Quiz 5

Question 1

What are the three necessities of controls?

Answer 1

1. Adequate
2. Effective
3. Efficient

Question 2

How can you say that the implemented controls are effective?

Answer 2

It achieves the purpose for which they were designed, they are consistently and correctly applied, it remain effective throughout the period.

Question 3

What are the three requirements of effective controls?

Answer 3

Directing, executing, and implementing.

Question 4

What are the three requirement of adequate controls?

Answer 4

Planned, organized, designed.

Question 5

What are the three things that a firm shall ensure to confirm that adequate internal controls are implemented?

Answer 5

Ensure compliance with the rules, ensure that assets are safeguarded, particular to ensure that the design of the internal control is appropriate to address identified risks.

Question 6

Controls are called efficient when?

Answer 6

Less cost and effort, and it may mitigate multiple risk.

Question 7

What should management provide?

Answer 7

Reasonable assurance that the organization’s risks have been managed effectively and that the organization’s goals and objectives will be achieved efficiently and economically.

Question 8

What are the 9 characteristics of an effective control systems?

Answer 8

Accuracy, timeliness, flexibility, acceptability, integration, economic feasibility, strategic placement, corrective action, emphasis on exception.

Question 9

An effective control system not only checks for and identifies deviation but also is programmed to suggest solutions to correct such a deviation.

Answer 9

Corrective action

Question 10

A good system control should work on the exception principle, so that only important deviations brought to the attention of management.

Answer 10

Emphasis on exception

Question 11

What are the two tools on evaluating controls?

Answer 11

1. Risk heat map

2. Risk and control matrix

Question 12

Accurate information is essential for effective managerial decisions.

Answer 12

Accuracy

Question 13

Controls must ensure that information reaches the decision makers when they need it so that a meaningful response can follow

Answer 13

Timeliness

Question 14

Controls should be such that all people who are affected by it are able to understand them fully.

Answer 14

Acceptability

Question 15

When the controls are consistent with corporate values and culture, they work in harmony with organizational policies and hence are easier to enforce.

Answer 15

Integration

Question 16

An effective control systems is one that can be updated quickly as the need rises

Answer 16

Flexibility

Question 17

The cost of a control system must be balanced against its benefits. It must be reasonable to operate. Accordingly the benefits received must outweigh the cost of implementing a control system

Answer 17

Economic feasibility

Question 18

Effective controls should be placed and emphasized at such critical control points where failures cannot be tolerated and where time and money costs of failures are gratest.

Answer 18

Strategic placement

Question 19

What is heat map?

Answer 19

It is a visualization tool to help organize, define, and quickly communicate key risks.

Question 20

What are the common terms used in the design of the heat map?

Answer 20

Potential impact, likelihood, onset speed

Question 21

It is an indispensable tool in any risk management toolbox and can help cut through complexity?

Answer 21

Risk Heat Map

Question 22

What are the three minimum categories of potential impact?

Answer 22

High, medium, low

Question 23

What are the three categories of likelihood?

Answer 23

Low, moderate, high

Question 24

What does organizations use to identify entity-wide risks?

Answer 24

Survey, workshops, interviews, risk factors in financial reports.

Question 25

What are the eight steps in creating a risk heat map?

Answer 25

1. Define the scope
2. Create a common language
3. Gather the necessary data
4. Score the risks
5. Plot the points and create the map
6. Assess the relative placement of individual risks
7. Gather feedback
8. Refine and update the map.

Question 26

Powerful tool that can help an organization identify, rank, and implement control measures to mitigate risks?

Answer 26

Risk and control matrix

Question 27

Serves as a snapshot of an organization’s risk profile?

Answer 27

RACM

Question 28

What is Risk and Control Matrix?

Answer 28

It is a powerful tool that can help an organization identify, rank, and implement control to mitigate risks.