OCC UCE STUDY MATERIAL (UNIFORMED COMMISSION
EXAM FLASHCARDS.) 369 QUESTIONS WITH COMPLETE
SOLUTION.
Preventive controls Answer - are designed to discourage or pre-empt errors or
irregularities from occurring. They are more cost-effective than detective
controls. Credit checks, job descriptions, required authorization signatures,
data entry checks and physical control over assets to prevent their improper
use are all examples of preventive controls.
Detective controls Answer - are designed to search for and identify errors after
they have occurred. They are more expensive than preventive controls, but still
essential since they measure the effectiveness of preventive controls and are
the only way to effectively control certain types of errors. Account reviews and
reconciliations, observations of payroll distribution, periodic physical inventory
counts, passwords, transaction edits and internal auditors are all examples of
detective controls.
Corrective controls Answer - are designed to remedy the circumstances that
allowed the unauthorized activity or return conditions to what they were
before the violation. They begin when improper outcomes occur and are
detected and keep the spotlight on the problem until management can solve
the problem or correct the defect. Quality circle teams and budget variance
reports are examples of corrective controls.
,Bank control systems include: Answer - Auditing procedures Internal Control
procedures AQ/Loan reviews Risk management Compliance mgt
Goals of the overall control system: Answer - help maintain authority recognize
and identify the need for timely reporting and information.
Goals of an internal controls system Answer - protect bank assets assure
integrity of financial and operating records. Promote operatin
Effective audit program depends on: Answer - competence and independence
of auditor proper audit scope adequate procedures
4 types of opinioned audits Answer - Unqualified ; FS fairly presents financial
condition Qualified ; phrases like except for and subject to -
Board responsibilities: Answer - Select competent executive officers Effectively
supervise bank affairs Adopt and follow s
Director responsibilities: Answer - be aware of the bank ;s operating
environment be diligent in performing director duties b
Chapter 7 bankruptcy Answer - complete liquidation of assets to pay off debt.
Remaining debt is discharged can be filed by individuals, corporations, and
partnerships
Chapter 11 bankruptcy: Answer - available to individuals, corporations, and
partnerships, but primarily used for businesses. Allows debtor to remain in
operation while being sh
,Chapter 13 bankruptcy: Answer - Wage-earner plan, available only to
individuals Debt reorganization to allow repayment under 3-5 year plan.
12 CFR 112 USC 24 Answer - Investment Securities
12 CFR 3 Answer - Capital Adequacy Standards: Minimum Capital Ratios,
Issuance of Directives
12 CFR 5 Answer - Rules Policies and procedures for corporate activities
12 CFR 6 Answer - Prompt Corrective Action
12 CFR 7 Answer - Bank activities and operations
12 CFR 9 Answer - Fiduciary activities (Trust) for National Banks
12 CFR 21 Answer - Minimum Security Devices and Procedures, Suspicious
activity reports (SARs), The Bank Secrecy Act (BSA) compliance program
12 CFR 22 Answer - loans in areas having special flood hazards
12 CFR 25 Answer - CRA, Interstate Deposit Production
12 CFR 30 Answer - Safety and Soundness Standards Appendix A ; Interagency
Safety and Soundness standards Appendix B ; Information Security Program
12 CFR 31 Answer - Extensions of credit to insiders and transactions with
affiliates
, 12 CFR 32 and 12 USC 84 Answer - Lending Limits
12 CFR 34 Answer - Real Estate Lending and Appraisals---Part A: General---Part
B: Adjustable Rate Mortgages----Part C: Appraisals-----Part D: RE lending
standards-----Part E: OREO
12 CFR 40 Answer - Privacy of Consumer Financial Information
12 CFR 206 (Reg F) Answer - Interbank Liabilities
12 CFR 215 (Reg O) Answer - Loans to Executive Officers, Directors, and
Principal Shareholders of member banks
12 CFR 221 (Reg U) Answer - Credit by banks and other persons for the
purposes of carrying margin stock
12 CFR 223 (Reg W)12 USC 371(c) Answer - Transactions between member
banks and their affiliates
12 CFR 337 Answer - Unsafe and Unsound Practices
12 CFR 363 Answer - Annual independent audits and reporting requirements
(Sarbanes Oxley)
12 USC 56 Answer - Prohibition of withdrawal of capital, unearned dividends
(can not dividend more than retained earnings)
EXAM FLASHCARDS.) 369 QUESTIONS WITH COMPLETE
SOLUTION.
