Governance and Enterprise Risk Management Practice Test

Governance and Enterprise Risk Management Practice Test

 

Which of the following is a key objective of corporate governance?

A) Maximizing shareholder wealth
B) Protecting the interests of employees
C) Ensuring compliance with tax regulations
D) Minimizing operational risks

 

The Committee of Sponsoring Organizations (COSO) framework primarily focuses on which of the following?

A) Legal frameworks for corporate governance
B) Improving operational efficiency
C) Internal controls and enterprise risk management
D) Developing corporate tax strategies

 

Which of the following is NOT a component of the COSO ERM framework?

A) Risk identification
B) Risk assessment
C) Risk avoidance
D) Risk response

 

The risk management process within an organization primarily begins with:

A) Risk assessment
B) Risk mitigation
C) Risk identification
D) Risk reporting

 

What does the control environment component of the COSO framework focus on?

A) The company’s financial reporting process
B) The attitudes, policies, and actions of top management
C) The identification and mitigation of risks
D) The segregation of duties

 

Which of the following best describes the purpose of internal controls in corporate governance?

A) To monitor compliance with financial reporting standards
B) To increase organizational profitability
C) To ensure accurate and reliable financial reporting
D) To reduce the need for independent audits

 

Which of the following is an example of a preventive internal control?

A) Reconciliations of bank statements
B) Supervisory review of transactions
C) Authorization requirements for transactions
D) Forensic investigations

 

An effective enterprise risk management system requires all of the following EXCEPT:

A) A well-established risk appetite
B) A focus solely on financial risks
C) Continuous monitoring and updating of risks
D) Strong leadership and risk governance

 

The concept of “fraud deterrence” in corporate governance primarily aims to:

A) Prevent fraudulent financial statements
B) Maximize operational performance
C) Facilitate the internal audit process
D) Ensure compliance with regulatory standards

 

Which of the following is a key element of an ethical organizational culture?

A) Aggressive financial goals
B) Clear communication of ethical standards
C) Risk-taking behavior encouraged among employees
D) Focus on maximizing short-term profits

 

Who is ultimately responsible for overseeing the risk management process within an organization?

A) The CEO
B) The Board of Directors
C) The internal audit team
D) External auditors

 

What is the role of the internal audit function in relation to enterprise risk management (ERM)?

A) To design the organization’s risk management strategy
B) To provide assurance that risk management activities are effective
C) To implement risk mitigation plans
D) To determine the organization’s risk appetite

 

Which of the following would be a primary responsibility of the audit committee in governance?

A) Developing corporate strategy
B) Monitoring risk management and internal controls
C) Setting employee compensation
D) Designing marketing strategies

 

In the COSO framework, risk assessment involves:

A) Identifying and analyzing risks to achieving organizational objectives
B) Identifying financial statements
C) Monitoring operations
D) Implementing risk responses

 

Which of the following is NOT a typical method for assessing enterprise risks?

A) Scenario analysis
B) Sensitivity analysis
C) Financial forecasting
D) SWOT analysis

 

The establishment of a “whistleblower” policy is primarily a fraud deterrence measure aimed at:

A) Encouraging employee reporting of unethical activities
B) Increasing transparency in financial reporting
C) Enhancing shareholder value
D) Ensuring compliance with legal requirements

 

What is a significant benefit of having a robust internal control system in place?

A) It guarantees no fraudulent activities will occur
B) It ensures complete protection from financial losses
C) It enhances the reliability of financial reporting
D) It provides competitive intelligence

 

The internal control system is most effective when it is:

A) Voluntary
B) Monitored and updated regularly
C) Implemented only by external auditors
D) Based on an employee’s self-regulation

 

Which of the following best defines “enterprise risk management” (ERM)?

A) The strategic management of financial assets
B) The identification, assessment, and management of risks to achieving organizational objectives
C) The documentation of financial transactions
D) The development of marketing plans for corporate expansion

 

Which of the following is a critical factor for the success of a risk management process in an organization?

A) A passive approach to risk-taking
B) A well-defined and communicated risk appetite
C) Reliance on external consultants
D) Emphasis on short-term goals over long-term objectives

 

What does the term “risk appetite” refer to in corporate governance?

A) The amount of risk an organization is willing to accept in pursuit of its objectives
B) The level of financial risk the CEO is willing to bear
C) The interest in taking on risky investments
D) The maximum limit on risk exposure for the employees

 

An important feature of the COSO framework’s monitoring component is:

A) Continuous risk assessment by external auditors
B) Ongoing evaluations to ensure that risk management processes are operating as intended
C) Independent verification of financial statements
D) Evaluation of internal accounting practices

 

What is the primary goal of corporate governance in relation to stakeholders?

A) Maximizing the wealth of shareholders
B) Ensuring ethical behavior and compliance with laws
C) Increasing the market value of the organization
D) Establishing transparency in financial reporting

 

Which of the following is an example of detective internal control?

A) Regular physical inventory counts
B) Authorization of purchases
C) Employee performance reviews
D) Separation of duties

 

How does the COSO framework help in corporate governance?

A) It prescribes specific financial practices for all companies
B) It offers a holistic approach to risk management and internal control
C) It mandates compliance with government regulations
D) It focuses solely on financial accounting standards

 

Which of the following is the responsibility of the board of directors in relation to enterprise risk management?

A) Directly manage risks on a daily basis
B) Establish and oversee the risk management strategy
C) Implement internal control systems
D) Conduct routine risk assessments

 

Which of the following is NOT considered part of the COSO ERM framework’s “control activities” component?

A) Risk assessments
B) Policies and procedures to mitigate risks
C) Segregation of duties
D) Monitoring of internal controls

 

The process of identifying fraud risk factors and implementing controls to mitigate those risks is called:

A) Risk tolerance analysis
B) Fraud deterrence
C) Risk diversification
D) Strategic risk assessment

 

Which of the following is most directly impacted by a company’s ethical culture?

A) Financial reporting accuracy
B) Organizational compliance
C) Employee motivation and morale
D) Customer satisfaction

 

A key characteristic of a strong corporate governance framework is:

A) Clear separation of duties between management and the board
B) A focus on maximizing short-term profits
C) Reliance on the discretion of the CEO for decision-making
D) Reducing employee benefits to increase company earnings

 

 

Set 2

 

What is the first step in the enterprise risk management (ERM) process according to the COSO framework?

A) Risk assessment
B) Risk identification
C) Risk response
D) Risk monitoring

 

The “monitoring” component of the COSO framework refers to:

A) Identifying risks and assessing their impact
B) Continuous assessment of the risk management process to ensure its effectiveness
C) Implementing risk responses
D) Designing internal controls for financial reporting

 

Which of the following best describes the role of corporate governance in risk management?

A) Defining the company’s legal obligations
B) Managing risk mitigation strategies at the operational level
C) Overseeing and guiding the organization’s risk management strategy
D) Developing marketing strategies for the company’s products

 

Which of the following is a responsibility of the Board of Directors in terms of corporate governance?

A) Executing day-to-day management decisions
B) Setting corporate strategy and oversight of risk management processes
C) Implementing internal control policies
D) Monitoring employee performance

 

According to the COSO framework, what does “risk tolerance” refer to?

A) The level of risk an organization is willing to take in pursuit of its objectives
B) The amount of risk the board of directors will personally bear
C) The maximum number of risks that can be handled in a single fiscal year
D) The process of reducing risks to zero

 

The “control activities” component of the COSO framework involves which of the following?

A) Regularly evaluating internal controls
B) Ongoing risk assessments
C) Establishing policies and procedures to address risks
D) Determining the organization’s risk appetite

 

Fraud risk management includes which of the following measures?

A) Creating anonymous reporting channels
B) Defining employee salaries and benefits
C) Ignoring financial statement discrepancies
D) Establishing limits on credit card expenditures

 

What does the “risk response” component of the COSO framework involve?

A) Designing new internal controls
B) Evaluating the effectiveness of risk management
C) Developing strategies to mitigate, accept, share, or avoid risks
D) Developing financial reporting strategies

 

Which of the following is a characteristic of a strong ethical organizational culture?

A) A focus on immediate financial results
B) Open and transparent communication about ethical standards
C) Top-down management style that discourages feedback
D) Encouraging employees to focus solely on profit maximization

 

Which of the following best describes “enterprise risk management” (ERM)?

A) The management of operational risks alone
B) The identification, assessment, and management of all types of risks that may affect the achievement of organizational objectives
C) The process of determining financial performance goals
D) The development of new organizational strategies

 

The primary objective of a “fraud deterrence” program is to:

A) Prevent organizational growth
B) Minimize internal control costs
C) Reduce the opportunity for fraudulent activities
D) Maximize profitability in high-risk situations

 

What is the primary role of the internal audit function within corporate governance?

A) To manage day-to-day business operations
B) To assess the effectiveness of risk management and internal control processes
C) To implement risk mitigation strategies
D) To design the corporate governance framework

 

What is the most important reason for a company to have a robust internal control system?

A) To reduce regulatory compliance costs
B) To enhance the reliability of financial reporting and operations
C) To maximize profit and increase shareholder value
D) To improve marketing campaigns

 

Which of the following describes the “control environment” in the COSO framework?

A) The process of identifying and managing risks
B) The attitudes and actions of top management regarding internal controls
C) The regular monitoring of financial performance
D) The process of creating risk response strategies

 

According to the COSO framework, which of the following would be considered an example of a “detective control”?

A) Segregation of duties
B) Monthly reconciliation of bank accounts
C) Authorization of transactions before they are processed
D) Employee training programs

 

What is the role of the “information and communication” component in the COSO framework?

