WorksheetsChapter 3
Total questions: 13
Worksheet time: 6mins
Which of the following is not an appropriate governance role for an organization’s board of directors?
Evaluating and approving strategic objectives
Influencing the organization’s risk-taking philosophy.
Providing assurance directly to third parties that the organization’s governance processes are effective
Establishing broad boundaries of conduct, outside of which the organization should not operate
Which of the following are typically governance responsibilities of executive management?
I. Delegating its tolerance levels to lower-level managers.
II. Monitoring day-to-day performance of specific risk management activities.
III. Establishing a governance committee of the board.
IV. Ensuring that sufficient information is gathered to support reporting to the board
I and IV
II and III
I, II, and IV
I, II, III, and IV
ABC utility company sells electricity to residential customers and is a member of an industry association that provides guidance to electric utilities, lobbies on behalf of the industry, and facilitates sharing among its members. From ABC’s perspective, what type of stakeholder is this industry association?
Directly involved in the operation of the company
Interested in the success of the company
Influences the company
Not a stakeholder
Who is responsible for establishing the strategic objectives of an organization?
The board of directors
Executive management.
Consensus among all levels of management
The board and senior management jointly
Who is ultimately responsible for identifying new or emerging key risk areas that should be covered by the organization’s governance process?
The board of directors
Executive management.
Management.
The internal audit function
The internal audit function should not:
Assess the organization’s governance and risk management processes.
Provide advice about how to improve the organization’s governance and risk management processes.
Oversee the organization’s governance and risk management processes.
Coordinate its governance and risk management-related activities with those of the independent outside auditor.
Which of the following would not be considered a first line role in the Three Lines Model?
A divisional controller conducts a peer review of compliance with financial control standards
An accounts payable clerk reviews supporting documents before processing an invoice for payment
An accounting supervisor conducts a monthly review to ensure all reconciliations were completed properly
A production line worker inspects finished goods to ensure the company’s quality standards are met
Which of the following would be considered a first line of defense in the Three Lines of Defense model?
An accounts payable supervisor conducting a weekly review to ensure all payments were issued by the required payment date
A divisional compliance and ethics officer conducting a review of employee training records to ensure that all marketing and sales staff have completed the required FCPA training
The external audit team observes the counting of inventory on December 31
An internal audit team conducting an engagement to provide assurance on the company’s Sarbanes-Oxley compliance with internal controls over financial reporting
Which of the following would be considered a second line role in the Three Lines Model?
An accounts payable supervisor conducting a weekly review to ensure all payments were issued by the required payment date
A divisional compliance and ethics officer conducting a review of employee training records to ensure that all marketing and sales staff have completed the required FCPA training
A shift supervisor inspecting a sample of finished goods to ensure quality standards are met
An internal audit team conducting an engagement to provide assurance on the company’s Sarbanes-Oxley compliance with internal controls over financial reporting
Companies in industries that are heavily regulated may be subject to audits by the regulator’s auditors. While not specifically covered in the Three Lines Model, such auditors would most likely be considered:
Part of the first line
Part of the second line
Part of the third line
Not a line
Which of the following is not a role of the internal audit function in best practice governance activities?
Support the board in enterprise wide risk assessment
Ensure the timely implementation of audit recommendations
Monitor compliance with the corporate code of conduct
Discuss areas of significant risks
Which of the following statements regarding corporate governance is not correct?
Corporate control mechanisms include internal and external mechanisms
The compensation scheme for management is part of the corporate control mechanisms
The dilution of shareholders’ wealth resulting from employee stock options or employee stock bonuses is an accounting issue rather than a corporate governance issue
The internal audit function of a company has more responsibility than the board for the company’s corporate governance
What types of business events tend to drive new legislation and guidance?
Economic downturns
Fraud or other corporate wrongdoing.
Elections or other political changes
Economic growth
