18 Questions
What is one way to reduce the complexity of a risk matrix?
Categorising risks and using one or more graphs for each category
What is a common challenge in managing risk?
Subjective judgement in risk assessment
What is an example of a category of risk that may be plotted on a risk matrix?
All of the above
What is a way to categorise risks?
By type of risk, such as strategic or operational
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
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
What is a crucial aspect of reviewing the control system?
Questioning the relevance and suitability of the control system
Why is it essential to have a defined mechanism for reporting control shortcomings?
To enable prompt and effective reporting and corrective action
What should a control system cater for in terms of reporting channels?
Both formal and informal reporting channels for all staff members
What is a key aspect of managing control-related problems?
Ensuring prompt and effective corrective action
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
Why is it important to review the control system periodically?
To adapt to external forces and changes in the business
Who should ultimately be responsible for monitoring the internal control system?
The board of directors
What is the ideal characteristic of the monitoring process?
A degree of independence
Who should be responsible for ongoing monitoring of operations and financial performance?
Line management
What is the role of the audit committee in monitoring?
Reviewing financial statements and assessing internal control effectiveness
What is the primary role of the internal audit function in monitoring?
Independently assessing the effectiveness of controls
What should the board monitor in addition to the internal control system?
The identification of business risks and control objectives
This quiz covers operational audit and risk management, including monitoring and categorizing risks, reviewing exception reports, and compliance with processes.
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