A) To provide information for decision-making and enable communication of risk management strategies
B) To create financial reports for external stakeholders
C) To review legal obligations for corporate compliance
D) To monitor organizational performance

 

An organization’s risk management framework should include:

A) A complete elimination of all risks
B) A clear communication of risk tolerances to all stakeholders
C) A focus on minimizing operational risks only
D) Restricting employee involvement in decision-making processes

 

What does “segregation of duties” refer to in terms of internal control?

A) Assigning the same person to authorize and execute transactions
B) Dividing key responsibilities among different employees to reduce the risk of errors or fraud
C) Reviewing financial statements quarterly
D) Ensuring that all company policies are followed to the letter

 

A company’s ability to manage its risk appetite is directly influenced by:

A) The willingness of employees to report risks
B) The size and complexity of the organization
C) The legal requirements in the company’s operating jurisdiction
D) The leadership’s tolerance for ambiguity and uncertainty

 

Which of the following is a key characteristic of the “monitoring” process in the COSO framework?

A) Continuous review and reporting of risk management activities to senior management
B) One-time evaluation of internal controls
C) The analysis of financial statements
D) The establishment of corporate marketing goals

 

Which of the following is an example of a preventive control?

A) Unauthorized transaction review
B) Bank reconciliation
C) Employee background checks
D) Audit of financial reports

 

The risk management strategy “risk acceptance” refers to:

A) Avoiding a risk by discontinuing the risky activity
B) Transferring the risk to a third party
C) Deciding to proceed with an activity even if the risk is identified and acknowledged
D) Reducing the probability of a risk event occurring

 

A company’s “ethical culture” is built upon:

A) Strong leadership that sets the tone at the top
B) Financial performance reviews
C) Implementation of aggressive sales tactics
D) Strict enforcement of compliance rules

 

Which of the following is an essential feature of an effective governance framework?

A) Centralized control with minimal involvement from employees
B) Transparency and accountability in decision-making
C) A focus on short-term financial goals
D) Limiting the scope of risk management activities

 

The COSO framework’s “risk assessment” component involves:

A) Reporting financial performance to stakeholders
B) Identifying potential risks to achieving organizational goals and assessing their impact
C) Developing marketing strategies for new products
D) Creating policies for employee behavior and conduct

 

Which of the following is the responsibility of the audit committee in corporate governance?

A) Managing employee benefits
B) Overseeing the financial reporting process and internal controls
C) Developing business strategies
D) Supervising operational activities

 

The implementation of fraud deterrence controls is most effective when:

A) They are applied only to senior management
B) They are comprehensive, covering multiple levels of the organization
C) The company avoids discussing fraud risks with employees
D) They are applied sporadically, only when fraud is suspected

 

In the COSO framework, the “risk response” component involves:

A) Identifying the most critical risks
B) Implementing controls to prevent fraud
C) Developing responses for identified risks such as avoidance, mitigation, sharing, or acceptance
D) Creating awareness of potential risks among employees

 

The effective communication of risk management policies is important because:

A) It helps employees avoid ethical violations
B) It ensures consistency in risk management efforts across the organization
C) It reduces employee turnover
D) It increases profitability in high-risk areas

 

Which of the following is a result of implementing a strong internal control system?

A) Increased potential for fraud
B) More efficient resource allocation
C) Reduced transparency in financial reporting
D) Over-reliance on external audits

 

 

Set 3

 

What is the primary purpose of the Committee of Sponsoring Organizations (COSO) framework?

A) To provide financial reporting standards for global companies
B) To establish guidelines for corporate governance and risk management
C) To develop marketing strategies for businesses
D) To standardize audit procedures

 

Which of the following best describes the concept of “enterprise risk management” (ERM)?

A) A comprehensive approach to managing all risks that could impact the achievement of organizational objectives
B) A focus on managing financial risks only
C) A strategy that eliminates all potential risks from an organization
D) A risk mitigation plan that is only applicable to large organizations

 

According to the COSO framework, which of the following is a key component of the “risk assessment” process?

A) Monitoring risks continuously
B) Identifying and analyzing risks that could impact the achievement of objectives
C) Setting up risk mitigation strategies
D) Implementing internal control policies

 

Which of the following is an example of a “corrective control”?

A) Segregation of duties
B) Employee training programs
C) Annual internal audits
D) Implementation of new security software

 

What is the role of the risk appetite in risk management?

A) To define the maximum acceptable level of risk the organization is willing to take to achieve its objectives
B) To eliminate all risks that could occur within the organization
C) To set the budget for risk management activities
D) To identify potential risks and assess their probability

 

What is a major benefit of integrating fraud deterrence strategies into corporate governance?

A) Reducing operational costs
B) Increasing market share
C) Preventing fraudulent activities and protecting organizational assets
D) Minimizing competition in the industry

 

According to the COSO framework, the “information and communication” component ensures:

A) Effective internal controls are implemented
B) Risks are avoided
C) Information relevant to risk management is identified, captured, and communicated across the organization
D) Audit procedures are streamlined

 

Which of the following is an example of a “preventive control”?

A) Regular reconciliation of accounts
B) Locking doors to protect physical assets
C) Reporting unethical behavior
D) Analyzing risk management data

 

The “control environment” component of the COSO framework refers to:

A) A company’s physical office design
B) The integrity and ethical values established by the organization, and its risk management culture
C) The processes used to monitor business activities
D) The physical assets used by the organization

 

In the context of enterprise risk management, which of the following describes “risk tolerance”?

A) The minimum amount of risk the company is willing to take
B) The total amount of risk that can be avoided
C) The level of risk the company is prepared to accept in pursuit of its objectives
D) The maximum amount of risk an organization can manage

 

Which of the following is the responsibility of senior management in corporate governance?

A) Approving the organization’s risk management strategy
B) Ensuring day-to-day management operations are conducted
C) Preparing financial statements
D) Overseeing audit functions

 

What is the main goal of the internal audit function in corporate governance?

A) To manage the daily operations of the organization
B) To evaluate and monitor the effectiveness of internal controls and risk management processes
C) To develop marketing campaigns for new products
D) To supervise executive compensation

 

A company’s internal controls can help achieve which of the following objectives?

A) Maximizing revenue growth
B) Ensuring compliance with regulations, preventing fraud, and improving financial reporting
C) Minimizing the need for internal audits
D) Increasing the organization’s share of the market

 

What is the role of the Board of Directors in overseeing enterprise risk management?

A) Setting the organization’s long-term risk management strategies
B) Developing the company’s marketing strategies
C) Managing day-to-day operations
D) Reviewing employee performance

 

Which of the following best describes the “risk response” process in ERM?

A) Developing strategies to manage, mitigate, accept, or avoid identified risks
B) Monitoring and reviewing risk management procedures
C) Reporting risk results to external stakeholders
D) Defining risk appetite and tolerance

 

In the COSO framework, “monitoring” is essential for ensuring:

A) All risks are eliminated from the organization
B) That risk management processes are functioning effectively and are adjusted as necessary
C) Effective decision-making on business expansion strategies
D) Risks are documented and reported

 

A key characteristic of an ethical organizational culture is:

A) A strict hierarchy where only senior management makes decisions
B) A culture that encourages transparency and ethical behavior at all levels
C) Focus on short-term profits
D) Avoiding employee feedback on ethical concerns

 

Which of the following would most likely indicate a failure in the “control activities” component of the COSO framework?

A) Lack of proper training for employees
B) No internal audits are conducted
C) Employees are not aware of risk management policies
D) Insufficient segregation of duties to prevent fraud

 

Fraud deterrence programs are typically more effective when:

A) They focus on only the top management
B) They rely solely on external auditors
C) They are comprehensive and include policies at all organizational levels
D) They are applied only during financial crises

 

Which of the following is an example of an external risk to an organization?

A) An employee failing to follow a company procedure
B) A natural disaster, such as an earthquake, affecting operations
C) A company’s internal audit being ineffective
D) Employees engaging in fraudulent activities

 

What is the purpose of segregation of duties as a control activity?

A) To limit the power of senior management
B) To reduce the risk of fraud and errors by ensuring that no one person has control over all aspects of a financial transaction
C) To avoid conflict between employees
D) To streamline decision-making processes

 

Which of the following is a typical result of poor corporate governance?

A) Increased profitability
B) Higher employee engagement
C) Increased risk of financial misstatements and fraudulent activities
D) Improved market share

 

In the COSO framework, “information and communication” ensures that:

A) Legal requirements are met
B) Relevant risk management information is communicated throughout the organization
C) Employee roles and responsibilities are clear
D) Customer expectations are exceeded

 

Which of the following best defines “enterprise risk management” (ERM)?

A) A process to eliminate all risks faced by an organization
B) A framework for addressing financial risks only
C) A comprehensive process for identifying, assessing, and managing all types of risks across the organization
D) A method of controlling employee behavior

 

The “risk assessment” process in the COSO framework includes:

A) Conducting background checks on employees
B) Identifying, analyzing, and evaluating risks to achieve objectives
C) Communicating with stakeholders about the company’s risk management practices
D) Monitoring the effectiveness of internal controls

 

An effective corporate governance structure should emphasize:

A) The avoidance of risks at all costs
B) Clear policies for risk management, compliance, and ethical behavior
C) A hands-off approach to monitoring employee behavior
D) Restricting communication within the organization

 

What is the primary benefit of regularly monitoring internal controls?

A) To ensure compliance with accounting standards
B) To improve employee satisfaction
C) To detect and correct weaknesses in risk management and controls before they result in significant harm
D) To increase profits

 

Which of the following is an example of an operational risk?

