ARM 400 CORE MAIN QUESTIONS AND ANSWERS
SET A+
✔✔The Committee of Sponsoring Organizations of the Treadway Commission (COSO)
describes internal control as consisting of five essential components, one of which is
risk assessment. This component - ✔✔Considers management's efforts to identify and
analyze risks relevant to achieving predetermined objectives
✔✔Which one of the following best describes how internal audit supports enterprise risk
management (ERM)? - ✔✔ERM implements risk management activities and internal
audit assesses the results
✔✔Which one of the following is true regarding internal audit involvement with
enterprise risk management (ERM) efforts? - ✔✔Internal audit is increasingly asked to
evaluate organizational risks, including strategic, financial and hazard risks
✔✔Which one of the following best describes how internal audit compliments a risk
management initiative? - ✔✔Risk managers identify, assess and prioritize risks. Internal
audit develops a risk-based auditing plan that addresses material risks to an
organization
✔✔Which one of the following best describes why the Institute for Internal Auditors (IIA)
has designed standards assessing the need for internal audit to evaluate the
effectiveness of risk management? - ✔✔Audits are conducted under diverse legal and
cultural environments. Requiring an auditor to validate particular points ensures that
auditors and their activities meet their responsibilities
✔✔Colossal Casualty Insurance Company decided to conduct an internal audit of the
company's operations. As part of the internal audit, several fictitious claims were
submitted to the claims department to see if the claims would be approved and paid m.
Which one of the COSO components of internal control was examined by this internal
audit test? - ✔✔Control environment
, ✔✔The auditing standard no. 5 calls for a specific fraud assessment because - ✔✔The
failure to prevent or detect fraudulent misstatements is higher than the risk of failing to
prevent or detect other types of errors
✔✔The importance of strong control environments with independent oversight have
become increasingly important - ✔✔As organizations become more complex
✔✔Many banks are using technology to search for and detect cyber-security threats
locally and in the cloud. This application of technology, in which machines learn from
humans, illustrates the use of - ✔✔Artificial intelligence
✔✔It is necessary to define functions that should be performed by internal audit rather
than the enterprise risk management (ERM) team because - ✔✔Clarification of
functions helps avoid redundancy and foster a strong working relationship
✔✔COSO's Internal Control - Integrated Framework provides - ✔✔Common standards
designed to increase effectiveness and efficiency of operations and reliability of financial
reporting while ensuring compliance with applicable laws and regulations
✔✔Which one of the following best describes why many purchasers require an ISO
9001 certification prior to buying a business? - ✔✔To ensure that internal standards and
controls are in place
✔✔Which one of the following best describes an effective way to construct internal
controls? - ✔✔The controls should be linear and create checks and balances
✔✔An auditor identifies risks under the risk-based approach by - ✔✔Looking at each
objective and it's controls identifying risks by asking, "What might go wrong?"
✔✔Examples of Principles-Based Regulations include all of the following, EXCEPT -
✔✔Restaurant employees must wash their hands every time they use the restroom
✔✔Which one of the following statements about standards - risk management,
Solvency II, and Basel II and III - is true? - ✔✔Many risk management standards, such
as ISO 31000, are voluntary
✔✔One of the key department players in compliance program implementation is
Internal Audit. As such, the main responsibility of Internal Audit involves which of the
following? - ✔✔Oversight of financial compliance
SET A+
✔✔The Committee of Sponsoring Organizations of the Treadway Commission (COSO)
describes internal control as consisting of five essential components, one of which is
risk assessment. This component - ✔✔Considers management's efforts to identify and
analyze risks relevant to achieving predetermined objectives
✔✔Which one of the following best describes how internal audit supports enterprise risk
management (ERM)? - ✔✔ERM implements risk management activities and internal
audit assesses the results
✔✔Which one of the following is true regarding internal audit involvement with
enterprise risk management (ERM) efforts? - ✔✔Internal audit is increasingly asked to
evaluate organizational risks, including strategic, financial and hazard risks
✔✔Which one of the following best describes how internal audit compliments a risk
management initiative? - ✔✔Risk managers identify, assess and prioritize risks. Internal
audit develops a risk-based auditing plan that addresses material risks to an
organization
✔✔Which one of the following best describes why the Institute for Internal Auditors (IIA)
has designed standards assessing the need for internal audit to evaluate the
effectiveness of risk management? - ✔✔Audits are conducted under diverse legal and
cultural environments. Requiring an auditor to validate particular points ensures that
auditors and their activities meet their responsibilities
✔✔Colossal Casualty Insurance Company decided to conduct an internal audit of the
company's operations. As part of the internal audit, several fictitious claims were
submitted to the claims department to see if the claims would be approved and paid m.
Which one of the COSO components of internal control was examined by this internal
audit test? - ✔✔Control environment
, ✔✔The auditing standard no. 5 calls for a specific fraud assessment because - ✔✔The
failure to prevent or detect fraudulent misstatements is higher than the risk of failing to
prevent or detect other types of errors
✔✔The importance of strong control environments with independent oversight have
become increasingly important - ✔✔As organizations become more complex
✔✔Many banks are using technology to search for and detect cyber-security threats
locally and in the cloud. This application of technology, in which machines learn from
humans, illustrates the use of - ✔✔Artificial intelligence
✔✔It is necessary to define functions that should be performed by internal audit rather
than the enterprise risk management (ERM) team because - ✔✔Clarification of
functions helps avoid redundancy and foster a strong working relationship
✔✔COSO's Internal Control - Integrated Framework provides - ✔✔Common standards
designed to increase effectiveness and efficiency of operations and reliability of financial
reporting while ensuring compliance with applicable laws and regulations
✔✔Which one of the following best describes why many purchasers require an ISO
9001 certification prior to buying a business? - ✔✔To ensure that internal standards and
controls are in place
✔✔Which one of the following best describes an effective way to construct internal
controls? - ✔✔The controls should be linear and create checks and balances
✔✔An auditor identifies risks under the risk-based approach by - ✔✔Looking at each
objective and it's controls identifying risks by asking, "What might go wrong?"
✔✔Examples of Principles-Based Regulations include all of the following, EXCEPT -
✔✔Restaurant employees must wash their hands every time they use the restroom
✔✔Which one of the following statements about standards - risk management,
Solvency II, and Basel II and III - is true? - ✔✔Many risk management standards, such
as ISO 31000, are voluntary
✔✔One of the key department players in compliance program implementation is
Internal Audit. As such, the main responsibility of Internal Audit involves which of the
following? - ✔✔Oversight of financial compliance
