Bank Audit Flashcard

Front

What is the main objective of a bank audit?

Back

To ensure that financial records are accurate and comply with regulations

Front

Which of the following is an auditor’s primary responsibility during a bank audit? To provide financial advice to the bank, To ensure the accuracy and integrity of the bank’s financial statements, To assess employee performance, To invest in the bank’s financial products

Back

To ensure the accuracy and integrity of the bank’s financial statements

Front

What is the purpose of auditing loan loss provisions in a bank audit?

Back

To assess the risk of loan defaults and ensure the bank has adequate provisions for losses

Front

Which of the following documents is most critical for evaluating the financial position of a bank during an audit? Income Statement, Cash Flow Statement, Balance Sheet, Loan Application Forms

Back

Balance Sheet

Front

In a bank audit, which of the following would be a potential indicator of financial misstatements?
Options:
Consistent interest rates across all loan products,
Large unexplained differences between reported and actual cash balances,
Regular reviews of employee performance,
An increase in new customer accounts

Back

Large unexplained differences between reported and actual cash balances

Front

Which of the following is the most likely reason an auditor would issue a "qualified" opinion in a bank audit?
- The bank's management is highly trustworthy and experienced
- There are significant and unresolved material misstatements in the financial statements
- The auditor is unable to obtain sufficient audit evidence
- The bank has achieved strong compliance with all regulatory requirements

Back

There are significant and unresolved material misstatements in the financial statements

Front

What does the term “capital adequacy ratio” (CAR) indicate in a bank audit?

Back

The ability of the bank to cover its risks with its capital

Front

During a bank audit, what would an auditor most likely check to identify any operational inefficiencies or weaknesses? Options: Loan-to-deposit ratio, Internal control systems and procedures, Social media presence, Interest rate changes over the year

Back

Internal control systems and procedures

Front

What is the primary purpose of an auditor performing substantive testing of loans during a bank audit?

Back

To evaluate the collectibility and risk of loans and ensure proper provisioning.

Front

Which of the following is a critical factor in assessing the risk of fraud during a bank audit?
Profit margins of the bank, Adequacy of internal controls and segregation of duties, Customer growth rate, Number of employees working in the loan department

Back

Adequacy of internal controls and segregation of duties