A) Changes in tax law
B) A breakdown in the company’s supply chain
C) Fraud committed by management
D) Political instability in foreign markets

 

An organization that follows a strong risk management framework should expect to:

A) Eliminate all risks
B) Prevent any losses or setbacks
C) Balance risk-taking and control to achieve its objectives effectively
D) Avoid risk at all costs

 

Which of the following best describes the concept of “risk identification”?

A) Developing a strategy for mitigating risks
B) The process of identifying, assessing, and analyzing risks that could impact organizational objectives
C) Setting the organization’s risk tolerance level
D) Implementing strategies to avoid risks

 

 

Which of the following is NOT a key component of the COSO internal control framework?

A) Control Environment
B) Risk Assessment
C) Market Share Analysis
D) Information and Communication

 

In the context of internal controls, which of the following is the primary purpose of a “separation of duties”?

A) To streamline decision-making
B) To prevent errors and fraud by ensuring that no one person is responsible for both authorization and recording of transactions
C) To minimize employee turnover
D) To reduce the number of transactions

 

Which of the following best defines “ethical culture” in an organization?

A) The culture of following legal requirements only
B) The set of values and practices that promote ethical behavior and decision-making at all levels of the organization
C) The culture of maximizing profits at any cost
D) The culture of rewarding employees based on sales performance only

 

The “monitoring” component of the COSO framework includes:

A) Continuously reviewing the effectiveness of risk management processes
B) Setting up policies for risk acceptance
C) Hiring new staff to manage risks
D) Implementing corrective actions without any reviews

 

What is the main goal of risk response in the ERM process?

A) To avoid all risks
B) To identify all potential risks and eliminate them
C) To develop strategies to mitigate, accept, transfer, or avoid identified risks
D) To maximize the risk exposure for financial gain

 

What is the primary purpose of an internal audit in relation to corporate governance?

A) To manage operations and business processes
B) To ensure financial reports meet regulatory standards
C) To assess and improve the effectiveness of internal controls and risk management systems
D) To evaluate customer satisfaction

 

The “control activities” component of the COSO framework involves:

A) Continuous monitoring of the organizational environment
B) Establishing procedures to ensure that management’s directives are carried out
C) Promoting communication across the organization
D) Identifying potential legal risks

 

Which of the following describes the concept of “fraud deterrence”?

A) The process of identifying potential fraudsters within the organization
B) The measures taken to prevent, detect, and respond to fraud
C) The total elimination of all organizational fraud
D) The analysis of fraud-related financial statements

 

In risk management, what does “risk appetite” refer to?

A) The level of risk that the organization is willing to accept to achieve its objectives
B) The amount of risk the organization is required to avoid at all costs
C) The total risk exposure in terms of financial loss
D) The level of risk that will generate the highest profit

 

What is the primary function of the governance structure in an organization?

A) To define the company’s operational goals
B) To establish policies and procedures for managing risks and ensuring compliance
C) To monitor employee performance
D) To organize product launches

 

What role does the Board of Directors play in corporate governance?

A) Managing day-to-day operations
B) Overseeing the strategic direction and risk management of the organization
C) Setting prices for products
D) Directly monitoring employee attendance

 

The COSO framework emphasizes the importance of:

A) Only focusing on financial risks
B) An isolated approach to risk management
C) Integration of risk management into all aspects of the organization’s processes
D) Minimizing corporate taxes

 

Which of the following is considered a “detective control”?

A) Security cameras monitoring company premises
B) Periodic reconciliations of accounts
C) Segregation of duties
D) Policies and procedures for handling cash transactions

 

Which of the following is NOT a responsibility of senior management in the context of enterprise risk management?

A) Setting the organization’s risk management strategy
B) Reviewing risk management reports submitted by internal auditors
C) Overseeing the day-to-day management of the organization’s operations
D) Implementing strategic decisions without consulting the Board of Directors

 

In a corporate governance structure, the “tone at the top” refers to:

A) The financial performance of the organization
B) The ethical climate and values set by senior management
C) The distribution of compensation to employees
D) The organizational hierarchy

 

A risk management strategy that focuses on eliminating all risks is called:

A) Risk avoidance
B) Risk retention
C) Risk transfer
D) Risk mitigation

 

Which of the following describes the “control environment” component in the COSO framework?

A) The process for measuring risk and monitoring effectiveness
B) The organizational culture and structure that influences the control environment
C) The methodology for managing external risks
D) The tools used to communicate risk-related information across the organization

 

What is a major disadvantage of relying solely on external audits for risk management?

A) External audits can address all internal control deficiencies
B) External audits focus only on financial data and may miss other risks
C) External audits have no cost associated with them
D) External auditors are always more thorough than internal auditors

 

The “risk assessment” component of the COSO framework involves:

A) Identifying and analyzing risks that could prevent the organization from achieving its objectives
B) Creating a database of risks
C) Automatically eliminating any risks that are identified
D) Monitoring compliance with risk management policies

 

Which of the following is an example of an internal risk?

A) Changes in regulatory laws
B) Failure to comply with company procedures
C) A recession in the global economy
D) A natural disaster

 

What is the main purpose of a “whistleblower” policy in an organization?

A) To allow employees to report unethical or fraudulent activities confidentially
B) To reward employees for identifying competitors
C) To track the performance of senior management
D) To increase profitability

 

In enterprise risk management, “risk tolerance” refers to:

A) The total amount of risk the company is willing to avoid
B) The amount of risk that will guarantee the company’s success
C) The acceptable level of risk the organization is prepared to accept in achieving its objectives
D) The company’s ability to avoid all risks

 

In the context of internal controls, what is the role of “monitoring” activities?

A) To evaluate and test the effectiveness of control activities over time
B) To create marketing campaigns
C) To organize employee training programs
D) To reduce operational costs

 

What is an example of an “ethical risk”?

A) A new competitor entering the market
B) A company not adhering to ethical business practices, such as bribery or conflict of interest
C) A product failure
D) A company’s strategic expansion into new markets

 

In risk management, what is the purpose of “risk transfer”?

A) Accepting the risk and absorbing the cost of it
B) Moving the risk to another party, such as through insurance or outsourcing
C) Avoiding any exposure to risk
D) Retaining risks within the organization and controlling them internally

 

A significant event that threatens the stability of an organization, such as an executive scandal, would be classified as a:

A) Strategic risk
B) Operational risk
C) Compliance risk
D) Reputational risk

 

What is the primary objective of a “compliance risk management” process?

A) To prevent operational failures
B) To identify and manage the risks associated with failing to comply with laws and regulations
C) To increase employee productivity
D) To ensure financial reports are timely

 

Which of the following best describes “risk retention”?

A) Risk is transferred to an external party, such as an insurance company
B) The organization accepts the risk and the cost associated with it
C) The organization eliminates the risk
D) The organization shifts the risk to a competitor

 

In an ERM framework, which of the following is essential for creating a culture of risk awareness throughout the organization?

A) Establishing a formal reporting system
B) Ensuring that all employees are aware of the company’s risk policies and procedures
C) Reducing operational costs
D) Hiring external consultants

 

What does “operational risk” primarily concern?

A) The risk of financial loss due to market fluctuations
B) The risk associated with business operations, such as supply chain disruptions or process failures
C) The risk of a regulatory fine
D) The risk of employee theft

 

 

Which of the following is the main responsibility of a company’s audit committee?

A) To establish the company’s risk management strategy
B) To monitor the effectiveness of internal controls and financial reporting
C) To design compensation packages for executives
D) To manage day-to-day operations of the company

 

A critical aspect of an effective enterprise risk management system is:

A) Having a comprehensive insurance policy
B) Recognizing that risk is always external to the organization
C) Identifying, assessing, and managing risks in a holistic and integrated manner
D) Distributing risk across unrelated markets

 

Which of the following is an example of a “preventive control”?

A) Spot checks of inventory
B) Regular reconciliations of cash
C) Segregation of duties in cash handling
D) Investigating fraud reports

 

The Committee of Sponsoring Organizations (COSO) framework primarily assists organizations in:

A) Ensuring regulatory compliance with environmental laws
B) Managing employee benefits programs
C) Developing an effective internal control system and managing risk
D) Increasing customer loyalty

 

A company’s risk culture is influenced by:

A) Only the financial performance of the company
B) The ethical behavior and decisions of management and employees
C) The number of employees in the company
D) The industry in which the company operates

 

Which of the following is an example of a “corrective control”?

A) Training employees on fraud prevention
B) Reconciling accounts monthly
C) Correcting discrepancies found in a transaction audit
D) Implementing automated systems to handle transactions

 

In enterprise risk management (ERM), “risk identification” refers to:

A) Determining the probability of risks occurring
B) Identifying risks that could impact the achievement of objectives
C) Setting financial goals for the organization
D) Developing strategies to eliminate all risks

 

Which of the following is NOT part of the COSO framework’s component of “risk assessment”?

A) Identifying internal and external risks
B) Estimating the likelihood of risks occurring
C) Developing risk responses
D) Overseeing the implementation of internal controls

 

Which of the following best describes the “control activities” component of the COSO framework?

A) The risk management process used by senior management
B) The procedures and actions to ensure risk management policies are implemented
C) The development of an organization’s corporate culture
D) The organizational structure used to communicate risks

 

What is the purpose of “ethical governance” in the context of corporate management?

A) To strictly follow government regulations
B) To focus on maximizing profits at any cost
C) To create a framework that supports ethical decision-making and behavior within the organization
D) To minimize the risk of financial loss

 

Which of the following is a key element of “internal controls” in corporate governance?

