ARM54 Chapter 11 Monitoring & Reporting on Risk- Qs
& As
Internal audit department- purpose Correct Ans-evaluates how well an organization is
achieving its business objectives, can provide evidence that risk controls are in place and
functioning as designed
Benefits of internal audit Correct Ans-it ensures that financial reports are accurate and
that the appropriate risk disclosures are reported, is becoming more holistic , by reviewing
organization overall objectives and evaluating the risk that challenge an organization from
achieving its objectives
Risk management is accountable Correct Ans-for proper design and implementation of the
risk management plan, internal controls, and overall success of the risk management effort
Principles successful risk based auditing focuses on Correct Ans-• audit to business
objectives
• Focus on the materiality of the risk
• identify threats to the achievement of goal and objectives
Organizational characteristics associated with high level of risk assurance Correct Ans-•
Board of directors (BOD) is certain that key risks that can affect goals and objectives are
identified, quantified, prioritized and managed in effective and cost efficient manner
• Managers have implemented an effective RM controls; and have an effective RM monitoring
system in place and are using it
, ARM54 Chapter 11 Monitoring & Reporting on Risk- Qs
& As
• Risk reporting systems are providing information up the management chain to BOD , as well
as down chain management chain to operating units
• Culture of RM prevails in organization. Employees recognize the culture; externally
customers, suppliers, lenders and shareholders are aware of RM culture
Organizational sources of risk assurance Correct Ans-• Policy and procedures
documentation
• Normal business unit and business department operating reports
• Internal audit reports of operations and processes, internal controls and risk monitoring
• Risk management reports and documentation
External sources of risk assurance Correct Ans-• External audits
• Favorable press reports
• Willingness of lenders to supply funds at favorable rates
• Survey of customers and suppliers
Control Risk Self-Assessment (CRSA) Correct Ans-purpose is to evaluate the effectiveness
of business processes, done by managers, identifies where controls needed, problem areas &
overall effectiveness. Can be done using facilitated workshops, where info can be
disseminated quickly, identify strengths that can be exploited. It does not replace internal
audit, but it supplements it & allows control lapses to be recognized quickly.
& As
Internal audit department- purpose Correct Ans-evaluates how well an organization is
achieving its business objectives, can provide evidence that risk controls are in place and
functioning as designed
Benefits of internal audit Correct Ans-it ensures that financial reports are accurate and
that the appropriate risk disclosures are reported, is becoming more holistic , by reviewing
organization overall objectives and evaluating the risk that challenge an organization from
achieving its objectives
Risk management is accountable Correct Ans-for proper design and implementation of the
risk management plan, internal controls, and overall success of the risk management effort
Principles successful risk based auditing focuses on Correct Ans-• audit to business
objectives
• Focus on the materiality of the risk
• identify threats to the achievement of goal and objectives
Organizational characteristics associated with high level of risk assurance Correct Ans-•
Board of directors (BOD) is certain that key risks that can affect goals and objectives are
identified, quantified, prioritized and managed in effective and cost efficient manner
• Managers have implemented an effective RM controls; and have an effective RM monitoring
system in place and are using it
, ARM54 Chapter 11 Monitoring & Reporting on Risk- Qs
& As
• Risk reporting systems are providing information up the management chain to BOD , as well
as down chain management chain to operating units
• Culture of RM prevails in organization. Employees recognize the culture; externally
customers, suppliers, lenders and shareholders are aware of RM culture
Organizational sources of risk assurance Correct Ans-• Policy and procedures
documentation
• Normal business unit and business department operating reports
• Internal audit reports of operations and processes, internal controls and risk monitoring
• Risk management reports and documentation
External sources of risk assurance Correct Ans-• External audits
• Favorable press reports
• Willingness of lenders to supply funds at favorable rates
• Survey of customers and suppliers
Control Risk Self-Assessment (CRSA) Correct Ans-purpose is to evaluate the effectiveness
of business processes, done by managers, identifies where controls needed, problem areas &
overall effectiveness. Can be done using facilitated workshops, where info can be
disseminated quickly, identify strengths that can be exploited. It does not replace internal
audit, but it supplements it & allows control lapses to be recognized quickly.