Preventive controls Answer - are designed to discourage or pre-empt errors or
irregularities from occurring. They are more cost-effective than detective
controls. Credit checks, job descriptions, required authorization signatures,
data entry checks and physical control over assets to prevent their improper
use are all examples of preventive controls.
Detective controls Answer - are designed to search for and identify errors after
they have occurred. They are more expensive than preventive controls, but still
essential since they measure the effectiveness of preventive controls and are
the only way to effectively control certain types of errors. Account reviews and
reconciliations, observations of payroll distribution, periodic physical inventory
counts, passwords, transaction edits and internal auditors are all examples of
detective controls.
Corrective controls Answer - are designed to remedy the circumstances that
allowed the unauthorized activity or return conditions to what they were
before the violation. They begin when improper outcomes occur and are
detected and keep the spotlight on the problem until management can solve
the problem or correct the defect. Quality circle teams and budget variance
reports are examples of corrective controls.
,Bank control systems include: Answer - Auditing procedures Internal Control
procedures AQ/Loan reviews Risk management Compliance mgt
Goals of the overall control system: Answer - help maintain authority recognize
and identify the need for timely reporting and information.
Goals of an internal controls system Answer - protect bank assets assure
integrity of financial and operating records. Promote operatin
Effective audit program depends on: Answer - competence and independence
of auditor proper audit scope adequate procedures
4 types of opinioned audits Answer - Unqualified ; FS fairly presents financial
condition Qualified ; phrases like except for and subject to -
Board responsibilities: Answer - Select competent executive officers Effectively
supervise bank affairs Adopt and follow s
Director responsibilities: Answer - be aware of the bank ;s operating
environment be diligent in performing director duties b
Chapter 7 bankruptcy Answer - complete liquidation of assets to pay off debt.
Remaining debt is discharged can be filed by individuals, corporations, and
partnerships
Chapter 11 bankruptcy: Answer - available to individuals, corporations, and
partnerships, but primarily used for businesses. Allows debtor to remain in
operation while being sh
,Chapter 13 bankruptcy: Answer - Wage-earner plan, available only to
individuals Debt reorganization to allow repayment under 3-5 year plan.
12 CFR 112 USC 24 Answer - Investment Securities
12 CFR 3 Answer - Capital Adequacy Standards: Minimum Capital Ratios,
Issuance of Directives
12 CFR 5 Answer - Rules Policies and procedures for corporate activities
12 CFR 6 Answer - Prompt Corrective Action
12 CFR 7 Answer - Bank activities and operations
12 CFR 9 Answer - Fiduciary activities (Trust) for National Banks
12 CFR 21 Answer - Minimum Security Devices and Procedures, Suspicious
activity reports (SARs), The Bank Secrecy Act (BSA) compliance program
12 CFR 22 Answer - loans in areas having special flood hazards
12 CFR 25 Answer - CRA, Interstate Deposit Production
12 CFR 30 Answer - Safety and Soundness Standards Appendix A ; Interagency
Safety and Soundness standards Appendix B ; Information Security Program
12 CFR 31 Answer - Extensions of credit to insiders and transactions with
affiliates
, 12 CFR 32 and 12 USC 84 Answer - Lending Limits
12 CFR 34 Answer - Real Estate Lending and Appraisals---Part A: General---Part
B: Adjustable Rate Mortgages----Part C: Appraisals-----Part D: RE lending
standards-----Part E: OREO
12 CFR 40 Answer - Privacy of Consumer Financial Information
12 CFR 206 (Reg F) Answer - Interbank Liabilities
12 CFR 215 (Reg O) Answer - Loans to Executive Officers, Directors, and
Principal Shareholders of member banks
12 CFR 221 (Reg U) Answer - Credit by banks and other persons for the
purposes of carrying margin stock
12 CFR 223 (Reg W)12 USC 371(c) Answer - Transactions between member
banks and their affiliates
12 CFR 337 Answer - Unsafe and Unsound Practices
12 CFR 363 Answer - Annual independent audits and reporting requirements
(Sarbanes Oxley)
12 USC 56 Answer - Prohibition of withdrawal of capital, unearned dividends
(can not dividend more than retained earnings)
