SBL Organisational control and audit

Which of these is a detective control?

• 1 Segregation of duties
• 2 Password access to the system
• 3 Bank reconciliation
• 4 Authorisation limits for purchases

Segregation of duties is mainly designed to:

• 1 Reduce the number of staff
• 2 Reduce the opportunity for error and fraud by one person
• 3 Speed up processing
• 4 Replace supervision

The key difference between internal and external audit is that internal audit:

• 1 Gives an opinion to shareholders on financial statements
• 2 Is independent of the entity by law
• 3 Reports to management or the audit committee and covers more than financial statements
• 4 Is only done by regulators

An outsourcing of the internal audit function means the company should:

• 1 Treat it as no longer subject to governance
• 2 Stop reporting to the audit committee
• 3 Retain responsibility for the function and monitor the provider
• 4 Use the same firm as external auditor in all cases

Which of the following is an advantage of an internal control framework such as COSO?

• 1 It reduces the number of risks
• 2 It gives a structured way to design and assess controls
• 3 It guarantees that no fraud occurs
• 4 It removes the need for audit

Management override of controls is a particular fraud risk because:

• 1 Senior people are able to bypass controls that apply to others
• 2 Staff have no authority
• 3 It cannot be audited
• 4 Controls always fail

A fraud triangle consists of:

• 1 Opportunity, pressure and rationalisation
• 2 Detection, deterrence and punishment
• 3 Revenue, expense and profit
• 4 Cost, quality and time

Which statement about whistleblowing arrangements is correct?

• 1 They replace internal audit
• 2 They apply only to external parties
• 3 They are only needed in small companies
• 4 They give staff a safe channel to report concerns and help to detect problems early