A) Increasing employee salaries to improve performance
B) Setting clear guidelines to ensure company policies are followed and objectives achieved
C) Expanding the company’s market share
D) Focusing exclusively on financial reporting

 

What is a “fraud risk assessment”?

A) An analysis to detect the presence of fraud within the organization
B) A process to design policies to deter fraud
C) A review of employee compensation to detect fraud
D) An investigation into potential conflicts of interest

 

In the context of internal controls, which of the following is true of “segregation of duties”?

A) One person should have responsibility for all aspects of a financial transaction
B) Different individuals should be responsible for authorizing, recording, and reviewing transactions
C) Only the internal audit team should be responsible for reviewing financial transactions
D) Segregation of duties is only relevant for financial reporting activities

 

Which of the following is an example of “enterprise risk management” (ERM) strategy?

A) Completely avoiding all risk
B) Transferring risk to an external provider, such as through insurance
C) Ignoring low-level risks that do not impact financial performance
D) Minimizing the organization’s legal exposure by avoiding litigation

 

The COSO framework’s “monitoring” component is responsible for:

A) Continuously evaluating the performance and effectiveness of risk management processes and internal controls
B) Identifying risks that have been missed by the organization
C) Implementing new business strategies
D) Assessing the profitability of the organization

 

“Operational risk” can be best described as the risk of:

A) Loss due to changes in the financial market
B) Loss due to failures in the company’s operational processes, systems, or people
C) Loss due to failure to comply with regulatory requirements
D) Loss due to economic downturns

 

Which of the following would be considered a “preventative” control?

A) A post-transaction review
B) A clear set of procedures for reporting fraud
C) An employee’s access being restricted to the information needed for their job
D) A quarterly review of financial statements

 

The “compliance” component of the COSO framework focuses on:

A) Establishing financial goals for the organization
B) Ensuring the organization complies with laws and regulations
C) Ensuring employee satisfaction
D) Managing customer relations

 

Which of the following would be classified as a “strategic risk”?

A) A production facility being unable to meet demand
B) A shift in consumer preferences that makes the company’s current product line less desirable
C) A failure to properly reconcile cash accounts
D) A minor error in the company’s quarterly report

 

Which of the following best defines the concept of “risk transfer” in ERM?

A) Accepting all risks and absorbing any related losses
B) Taking steps to eliminate risks from the organization
C) Shifting the financial consequences of a risk to an outside party, such as through insurance or outsourcing
D) Ignoring minor risks that do not impact business objectives

 

The “control environment” component of the COSO framework refers to:

A) The attitudes, awareness, and actions of management and employees toward internal controls
B) The physical security of company assets
C) The process for monitoring business performance
D) The organization’s marketing strategy

 

What does the “integrity” of an organization refer to in corporate governance?

A) The ability to maintain high sales
B) The organization’s commitment to honest and ethical behavior in all its dealings
C) The strength of an organization’s brand name
D) The consistency of its internal controls

 

An effective internal control system includes:

A) Only financial controls
B) Employee training and awareness programs
C) Surveillance cameras in every department
D) Strict focus on profitability metrics

 

Which of the following is an example of “external risk”?

A) Losses due to cybersecurity breaches
B) A competitor releasing a new product
C) Employee fraud
D) Inconsistent inventory reporting

 

Which of the following is part of a company’s “ethical governance” framework?

A) Ensuring profitability at any cost
B) Encouraging employees to cut corners to meet deadlines
C) Promoting ethical decision-making through training and clear policies
D) Promoting secrecy and non-transparency

 

What is a key benefit of using a “code of conduct” in governance?

A) It ensures maximum profit generation
B) It helps to create a clear framework for ethical behavior and decision-making
C) It minimizes the company’s market share
D) It reduces the company’s operational efficiency

 

“Business continuity planning” is important in ERM because it:

A) Helps mitigate risks associated with market shifts
B) Focuses on the continuity of operations in the event of a major disruption
C) Addresses employee performance issues
D) Targets reducing company overhead

 

What is an example of “management override” of internal controls?

A) A senior executive authorizing a financial transaction without proper review
B) Performing daily reconciliations of bank accounts
C) Training employees on fraud detection
D) Segregating duties within the finance department

 

The purpose of “fraud risk management” in corporate governance is to:

A) Design compensation programs for high performers
B) Minimize the risk of fraud by implementing controls and detecting suspicious activities
C) Reduce operating expenses
D) Analyze market trends and consumer behavior

 

The “information and communication” component of the COSO framework refers to:

A) The process of communicating financial reports to shareholders
B) The system for sharing risk-related information within the organization
C) The internal policy for marketing communication
D) The methods used for customer service communication

 

 

What is the main objective of the Committee of Sponsoring Organizations (COSO) framework?

A) To prevent corporate fraud
B) To help organizations design and implement effective internal control systems and risk management processes
C) To monitor employee performance
D) To regulate corporate taxation

 

Which of the following best defines “residual risk”?

A) The risk that remains after an organization has implemented risk management controls
B) The risk that is entirely eliminated through internal controls
C) The risk that can be passed on to a third party
D) The risk that is solely based on financial market fluctuations

 

In corporate governance, the “tone at the top” refers to:

A) The company’s advertising strategies
B) The overall risk culture set by senior leadership
C) The feedback mechanism for employees
D) The profit targets set by the board of directors

 

A company can manage “operational risks” by:

A) Transferring the risk to insurance companies
B) Ignoring the risks until they become significant
C) Implementing processes, procedures, and controls to manage day-to-day activities
D) Encouraging employees to take on high-risk projects

 

In the context of governance and internal control, which of the following best describes “control activities”?

A) Continuous monitoring of the organization’s overall performance
B) Policies and procedures that help ensure risk responses are implemented effectively
C) Reporting on the effectiveness of the internal control systems
D) Conducting training sessions for employees on risk management

 

Which of the following is NOT a key element of an effective enterprise risk management (ERM) system?

A) Identifying all risks that may affect the achievement of objectives
B) Implementing controls to manage risks without considering cost
C) Regularly reviewing and adjusting risk management strategies
D) Involving all stakeholders in risk assessment and management

 

Which of the following would most likely be considered a “mitigating action” in response to risk?

A) Avoiding all risky projects
B) Taking proactive measures such as strengthening internal controls to reduce the impact of a risk
C) Ignoring minor risks
D) Transferring all risks to insurance companies

 

Under the COSO framework, which of the following is a key responsibility of the “monitoring” component?

A) Ensuring the company complies with environmental regulations
B) Continuously evaluating the effectiveness of risk management processes and internal controls
C) Developing new business strategies
D) Implementing training programs for employees

 

Which of the following is a primary goal of an internal audit department in governance?

A) To increase the profitability of the organization
B) To identify inefficiencies and help the organization improve its operations
C) To manage day-to-day operations
D) To handle customer service issues

 

What is the main purpose of conducting a “fraud risk assessment”?

A) To identify areas where the company can cut costs
B) To identify vulnerabilities to fraud and develop controls to prevent fraud
C) To eliminate all employee bonuses
D) To increase profits by lowering operating expenses

 

Which of the following represents a “preventive control” in an organization?

A) Regularly auditing financial records
B) Training employees on ethical behavior and fraud prevention
C) Investigating suspected fraud cases
D) Performing periodic financial reconciliations

 

Which of the following is an example of “information and communication” in the context of internal controls?

A) A company’s website used to post quarterly financial reports
B) Developing a system to share risk management information among departments
C) Performing routine reconciliations of financial records
D) Setting compensation targets for executives

 

A company that has a “whistleblower policy” in place is demonstrating which aspect of corporate governance?

A) Preventing insider trading
B) Encouraging employees to report unethical or fraudulent activities
C) Allowing managers to override internal controls
D) Increasing the company’s profitability

 

What is an example of a “detective control” in the context of enterprise risk management (ERM)?

A) Training employees on fraud prevention
B) Reviewing financial transactions after they have occurred
C) Implementing segregation of duties
D) Implementing a policy to avoid risky transactions

 

The COSO framework’s “risk assessment” component includes:

A) Identifying and analyzing risks that could impact the achievement of the organization’s objectives
B) Setting the overall strategic direction of the organization
C) Establishing a comprehensive training program for employees
D) Developing business continuity plans for natural disasters

 

The “control environment” component of the COSO framework emphasizes:

A) The importance of setting clear, risk-aware business strategies
B) The internal control policies that govern day-to-day operations
C) The attitudes and actions of management regarding risk management and ethical behavior
D) The company’s profitability targets

 

Which of the following is an example of an “indirect” approach to managing risk?

A) Eliminating risky activities entirely
B) Implementing a proactive risk communication strategy across the organization
C) Transferring risk to a third party via insurance
D) Monitoring the effectiveness of internal controls

 

What does “enterprise-wide risk management” focus on?

A) Managing the risks related to a single department
B) Identifying, assessing, and managing all risks across the organization in a coordinated manner
C) Increasing profits by minimizing the costs of operations
D) Focusing on personal risks for executives and management only

 

Which of the following is an example of a “corrective control”?

A) A policy to segregate duties
B) A system that detects and corrects discrepancies in financial records
C) A process to regularly update the company’s website with accurate financial data
D) Regular audits of internal controls

 

In the context of corporate governance, which of the following is most critical to ensuring compliance with regulatory requirements?

A) Implementing a performance-based compensation system
B) Establishing robust internal control systems and compliance programs
C) Increasing market share
D) Outsourcing management duties to a third party

 

In the COSO framework, which of the following best describes the “monitoring” component?

