Internal Auditing & Control Systems Flashcards
7 cards from real CCB practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Internal Auditing & Control Systems flashcards as text
Which audit report opinion indicates that financial statements are fairly presented with no material misstatements?
Answer: Unmodified (clean) opinion
An unmodified or clean opinion means the auditor found no material misstatements and the statements conform to applicable accounting standards.
The three lines of defense model assigns internal audit to which line?
Answer: Third line
In the three lines model, internal audit is the third line, providing independent assurance to the board and senior management about the effectiveness of governance and controls.
A material weakness in internal control over financial reporting is best defined as:
Answer: A deficiency that could result in a material misstatement not being prevented or detected
A material weakness is a significant deficiency (or combination of deficiencies) that creates a reasonable possibility of a material misstatement going undetected.
Which approach involves auditors tracing a transaction from initiation through completion to understand the control environment?
Answer: Walkthrough
A walkthrough traces one or more transactions from start to finish to help auditors understand how controls operate in practice.
Key risk indicators (KRIs) are BEST described as:
Answer: Forward-looking metrics that signal increasing risk exposure
KRIs are predictive metrics that alert management to rising risk levels before they result in control failures or losses.
When audit findings are rated by severity, a 'significant deficiency' falls:
Answer: Between a control deficiency and a material weakness
A significant deficiency is more severe than a control deficiency but less severe than a material weakness on the audit findings severity scale.
Which standard-setting body issues the International Standards for the Professional Practice of Internal Auditing?
Answer: IIA (Institute of Internal Auditors)
The Institute of Internal Auditors (IIA) publishes the International Standards for the Professional Practice of Internal Auditing, the globally recognized framework for internal audit.