Operational Audit and Risk Management
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Questions and Answers

What is one way to reduce the complexity of a risk matrix?

  • Categorising risks and using one or more graphs for each category (correct)
  • Using a single graph for all categories of risk
  • Including only the most critical risks in the matrix
  • Eliminating all IT risks from the matrix

    • What is a common challenge in managing risk?

  • Subjective judgement in risk assessment (correct)
  • Insufficient resources for risk management
  • Lack of data for risk assessment
  • Inadequate risk management policies

    • What is an example of a category of risk that may be plotted on a risk matrix?

  • Financial risk
  • HR risks
  • Structural risks
  • All of the above (correct)

    • What is a way to categorise risks?

    <p>By type of risk, such as strategic or operational</p> Signup and view all the answers

    What does monitoring in risk management involve?

    <p>A combination of management reviewing exception reports, software monitoring exceptions and trends over time, and the compliance function reviewing processes and outturns</p> Signup and view all the answers

    Why may historical data be limited in its usefulness for risk assessment?

    <p>Because the future may not correspond to the past upon which the historical data is based</p> Signup and view all the answers

    What is a crucial aspect of reviewing the control system?

    <p>Questioning the relevance and suitability of the control system</p> Signup and view all the answers

    Why is it essential to have a defined mechanism for reporting control shortcomings?

    <p>To enable prompt and effective reporting and corrective action</p> Signup and view all the answers

    What should a control system cater for in terms of reporting channels?

    <p>Both formal and informal reporting channels for all staff members</p> Signup and view all the answers

    What is a key aspect of managing control-related problems?

    <p>Ensuring prompt and effective corrective action</p> Signup and view all the answers

    What type of evidence may be available to demonstrate review of the internal control system?

    <p>Internal audit reports, summaries of significant control issues, or minutes of board meetings</p> Signup and view all the answers

    Why is it important to review the control system periodically?

    <p>To adapt to external forces and changes in the business</p> Signup and view all the answers

    Who should ultimately be responsible for monitoring the internal control system?

    <p>The board of directors</p> Signup and view all the answers

    What is the ideal characteristic of the monitoring process?

    <p>A degree of independence</p> Signup and view all the answers

    Who should be responsible for ongoing monitoring of operations and financial performance?

    <p>Line management</p> Signup and view all the answers

    What is the role of the audit committee in monitoring?

    <p>Reviewing financial statements and assessing internal control effectiveness</p> Signup and view all the answers

    What is the primary role of the internal audit function in monitoring?

    <p>Independently assessing the effectiveness of controls</p> Signup and view all the answers

    What should the board monitor in addition to the internal control system?

    <p>The identification of business risks and control objectives</p> Signup and view all the answers

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