A) Identifying, analyzing, and responding to risks
B) Ensuring employees follow corporate codes of conduct
C) Continuously evaluating and improving the effectiveness of risk management and internal control processes
D) Setting long-term business goals for profitability

 

In enterprise risk management, the “risk response” process is designed to:

A) Prevent risks from occurring
B) Analyze and choose how to handle identified risks
C) Eliminate all risks from the organization
D) Increase risk exposure for the organization

 

Which of the following represents a key benefit of implementing a fraud deterrence program in an organization?

A) To increase the profitability of the organization
B) To reduce the likelihood of fraudulent activities occurring
C) To expand the company’s market presence
D) To increase employee turnover

 

Which of the following is considered an “ethical decision-making process” in corporate governance?

A) Focusing on maximizing profits at all costs
B) Evaluating decisions based on ethical guidelines, legal compliance, and potential impact on stakeholders
C) Taking shortcuts to save time
D) Encouraging employees to ignore internal controls when necessary

 

What role does “training and awareness” play in risk management?

A) Ensuring employees are aware of company policies and their roles in mitigating risk
B) Identifying and assessing external risks
C) Ignoring risks that are unlikely to have significant impact
D) Reducing the company’s market share

 

In risk management, the term “residual risk” refers to:

A) The risk that remains after risk treatment actions are applied
B) The risk that is transferred to third parties
C) The risk eliminated by effective internal controls
D) The risk ignored by the organization due to low impact

 

The “ethical culture” of an organization is influenced by:

A) Only the financial goals of the organization
B) The behavior of management and the organization’s commitment to ethical values
C) The number of employees in the company
D) The company’s marketing strategies

 

Which of the following is a key characteristic of a “strong internal control system”?

A) A system that allows employees to bypass controls for efficiency
B) Policies that focus on profit maximization at the expense of ethics
C) Clear procedures to safeguard assets, ensure accuracy in financial reporting, and promote efficiency
D) A focus only on financial reporting activities

 

Which of the following is most likely to be a “strategic risk”?

A) A failure to comply with accounting regulations
B) A competitor launching a product that threatens the organization’s market share
C) An error in the company’s payroll system
D) A physical theft of assets from the company

 

What is the primary objective of corporate governance?

A) Maximizing profits at any cost
B) Ensuring that the organization’s operations are carried out ethically, transparently, and in compliance with legal and regulatory requirements
C) Reducing employee compensation
D) Ignoring internal controls to streamline operations

 

 

In the context of risk management, which of the following is the primary goal of risk identification?

A) To allocate resources effectively
B) To avoid potential financial losses
C) To recognize and categorize risks that could affect organizational objectives
D) To eliminate all risks from the organization

 

In a corporate governance framework, which of the following best defines “transparency”?

A) Protecting confidential information from all stakeholders
B) Ensuring clear, honest, and accurate communication of company operations and decisions
C) Keeping internal decision-making processes secret to avoid scrutiny
D) Allowing management to change financial statements without external oversight

 

Which of the following is an example of “financial risk” that a corporation may face?

A) The possibility of employees violating ethical codes
B) The potential for losing customers due to poor service
C) Exposure to fluctuating exchange rates or interest rates
D) The risk of environmental hazards affecting company assets

 

Which of the following is a key characteristic of a “compliance risk management” strategy?

A) Ensuring the company avoids all operational risks
B) Identifying and managing the risks associated with violations of laws, regulations, and standards
C) Focusing solely on financial performance to increase profit margins
D) Ignoring regulatory changes until they become a significant issue

 

Which of the following would be classified as an example of “reputational risk”?

A) The risk of a supplier’s failure to deliver goods on time
B) The negative impact on the company’s image due to unethical conduct or fraud
C) The risk of losing intellectual property rights
D) The possibility of a natural disaster affecting company facilities

 

What does the “segregation of duties” principle in internal controls aim to prevent?

A) Employee burnout
B) The concentration of power and the potential for fraudulent activities
C) Delays in completing tasks
D) Excessive costs associated with risk management activities

 

In corporate governance, which of the following is a role of the audit committee?

A) Overseeing the development of the company’s marketing strategy
B) Ensuring compliance with the company’s code of ethics
C) Monitoring the effectiveness of internal controls and financial reporting
D) Managing employee relations and performance

 

What is the purpose of “fraud deterrence” controls in an organization?

A) To eliminate all risks related to employee performance
B) To reduce the likelihood of fraud occurring by implementing preventive measures
C) To track employee productivity
D) To ensure transparency in all marketing efforts

 

In the context of internal controls, which of the following best describes “risk assessment”?

A) A process for evaluating the financial performance of the company
B) A method of identifying, analyzing, and prioritizing risks that could affect the achievement of business objectives
C) A step in setting up training programs for employees
D) A process to implement segregation of duties

 

Which of the following is NOT an example of a “corrective control”?

A) An automated system that flags unusual financial transactions for review
B) A company’s investigation into a suspected fraud case
C) A manager approving all financial transactions over a certain threshold
D) A security team conducting daily checks on sensitive company assets

 

In the COSO framework, what does the “control environment” component involve?

A) Managing market risks through insurance policies
B) Establishing a culture that supports effective risk management and ethical behavior
C) Evaluating financial risks through external audits
D) Monitoring the implementation of risk management strategies

 

Which of the following is the primary purpose of an organization’s internal control system?

A) To help organizations achieve their strategic objectives
B) To increase the speed at which business processes are completed
C) To ensure all organizational risks are avoided
D) To reduce the amount of documentation and reporting required

 

Which of the following describes an organization’s “risk appetite”?

A) The maximum amount of risk the organization is willing to accept in pursuit of its objectives
B) The total amount of risk that the organization eliminates through controls
C) The cost associated with transferring risk to third parties
D) The process of identifying potential future risks

 

A “safeguard” in internal controls refers to:

A) Preventing employees from taking vacation
B) A protective measure designed to prevent or detect errors and fraud
C) A review of the company’s overall market position
D) A set of protocols for increasing operational efficiency

 

Which of the following best defines “enterprise risk management (ERM)”?

A) A process that focuses only on financial risks
B) A framework that integrates risk management into all aspects of an organization’s operations
C) A system designed to manage only operational risks
D) A strategy to avoid taking any financial risks at all

 

Which of the following best describes a “preventive control”?

A) A procedure used to detect errors after they occur
B) A process that prevents risks from affecting an organization’s objectives
C) An investigation into potential fraud after it has been detected
D) A financial audit conducted after year-end

 

In risk management, which of the following strategies involves “risk sharing”?

A) Eliminating all risk exposure
B) Implementing controls to manage risk
C) Transferring some portion of risk to a third party, such as through insurance
D) Increasing risk exposure to maximize potential returns

 

Which of the following is the primary purpose of “monitoring” in the COSO framework?

A) To evaluate the effectiveness of risk management and internal control processes continuously
B) To track financial performance
C) To set long-term business goals
D) To ensure that all stakeholders are happy with the company’s operations

 

Which of the following is the most important reason for establishing a corporate code of ethics?

A) To maximize the company’s profits
B) To set expectations for employee behavior and promote a culture of integrity
C) To prevent employees from engaging in personal business activities
D) To lower operational costs

 

What is “fraud risk management”?

A) A set of strategies to increase revenue
B) A framework that identifies, assesses, and responds to the risk of fraudulent activities within an organization
C) A way to track employee productivity
D) A process to cut costs by outsourcing operations

 

In corporate governance, what is the significance of the “audit trail”?

A) It helps reduce market risks
B) It tracks the history of changes made to financial records and ensures accountability
C) It monitors employee attendance and punctuality
D) It defines the company’s ethical guidelines

 

Which of the following is a “corrective control” example in governance?

A) A system that flags suspicious transactions for review
B) A monthly audit of financial statements to ensure accuracy
C) A preventive measure to avoid risks from happening
D) Training employees on recognizing potential fraud

 

Which of the following is an example of “ethical governance”?

A) Enforcing transparency and accountability in organizational decision-making
B) Ignoring regulatory compliance to increase profits
C) Focusing exclusively on financial performance
D) Increasing employee turnover to reduce costs

 

In a corporate governance structure, who is primarily responsible for overseeing the risk management process?

A) Employees across all departments
B) Senior management and the board of directors
C) External auditors
D) Customer service representatives

 

The “board of directors” is responsible for:

A) Overseeing management’s performance and ensuring that risk management processes are followed
B) Setting operational targets for employees
C) Developing customer marketing strategies
D) Focusing only on short-term profitability

 

What is the main purpose of “compliance controls” within a company’s internal control framework?

A) To prevent fraud and ensure adherence to laws and regulations
B) To identify potential fraud opportunities
C) To increase profitability by reducing costs
D) To improve employee satisfaction

 

Which of the following is the best example of a “reliable control” in risk management?

A) Regularly reviewing all company financial transactions and records
B) Ignoring any small-scale risks that don’t affect profit margins
C) Taking an aggressive stance on expanding into new markets without assessing risks
D) Setting unrealistic goals that could put the company at risk

 

Which of the following is a risk management “control objective”?

A) Minimizing employee salary expenditures
B) Ensuring compliance with laws, regulations, and company policies
C) Eliminating all risks to the organization
D) Increasing organizational risk exposure to maximize returns

 

What does the term “business continuity plan” refer to in risk management?

A) A strategy to increase profits during a crisis
B) A plan to ensure that the organization can continue operating in the event of an emergency or disruption
C) A set of strategies to expand market share
D) A plan to eliminate all risks in the organization

 

How can the board of directors demonstrate effective oversight of governance and risk management?

