability
56
Q

Effective MIS does what 4 things to risk?

A
  1. identify 2. measure 3. monitor 4. control
57
Q

The quality of MIS depends on

A

effective internal control environment

58
Q

Examiners review MIS to ensure that it is

A

Timely, accurate, complete, consistent, and relevant

59
Q

SR 00-4 Outsoursing of Information and Transaction

A

bank is responsible for managing its software vendor and service provider relationships as if the processing was done in-house.

60
Q

Assessing IT Risk

A

quantity of risk, quality of Risk Management over IT, adjusted risk, direction

61
Q

Purpose of MIS

A

decision support

Foundations (29 decks)

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