Risky Business
If the internal auditor concludes that senior management accepts a level of risk unacceptable to the institution, what should the audit do?
What should the reporting structure look like to promote independence of the internal audit program?
What is administratively to the CEO and functionally to the board
Internal audit is defined as? (Hint: 3 things)
What is:
an objective assurance activity designed to add value
an independent activity
a consulting activity
Which of the following controls would be considered soft controls?
1.Competence of employees
2. Reconciliations
3. Proper segregation of duties
4. Ethical behavior
What is 1 (Competence of employees) AND 4 (ethical behavior)
What type of evidence provides he LEAST amount of audit support?
What is testimonial
What are the 4 ways to deal with risk?
What is share, accept, mitigate, and avoid
The primary reason for having written formal audit reports is to?
What is record findings and recommend courses of action to the board and management
Assuring reliable accounting data, promoting operational efficiency, and adhering to policies best describes the purpose of what?
Training programs and security passwords are examples of what kinds of controls?
What is preventative controls
Historical information about the area to be audited should be gathered at what stage of an audit activity?
What is during preliminary survey work
External, independent financial audits express an opinion on what?
What is the Statement of Financial Condition (at a point in time)
FCA Regulations require the audit committee to specifically oversee and supervise what audit and review?
What is the fiscal audit and review
What document defines the Audit department's purpose, authority, and responsibility?
What is the Audit Committee charter or board approved policy
Assuring reliable accounting data, promoting operational efficiency, and adhering to policies describes the purpose of what?
What is internal controls
An auditor's evaluation of interest rate data over a 5- year period is an example of what kind of evidence?
What is analytical evidence
Assessing risk in an institution's loan portfolio is the primary function of what audit?
A board’s audit committee determines the association’s ALM function needs to be audited this year, but the association’s internal audit function lacks the expertise to complete the review. What should the audit committee do?
What is hire someone outside the association to perform the ALM audit.
FCA regulations define a financial expert as someone having what qualifications?
What is having education or experience in accounting, internal controls, or preparing or reviewing financial statements for financial institutions or large corporations
The principal benefit to management of an internal audit function is what?
What is to supplement its knowledge of and controls over day-to-day operations
Testing procedures and controls that management thinks it has in place is the role of whom within an association?
What is the Internal Audit Department
Regarding internal controls, segregation of duties between lending and finance staff are usually more challenging at what type of assoctions?
What is smaller associations
The internal auditor issued a report to the Audit Committee that identified several serious credit administration deficiencies in the loan files. In response, the CCO and the Loan Documentation Department attempted to remedy the deficiencies. Which would be the appropriate follow-up procedure for the internal auditor to undertake?
What is conduct a follow up activity within a short period of time
Random sampling means?
An effective corrective action recommended by the internal auditor should address what?
What is the underlying control weakness
What is a necessary requirement for inclusion of a deficiency finding in an audit report?
What is supporting evidence must be objective and relevant