A) By focusing only on short-term financial goals
B) By ensuring management follows established risk management policies and ensuring transparency in reporting
C) By delegating all risk management responsibilities to third-party firms
D) By ignoring ethical concerns to maximize profitability

 

 

Which of the following best defines “Enterprise Risk Management (ERM)”?

A) A risk management strategy focused solely on financial risks
B) A comprehensive approach to identifying, assessing, and managing risks across the entire organization
C) A method for reducing the impact of operational risks
D) A process for reducing fraud risk through employee monitoring

 

What is the purpose of an internal audit in corporate governance?

A) To verify compliance with external regulations only
B) To provide an independent evaluation of risk management and internal control systems
C) To oversee the development of corporate marketing strategies
D) To ensure the organization maximizes its profits

 

The COSO framework for internal controls consists of how many components?

A) 3
B) 5
C) 7
D) 9

 

Which of the following is an example of a “corrective control”?

A) Implementing a software system to detect fraud
B) Retraining employees after an error in financial reporting is identified
C) Preventing access to certain systems to mitigate risks
D) Having a third-party company perform a financial audit

 

In corporate governance, what does “accountability” primarily refer to?

A) Ensuring employees are paid on time
B) Holding individuals responsible for their decisions and actions
C) Tracking company sales figures
D) Reporting financial performance to external stakeholders

 

What is the main goal of the Committee of Sponsoring Organizations (COSO)?

A) To improve corporate governance and enhance organizational transparency
B) To reduce operational costs for companies
C) To enforce government regulations on businesses
D) To increase company profits through external audits

 

What does “risk mitigation” refer to in the context of risk management?

A) Accepting all risks as part of the business process
B) Identifying risks and taking steps to reduce their impact or likelihood
C) Ignoring risks that seem minor
D) Transferring all risks to insurance providers

 

Which of the following is NOT typically included in a company’s internal control environment?

A) Employee background checks
B) Systems for monitoring organizational performance
C) Procedures for processing financial transactions
D) Documentation of market trends

 

A “risk appetite statement” is used to:

A) Define the level of risk a company is willing to accept in order to achieve its objectives
B) Determine the number of employees the company should hire
C) Identify the risks that can be transferred to third parties
D) Track the financial performance of the company

 

In governance, what does “separation of duties” refer to?

A) Ensuring that one individual has complete control over all organizational decisions
B) Distributing responsibilities across multiple individuals to reduce the risk of errors or fraud
C) Reducing the number of employees in the organization
D) Delegating all decision-making to the CEO

 

Which of the following is a characteristic of an effective corporate governance structure?

A) Concentrating power in a single individual’s hands
B) Clear roles and responsibilities for all stakeholders
C) Ignoring stakeholder concerns to prioritize profits
D) Overemphasizing financial risks while ignoring operational risks

 

What does the term “risk tolerance” refer to?

A) The maximum amount of risk the organization can afford to bear without jeopardizing its objectives
B) The process of identifying risks associated with a project
C) A method for avoiding all risks in business operations
D) The ability of a company to transfer risks to insurance providers

 

What is the role of the board of directors in governance?

A) To ensure compliance with regulations and oversee the organization’s risk management strategy
B) To handle day-to-day operations of the company
C) To manage employee performance and ensure financial success
D) To decide on the organization’s market strategy

 

Which of the following is an example of a preventive control?

A) An investigation after discovering a fraud incident
B) Employee training programs to help them avoid mistakes and unethical behavior
C) Reviewing financial statements after the end of the year
D) Reporting financial discrepancies to external auditors

 

In the context of fraud deterrence, which of the following is a “preventive” measure?

A) Conducting surprise audits
B) Investigating suspected fraud cases
C) Implementing policies and procedures to prevent fraudulent activities from occurring
D) Reviewing financial discrepancies after they occur

 

What is the purpose of an organization’s “compliance program”?

A) To reduce the impact of market fluctuations
B) To ensure the organization adheres to laws, regulations, and ethical standards
C) To maximize profits by minimizing operational risks
D) To increase stakeholder influence on the board of directors

 

Which of the following is an example of a strategic risk?

A) The risk of a supplier failing to deliver on time
B) A company expanding into a new market without adequate research
C) A computer system malfunctioning during the production process
D) An employee failing to follow company policies

 

What is the primary purpose of internal control activities?

A) To make sure all financial transactions are verified by external auditors
B) To ensure that all employee actions align with the company’s goals and strategies
C) To provide a structured approach to prevent errors, fraud, and inefficiency in operations
D) To improve marketing strategies and customer relations

 

Which of the following is an example of an “operational risk”?

A) A sudden fluctuation in foreign exchange rates
B) A delay in product delivery due to supply chain disruptions
C) The risk of a breach of confidentiality
D) A change in government regulations affecting the business

 

In the context of governance, what does the “audit committee” primarily oversee?

A) Day-to-day operations of the company
B) Financial reporting, internal controls, and the effectiveness of risk management processes
C) Employee benefits and compensation packages
D) Marketing and advertising strategies

 

Which of the following is a key feature of a company’s “ethics program”?

A) Ignoring legal and regulatory requirements to maximize profits
B) Establishing policies and procedures that promote ethical behavior at all levels of the organization
C) Focusing solely on financial performance
D) Ensuring employees are paid a bonus for avoiding ethical issues

 

Which of the following is a key advantage of implementing an Enterprise Risk Management (ERM) system?

A) Increased focus on eliminating all risks entirely
B) A systematic approach to identifying, assessing, and managing risks to improve decision-making
C) A reduced need for employee training programs
D) Limiting risk assessment to only financial risks

 

Which of the following is a key responsibility of senior management in corporate governance?

A) Implementing the company’s risk management strategy and ensuring its effectiveness
B) Handling daily operational tasks without oversight
C) Focusing solely on increasing revenue
D) Ignoring the views of stakeholders in decision-making

 

Which of the following best describes a “residual risk”?

A) The risk that remains after mitigation efforts have been applied
B) The risk associated with new business opportunities
C) The risk that is completely eliminated by risk management strategies
D) The risk of fraud occurring in the organization

 

What does “risk assessment” involve in the context of governance?

A) The process of eliminating all organizational risks
B) The identification, evaluation, and prioritization of risks that could impact the organization’s objectives
C) Ignoring potential risks that could lead to negative consequences
D) Increasing risk exposure to maximize opportunities

 

Which of the following is a “monitoring control” in the context of internal controls?

A) An investigation of financial discrepancies
B) A risk analysis to determine future risks
C) Ongoing evaluations to assess the performance of risk management and internal control systems
D) A preventive policy to avoid fraudulent activity

 

Which of the following is a key challenge in implementing effective risk management within an organization?

A) Ensuring every employee follows the same strategy regardless of departmental differences
B) Balancing the need for risk control with the organization’s goals and risk appetite
C) Focusing solely on financial risks and ignoring operational risks
D) Avoiding any level of risk, even if it means losing business opportunities

 

Which of the following is an example of a “compliance risk”?

A) The possibility of employees violating the company’s code of conduct
B) The risk of losing market share to competitors
C) The risk of failing to comply with legal or regulatory requirements
D) The risk of an economic downturn affecting profits

 

What is the primary role of a company’s “risk management committee”?

A) To develop and implement the company’s risk management strategy
B) To oversee financial reporting and accounting procedures
C) To manage customer relations and satisfaction
D) To focus solely on profit generation

 

Which of the following is a primary benefit of a strong internal control system?

A) Increased employee turnover
B) Reduction in the likelihood of fraud, errors, and inefficiency
C) Higher operating costs
D) Increased focus on marketing strategies

 

 

Which of the following best describes the COSO framework’s approach to risk management?

A) A focused approach solely on operational risks
B) A holistic approach integrating all aspects of organizational risk management
C) A financial risk management model
D) A regulatory compliance-focused framework

 

What does the “tone at the top” refer to in governance?

A) The leadership style of the middle management
B) The ethical culture and direction set by senior management and the board of directors
C) The communication of policies only to upper-level management
D) The strategies implemented by the compliance department

 

Which of the following is the primary responsibility of the board of directors in corporate governance?

A) Overseeing day-to-day operations and managing employees
B) Providing strategic guidance and oversight of management decisions
C) Handling marketing and advertising campaigns
D) Managing operational costs and day-to-day budget

 

What is a key characteristic of an organization’s internal control system?

A) It only focuses on compliance with external regulations
B) It serves to safeguard assets, ensure accuracy in financial reporting, and promote efficiency
C) It is designed to ignore internal risks and focuses only on external risks
D) It eliminates all operational risks within the organization

 

In risk management, what is “risk transfer”?

A) The process of avoiding risks altogether
B) Shifting the responsibility for a risk to a third party, such as through insurance
C) Ignoring risks that are deemed insignificant
D) Transferring risks to the board of directors

 

In the COSO framework, which of the following is one of the five components of internal control?

A) Governance structure
B) Ethical guidelines
C) Control activities
D) Revenue management

 

What is the primary function of an organization’s risk management policy?

A) To increase revenue by accepting all risks
B) To identify, assess, and manage risks to help achieve business objectives
C) To reduce the impact of compliance risks only
D) To develop marketing strategies for risk-averse customers

 

Which of the following is an example of a detective control?

A) Conducting routine audits to identify potential issues
B) Implementing preventative measures like employee training
C) Establishing access controls to sensitive systems
D) Outsourcing risk management to an external provider

 

Which of the following is an example of an operational risk?

