Segregation of Duties Quiz

What is the primary purpose of preventive controls?

Proactively prevent fraud and cyber-attacks

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

Employee cybersecurity training

What do detective controls aim to do?

Find errors or problems after they have already occurred

Why are preventive controls considered critical?

To catch misstatements before financials are reported Signup and view all the answers

What should be done when detected errors occur according to corrective controls?

Evaluate if there are opportunities to improve process quality Signup and view all the answers

Why is segregating duties among multiple employees important?

To improve quality verification and avoid fraud temptation Signup and view all the answers

What is a common reason why some organizations fail to properly segregate duties?

Improperly designed segregation controls Signup and view all the answers

Why are solid preventive controls considered essential?

To reduce the need for detective and corrective controls Signup and view all the answers

Why is adopting the 'don't trust, always verify' approach recommended?

To prevent fraud and adverse events Signup and view all the answers

What does an internal control risk assessment evaluate?

Both internal and external risks affecting various aspects of the organization Signup and view all the answers

What is the primary objective of monthly transaction reconciliations?

Verifying the accuracy of financial records Signup and view all the answers

Which type of risk is associated with unexpected operational disruptions due to failure to maintain compliance?

Compliance Risk Signup and view all the answers

How can management override of controls lead to financial statement fraud?

By manipulating financial statements for personal gain Signup and view all the answers

Which detective control is specifically designed to prevent fraudulent activities by senior management?

External audits Signup and view all the answers

What role does strong governance play in combating fraud at managerial levels?

It is essential for identifying and preventing fraud Signup and view all the answers

Which action ensures that everyone knows their role in the control environment?

Creating a strong tone from the top Signup and view all the answers

What technology is recommended to streamline ERM and GRC processes?

Robotic process automation (RPA) Signup and view all the answers

How can internal controls be validated to ensure they are functioning as intended?

Engaging external auditors Signup and view all the answers

Which platform can help identify risks and mitigate business exposure?

Reciprocity ROAR Platform Signup and view all the answers

What is the key benefit of documenting controls processes?

Ensures everyone knows their role in the control environment Signup and view all the answers

Why is limited segregation of duties considered a risk in internal controls?

It makes it easier for employees to commit fraud without being detected. Signup and view all the answers

What strategy should be employed to prevent the overwhelming implementation of multiple risks and controls?

Break initiatives into smaller pieces and roll out new controls in phases Signup and view all the answers

What is the impact of having limited segregation of duties in an organization?

Increases the chances of conflicts of interest Signup and view all the answers

What is the main purpose of performing a 'