Operational Audit and Risk Management

Play an AI-generated podcast conversation about this lesson

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?

By type of risk, such as strategic or operational (B) Signup and view all the answers

What does monitoring in risk management involve?

A combination of management reviewing exception reports, software monitoring exceptions and trends over time, and the compliance function reviewing processes and outturns (C) Signup and view all the answers

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

Because the future may not correspond to the past upon which the historical data is based (A) Signup and view all the answers

What is a crucial aspect of reviewing the control system?

Questioning the relevance and suitability of the control system (A) Signup and view all the answers

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

To enable prompt and effective reporting and corrective action (D) Signup and view all the answers

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

Both formal and informal reporting channels for all staff members (C) Signup and view all the answers

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

Ensuring prompt and effective corrective action (A) Signup and view all the answers

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

Internal audit reports, summaries of significant control issues, or minutes of board meetings (C) Signup and view all the answers

Why is it important to review the control system periodically?

To adapt to external forces and changes in the business (D) Signup and view all the answers

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

The board of directors (D) Signup and view all the answers

What is the ideal characteristic of the monitoring process?

A degree of independence (A) Signup and view all the answers

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

Line management (B) Signup and view all the answers

What is the role of the audit committee in monitoring?

Reviewing financial statements and assessing internal control effectiveness (D) Signup and view all the answers

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

Independently assessing the effectiveness of controls (A) Signup and view all the answers

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

The identification of business risks and control objectives (D) Signup and view all the answers