A) A sudden change in tax laws affecting the business
B) A failure in the company’s IT system that disrupts operations
C) A significant drop in stock market prices
D) A change in government regulations that increases tax obligations

 

What is the role of an enterprise risk management (ERM) program?

A) To solely assess financial risks
B) To address only legal and compliance-related risks
C) To provide a comprehensive strategy for managing all types of risks across the organization
D) To ignore minor risks in favor of large, impactful risks

 

What is the purpose of a “whistleblower” policy in corporate governance?

A) To ensure that all employees are aware of the company’s social media policy
B) To allow employees to report unethical or illegal activities anonymously
C) To discourage employees from taking risks
D) To increase employee productivity by monitoring activities

 

What does the term “risk appetite” mean in risk management?

A) The level of risk the organization can accept while pursuing its objectives
B) The organization’s goal of avoiding all types of risks
C) The amount of insurance the company should purchase
D) The risk management strategies that are legally required

 

Which of the following is NOT a key factor in establishing a sound internal control system?

A) Clearly defined roles and responsibilities
B) Segregation of duties to prevent conflicts of interest
C) Limiting all decision-making power to a single individual
D) Regular reviews and monitoring of control activities

 

What is the purpose of implementing an internal audit function within an organization?

A) To provide an independent evaluation of the effectiveness of internal controls
B) To oversee the organization’s marketing strategies
C) To develop employee benefits programs
D) To ensure that managers are following company policies

 

Which of the following is an example of a compensating control?

A) Changing the design of a process to prevent a specific risk
B) Implementing a control to counteract the lack of another control
C) Auditing the performance of senior managers
D) Transferring risk to an insurance provider

 

What is the main purpose of fraud deterrence in corporate governance?

A) To increase the company’s profitability by encouraging risk-taking
B) To establish controls and policies that reduce the likelihood of fraudulent activity
C) To focus solely on financial fraud and ignore operational fraud
D) To prevent employees from reporting suspicious activities

 

Which of the following is a component of “ethical culture” in governance?

A) Creating a system where employees avoid all risks
B) Promoting ethical behavior and decision-making within the organization
C) Prioritizing profit maximization over ethics
D) Ignoring the company’s regulatory obligations

 

What is “continuous monitoring” in the context of governance and risk management?

A) A process of reviewing only financial transactions periodically
B) The ongoing evaluation of risks and the effectiveness of control measures
C) A method for ignoring minor risks to focus on larger risks
D) The process of eliminating all risks immediately after they are identified

 

In corporate governance, what does “transparency” refer to?

A) Ensuring that information is withheld to protect sensitive data
B) The company’s efforts to provide clear and accurate reporting to stakeholders
C) Making decisions without considering stakeholder interests
D) Limiting access to company data to upper management

 

What is the role of the audit committee in governance?

A) To handle day-to-day business operations
B) To provide oversight of the company’s financial reporting and internal controls
C) To implement marketing strategies
D) To conduct customer satisfaction surveys

 

Which of the following is an example of a “preventive control”?

A) Regular performance reviews to detect inefficiencies
B) Employee training programs to prevent errors and unethical behavior
C) Financial audits conducted at the end of the fiscal year
D) Analyzing financial results after a fraud incident

 

What does the term “compliance risk” refer to?

A) The risk of failing to comply with laws, regulations, or contractual obligations
B) The risk of failing to meet business performance targets
C) The risk of technological failure within the company
D) The risk associated with market competition

 

What is the role of senior management in implementing a risk management program?

A) To oversee the daily operations of risk management
B) To develop and implement risk management strategies and ensure their effectiveness
C) To minimize risks by reducing the number of employees
D) To focus only on financial risks and ignore operational risks

 

Which of the following is an example of a strategic risk?

A) A company experiencing a security breach in its IT system
B) A business expanding into an unfamiliar market without proper research
C) A business losing employees due to fraud investigations
D) A failure in complying with tax regulations

 

What is “due diligence” in the context of corporate governance?

A) The process of gathering information to understand risks before making decisions
B) A method of increasing profitability through mergers and acquisitions
C) The process of mitigating all risks entirely
D) The review of a company’s customer relations strategies

 

What is the purpose of a risk management framework?

A) To provide a set of rules for controlling risks without considering business objectives
B) To provide a structured approach to identifying, assessing, and managing risks
C) To reduce all risks to zero
D) To ensure that risks are completely ignored in decision-making

 

Which of the following is an essential element of effective corporate governance?

A) Allowing employees to make decisions without oversight
B) Concentrating power in the hands of one individual
C) Clear accountability for decision-making and performance
D) Limiting external audits to once every five years

 

What is the primary focus of governance in relation to risk management?

A) Ignoring risk factors to maximize profits
B) Creating a process to identify, assess, and control risks while achieving organizational objectives
C) Minimizing the importance of internal controls
D) Delegating all decision-making to external stakeholders

 

Which of the following best describes a “control environment”?

A) The physical security of company buildings
B) The tone and culture set by senior management that impacts risk management decisions
C) The financial transaction review process only
D) The method of managing employee benefits

 

Which of the following is NOT a characteristic of an effective governance framework?

A) Ethical decision-making at all levels
B) A clear separation of duties and responsibilities
C) A reliance solely on external audits
D) Regular monitoring and improvement of controls

 

 

Which of the following is a responsibility of the internal audit function in governance?

A) Directing the organization’s financial strategy
B) Evaluating the effectiveness of risk management processes and controls
C) Designing the company’s marketing campaigns
D) Overseeing employee recruitment and training

 

What is the main purpose of enterprise risk management (ERM)?

A) To reduce risk to zero
B) To provide a coordinated approach to identifying, assessing, and managing risks across the organization
C) To assess only financial risks
D) To minimize the cost of insurance policies

 

Which of the following is an example of a control activity within an organization?

A) Risk assessment process
B) Preventative measures like segregation of duties
C) Reporting risk appetite
D) Communication of policies to employees

 

The Committee of Sponsoring Organizations (COSO) framework includes all the following components EXCEPT:

A) Control environment
B) Risk assessment
C) Marketing and sales performance
D) Information and communication

 

What is the role of the governance framework in an organization?

A) To provide the strategic direction for business operations
B) To establish the structure and processes for decision-making, accountability, and control
C) To determine the marketing strategy
D) To focus exclusively on financial risks

 

Which of the following best describes the principle of “segregation of duties” in governance?

A) Assigning tasks to a single individual to increase efficiency
B) Ensuring that no single individual has control over all aspects of a financial transaction
C) Allowing the same individual to approve and execute payments
D) Delegating all responsibility to senior management

 

What is the primary focus of fraud deterrence within corporate governance?

A) To prevent the company from expanding
B) To implement controls and policies to prevent and detect fraudulent activities
C) To reduce the number of employees
D) To monitor only the financial performance of the company

 

Which of the following is the first step in the risk management process?

A) Implementing risk control measures
B) Identifying risks
C) Analyzing the impact of risks
D) Assessing risk tolerance

 

In the context of internal controls, what does the term “preventive control” refer to?

A) Controls implemented after a risk has occurred
B) Controls that prevent risks from occurring in the first place
C) Controls that detect fraud after it has occurred
D) Controls related to legal compliance

 

Which of the following best describes an operational risk?

A) A risk related to external market changes
B) A risk associated with a company’s internal processes, systems, and people
C) A risk related to regulatory changes
D) A risk associated with geopolitical events

 

What is the key feature of an effective internal control system?

A) It focuses solely on compliance with external regulations
B) It ensures accurate financial reporting and safeguards assets
C) It reduces costs by cutting internal audits
D) It ignores minor risks to focus on major risks

 

What does the “ethical culture” of an organization represent?

A) The physical environment in which employees work
B) The company’s approach to financial planning
C) The collective behaviors and decision-making influenced by organizational values and ethical standards
D) The marketing approach used to attract customers

 

Which of the following is a key principle of good governance in an organization?

A) Transparency in decision-making and reporting
B) Ignoring stakeholder interests to focus on profitability
C) Limiting risk to zero through risk transfer
D) Allowing only senior management to make all decisions

 

What is the purpose of implementing a “risk register”?

A) To record daily operational tasks
B) To document and prioritize identified risks across the organization
C) To track employee performance
D) To evaluate marketing strategies

 

What role does the audit committee play in corporate governance?

A) To provide strategic direction to the company’s operations
B) To oversee the financial reporting process and ensure the accuracy of financial statements
C) To monitor employee satisfaction levels
D) To design the company’s internal control system

 

What does the concept of “risk appetite” refer to?

A) The amount of risk an organization is willing to take in pursuit of its objectives
B) The desire to avoid all forms of risk
C) The maximum allowable risk for the entire industry
D) The risk level a company has already accepted

 

In governance, what is meant by the term “accountability”?

A) The responsibility of employees to manage their time effectively
B) The duty of individuals and teams to answer for their actions and decisions
C) The ability of the organization to meet financial targets
D) The focus on maximizing profits above all else

 

What is the purpose of the “control environment” in the COSO framework?

A) To provide the external factors influencing decision-making
B) To set the ethical tone and culture within the organization
C) To establish policies related to tax compliance
D) To monitor marketing strategies and customer satisfaction

 

Which of the following describes the principle of “continuous monitoring” in governance?

A) Monitoring the performance of all employees constantly
B) Ongoing evaluation of risk management strategies and internal controls to ensure effectiveness
C) Limiting the involvement of senior management in daily operations
D) Conducting audits only on an annual basis

 

What is “risk transfer” in the context of enterprise risk management?

