RCC RCC Compliance Auditing and Monitoring 2 — Questions and Answers
Question 1: When developing an audit work plan, which step should occur FIRST?
- Draft the audit report
- Define the audit scope and objectives (Correct answer)
- Interview line employees
- Test internal controls
Correct answer: Define the audit scope and objectives
Defining the scope and objectives establishes what the audit will cover and guides all subsequent planning, fieldwork, and reporting activities.
Question 2: A compliance officer discovers that a monitoring control has been bypassed repeatedly. The FIRST action should be to:
- Terminate the employees responsible
- Document the finding and escalate to appropriate management (Correct answer)
- Ignore it if no regulatory fine has occurred
- Wait until the annual audit to address it
Correct answer: Document the finding and escalate to appropriate management
Documenting and escalating the finding ensures it is tracked, investigated, and remediated in a timely manner through proper governance channels.
Question 3: What is the role of an audit committee in compliance oversight?
- To perform day-to-day transaction reviews
- To provide board-level oversight of the audit and compliance functions (Correct answer)
- To replace the internal audit department
- To conduct external regulatory examinations
Correct answer: To provide board-level oversight of the audit and compliance functions
The audit committee, typically a committee of the board, provides independent oversight of internal audit, external audit, financial reporting, and compliance matters.
Question 4: Which type of compliance testing involves reviewing documents and records without performing physical observations?
- Walkthrough testing
- Substantive testing
- Desk review (Correct answer)
- Penetration testing
Correct answer: Desk review
A desk review involves analyzing existing documentation, reports, and records remotely rather than through on-site observation or physical inspection.
Question 5: A 'root cause analysis' in compliance monitoring is BEST described as:
- A financial calculation methodology
- An investigation into the underlying reason a compliance failure occurred (Correct answer)
- A benchmark comparison against industry peers
- A process for ranking compliance risks by severity
Correct answer: An investigation into the underlying reason a compliance failure occurred
Root cause analysis seeks to identify the fundamental reason a violation or control failure occurred so that corrective actions address the source rather than just the symptom.
Question 6: After a compliance audit concludes, remediation tracking PRIMARILY ensures that:
- The audit report is published publicly
- Identified findings are corrected within agreed-upon timeframes (Correct answer)
- The auditors are compensated fairly
- No future audits are needed in that area
Correct answer: Identified findings are corrected within agreed-upon timeframes
Remediation tracking monitors the implementation of corrective actions to confirm that audit findings are resolved in a timely and effective manner.
RCC RCC Compliance Auditing and Monitoring 2
When developing an audit work plan, which step should occur FIRST?