Gleim CMA Unit 12 Internal Controls-Corporate Governance Questions and Answers Solved Correctly
Governance - Answers the combination of people, policies, procedures, and processes that help ensure
that an entity effectively and efficiently directs its activities toward meeting the objectives of
shareholders.
1. Applies to all organizational activities
2. Provide overall direction for risk management activities
3. Internal control activities
Governance Process - Answers Strategic direction and Oversight
Board - Answers source of overall direction to management and also has the responsibility of oversight,
identifies stakeholders, the entity's commitment to integrity and ethical values is reflected in the board's
selection of people for senior management positions (CEO & CFO)
Management - Answers performs day-to-day governance functions.
Senior management carries out board directives to achieve objectives
Foreign Corrupt Practices Act - Answers (FCPA) is designed to prevent secret payments of corporate
funds for purposes that Congress has determined to be contrary to public policy, prohibits bribery of any
foreign official, foreign political party or official thereof, or candidate for policitcal office in a foreign
country.
Oversight elements - Answers Government's component with which internal auditing is most concern.
Risk management and control activities are most likely to be applied. Involves internal and external
assurance activities.
Risk Committee - Answers identifies key risks, connects risks to management processes, delegates them
to risk owners, considers whether tolerance levels delegated to owners are consistent with risk appetite.
Risk Owners - Answers 1. Evaluate adequacy of the design of risk management activities
2. Determine whether risk management is operating as designed
3. Establish monitoring activities
4. Ensuring information is accurate, timely and available to the board and management
Governance Practices - Answers reflect the organizational culture, the culture determines degree of
sensitivity to social responsibility, may use various legal forms, structures, strategies and procedures
Fraud - Answers A deliberate deception intended to secure an unfair or unlawful gain
Audit Approaches - Answers 1. Substantive approach
, 2. Balance sheet approach
3. Systems-based approach
4. Risk-based approach
Types of Audit Opinions - Answers 1. Unmodified (unqualified)
2. Qualified
3. Adverse
4. Disclaimer
Violation of FCPA - Answers Each violation could carry up to $100,000 in fines/or up to 5 years in prison
FCPA - Answers requires a written code of ethics and conduct
Sarbanes-Oxley Act of 2002 - Answers applies to issuers of publicly traded securities subject to federal
securities laws, requires each member of he audit committee, including at least one who is a financial
expert, be an independent member of the issuer's board of directors.
1. Imposes new responsibilities on public companies and auditors
2. Applies to issuers of publicly traded securities
3. Created the PCAOB
Audit Committee - Answers 1. SOx requires that each member be an independent member of the board
of directors
2. Must be directly responsible for appointing, compensating, and overseeing work of public accounting
firm employed by issuer
3. Implement procedures regarding accounting and auditing matters
Section 302 Certificatoins - Answers signing officers...
1. Establish and maintain controls
2. Design controls to ensure material information
3. Evaluate controls
4. Present conclusions
5. Must disclose deficiencies
Section 404 Internal Control Report - Answers includes...
Governance - Answers the combination of people, policies, procedures, and processes that help ensure
that an entity effectively and efficiently directs its activities toward meeting the objectives of
shareholders.
1. Applies to all organizational activities
2. Provide overall direction for risk management activities
3. Internal control activities
Governance Process - Answers Strategic direction and Oversight
Board - Answers source of overall direction to management and also has the responsibility of oversight,
identifies stakeholders, the entity's commitment to integrity and ethical values is reflected in the board's
selection of people for senior management positions (CEO & CFO)
Management - Answers performs day-to-day governance functions.
Senior management carries out board directives to achieve objectives
Foreign Corrupt Practices Act - Answers (FCPA) is designed to prevent secret payments of corporate
funds for purposes that Congress has determined to be contrary to public policy, prohibits bribery of any
foreign official, foreign political party or official thereof, or candidate for policitcal office in a foreign
country.
Oversight elements - Answers Government's component with which internal auditing is most concern.
Risk management and control activities are most likely to be applied. Involves internal and external
assurance activities.
Risk Committee - Answers identifies key risks, connects risks to management processes, delegates them
to risk owners, considers whether tolerance levels delegated to owners are consistent with risk appetite.
Risk Owners - Answers 1. Evaluate adequacy of the design of risk management activities
2. Determine whether risk management is operating as designed
3. Establish monitoring activities
4. Ensuring information is accurate, timely and available to the board and management
Governance Practices - Answers reflect the organizational culture, the culture determines degree of
sensitivity to social responsibility, may use various legal forms, structures, strategies and procedures
Fraud - Answers A deliberate deception intended to secure an unfair or unlawful gain
Audit Approaches - Answers 1. Substantive approach
, 2. Balance sheet approach
3. Systems-based approach
4. Risk-based approach
Types of Audit Opinions - Answers 1. Unmodified (unqualified)
2. Qualified
3. Adverse
4. Disclaimer
Violation of FCPA - Answers Each violation could carry up to $100,000 in fines/or up to 5 years in prison
FCPA - Answers requires a written code of ethics and conduct
Sarbanes-Oxley Act of 2002 - Answers applies to issuers of publicly traded securities subject to federal
securities laws, requires each member of he audit committee, including at least one who is a financial
expert, be an independent member of the issuer's board of directors.
1. Imposes new responsibilities on public companies and auditors
2. Applies to issuers of publicly traded securities
3. Created the PCAOB
Audit Committee - Answers 1. SOx requires that each member be an independent member of the board
of directors
2. Must be directly responsible for appointing, compensating, and overseeing work of public accounting
firm employed by issuer
3. Implement procedures regarding accounting and auditing matters
Section 302 Certificatoins - Answers signing officers...
1. Establish and maintain controls
2. Design controls to ensure material information
3. Evaluate controls
4. Present conclusions
5. Must disclose deficiencies
Section 404 Internal Control Report - Answers includes...