A) Shifting risk management responsibilities to senior management
B) The process of managing risks internally without external help
C) Transferring the financial consequences of a risk to a third party, such as through insurance
D) Ignoring small risks in favor of focusing on major risks

 

What is the role of governance in relation to corporate social responsibility (CSR)?

A) To ensure that CSR initiatives are ignored in favor of maximizing shareholder profits
B) To integrate ethical and social considerations into business decisions and operations
C) To create regulations governing employee conduct
D) To eliminate the need for internal controls

 

Which of the following is an example of a detective control?

A) Training employees on compliance
B) Conducting surprise audits to detect discrepancies
C) Implementing segregation of duties to prevent fraud
D) Preventing access to sensitive data by unauthorized personnel

 

In the context of corporate governance, what does “transparency” mean?

A) Ensuring that financial records are accessible to employees only
B) Providing clear and accurate information to stakeholders about organizational activities and decision-making
C) Keeping all operational processes hidden from the public
D) Ignoring external reporting obligations

 

What is the primary responsibility of the CEO in a corporate governance structure?

A) To focus on day-to-day operational tasks and avoid strategic decisions
B) To lead the organization, execute the strategy, and ensure alignment with governance principles
C) To oversee the audit and compliance functions
D) To manage only the financial performance of the organization

 

Which of the following describes the concept of “residual risk”?

A) Risk that remains after controls and mitigation efforts have been implemented
B) Risk that is not considered by the organization
C) Risk that can be eliminated entirely through effective governance
D) Risk that is transferred to an insurance provider

 

What does “integrated risk management” focus on?

A) Handling only operational risks in isolation
B) Evaluating risks and controls in separate silos
C) Coordinating the management of risks across all functions and departments within the organization
D) Reducing the scope of risks considered to only financial concerns

 

In the context of corporate governance, what does “due diligence” mean?

A) A formal review process of financial performance by stakeholders
B) The comprehensive process of investigating and understanding the risks associated with a potential decision or transaction
C) A method for reviewing operational budgets only
D) A strategy for minimizing risks by ignoring them

 

Which of the following best describes a “risk control strategy”?

A) A specific set of actions designed to reduce, transfer, or accept risk
B) A financial strategy for maximizing profits
C) A process for evaluating employee satisfaction
D) A method for outsourcing risk management to third-party consultants

 

What does the “Committee of Sponsoring Organizations” (COSO) framework emphasize in terms of governance?

A) Financial reporting and internal control processes
B) A focus on operational costs and marketing strategies
C) Sales performance and market expansion
D) Employee satisfaction and benefits management

 

What is the role of a corporate governance framework?

A) To focus solely on profit maximization
B) To establish structures and processes that ensure effective decision-making, accountability, and ethical behavior
C) To monitor the performance of middle management
D) To ignore stakeholder interests in decision-making

 

What is a key factor in ensuring the effectiveness of enterprise risk management (ERM)?

A) Reducing the number of employees involved in risk management
B) Integration of ERM across all organizational levels and functions
C) Focusing only on financial risks
D) Allowing external parties to handle all risk management processes

 

What is the role of the Board of Directors in corporate governance?

A) To develop marketing strategies
B) To set the overall strategic direction and oversee management’s performance
C) To focus only on the financial profitability of the organization
D) To manage the day-to-day operations of the business

 

Which of the following best describes “compliance risk” in governance?

A) Risks arising from failure to comply with legal or regulatory requirements
B) Risks related to financial market fluctuations
C) Risks from operational inefficiencies
D) Risks associated with technological advancements

 

How does “risk assessment” contribute to corporate governance?

A) It helps to avoid any risks entirely
B) It provides a systematic approach to identifying and evaluating potential risks to the organization
C) It focuses only on customer satisfaction risks
D) It is limited to evaluating financial risks only

 

In a corporate governance structure, who is responsible for implementing the internal control systems?

A) The external auditors
B) The Board of Directors
C) Management and relevant departments within the organization
D) The shareholders

 

What is a key characteristic of “preventive controls” within an organization?

A) They are designed to detect issues after they have occurred
B) They are implemented to prevent issues from occurring in the first place
C) They focus on compliance with external regulations only
D) They monitor only the financial records of the organization

 

Which of the following is NOT typically part of the COSO framework?

A) Risk assessment
B) Internal controls
C) Fraud detection
D) Strategic business planning

 

What does the “monitoring” component of the COSO framework refer to?

A) The ongoing review of internal control systems to ensure their continued effectiveness
B) The evaluation of employee performance
C) The management of organizational strategies
D) The creation of financial forecasts

 

What is the role of internal audit in risk management?

A) To create marketing strategies for the company
B) To evaluate and improve the effectiveness of risk management and internal control processes
C) To supervise day-to-day operations
D) To implement corporate policies and procedures

 

What is the importance of ethical organizational culture in corporate governance?

A) To reduce employee salaries
B) To align decision-making and behaviors with the organization’s values, promoting trust and accountability
C) To limit financial risks
D) To focus solely on shareholder interests

 

What is the significance of “whistleblower protections” in corporate governance?

A) They reduce the number of employees in the organization
B) They encourage employees to report unethical or illegal activities without fear of retaliation
C) They focus solely on employee safety
D) They prevent external audits from being necessary

 

What does the concept of “risk tolerance” refer to in corporate governance?

A) The level of risk the organization is willing to take to achieve its objectives
B) The amount of risk an organization can eliminate completely
C) The preference for external audits over internal controls
D) The focus on risk management for only operational risks

 

Which of the following is an example of a detective control?

A) Establishing segregation of duties
B) Implementing risk transfer through insurance
C) Conducting audits to identify fraudulent activities after they have occurred
D) Providing training to employees on ethical standards

 

What is the main objective of a corporate governance framework?

A) To eliminate all financial risks
B) To ensure effective decision-making and accountability in the organization
C) To reduce the number of employees in the company
D) To focus on marketing and sales only

 

In the context of governance, what does “risk appetite” mean?

A) The willingness of an organization to take on risks in order to achieve its objectives
B) The ability to avoid all types of risks
C) The process of transferring risks to external parties
D) The method for managing only financial risks

 

What is “enterprise risk management (ERM)” designed to do?

A) To solely focus on minimizing operational costs
B) To provide a holistic approach to managing risks across the entire organization
C) To evaluate risks only in financial departments
D) To ignore low-level risks and focus on large-scale risks

 

Which of the following is NOT an internal control objective in governance?

A) Safeguarding assets
B) Ensuring compliance with laws and regulations
C) Minimizing customer satisfaction
D) Providing accurate financial reporting

 

Which of the following best describes “residual risk”?

A) The risk that remains after mitigation measures have been applied
B) The risk that an organization chooses to accept
C) The risk that is transferred to a third party
D) The risk that is identified but never addressed

 

How does the “control environment” impact corporate governance?

A) It establishes the organization’s ethical culture and attitude towards internal controls
B) It sets external financial reporting standards
C) It evaluates only financial risks
D) It focuses on tax compliance only

 

What is the purpose of the “risk register” in enterprise risk management?

A) To monitor employee productivity
B) To identify, assess, and document risks within the organization
C) To determine the marketing strategies of the company
D) To monitor financial transactions only

 

Which of the following is an example of a preventive control within corporate governance?

A) Monitoring financial transactions after they occur
B) Segregation of duties to prevent fraud and error
C) Conducting periodic audits of risk management practices
D) Issuing annual reports on financial performance

 

What is a key feature of “ethics training” in governance?

A) It is designed to teach employees about company policies and ethical behavior
B) It focuses on maximizing profits only
C) It encourages employees to engage in unethical practices to meet financial goals
D) It is a tool for reducing operational costs

 

What is the purpose of conducting a “risk assessment” in governance?

A) To identify potential risks and evaluate their impact on the organization’s objectives
B) To reduce employee salaries
C) To monitor employee satisfaction levels
D) To evaluate marketing and sales effectiveness

 

How does the COSO framework help organizations?

A) By providing a method to assess market risks only
B) By establishing guidelines for effective internal control systems and risk management processes
C) By focusing on employee performance reviews
D) By limiting the scope of corporate governance to financial issues only

 

Which of the following best describes “fraud deterrence” in corporate governance?

A) Preventing employees from using company resources for personal gain
B) Preventing external parties from influencing financial reports
C) The system of policies and controls implemented to prevent fraudulent activities
D) Monitoring employee productivity

 

What is the purpose of implementing “ethical leadership” in governance?

A) To encourage employees to focus solely on profit-making
B) To promote ethical decision-making and behavior at all levels of the organization
C) To reduce compliance costs
D) To focus only on financial performance

 

How does the concept of “ethical organizational culture” contribute to governance?

A) It ensures that only top management is involved in decision-making
B) It creates a foundation for ethical decision-making and behaviors throughout the organization
C) It focuses on legal compliance and regulatory issues
D) It ignores employee welfare in favor of profitability

 

What is the role of “independent directors” in corporate governance?

A) To manage day-to-day operations of the company
B) To provide unbiased oversight and ensure the interests of shareholders are protected
C) To oversee marketing and sales strategies
D) To handle only financial reporting

 

What does the term “business continuity planning” refer to in corporate governance?

A) Planning for short-term market expansion
B) Ensuring that the business can continue operating during and after a crisis or disruption
C) Focusing on employee recruitment
D) Maximizing immediate profitability

 

Which of the following is an example of a detective control?

A) Issuing company-wide compliance policies
B) Conducting surprise audits to detect errors and fraud
C) Segregating duties among different employees
D) Establishing preventative measures like background checks for all employees

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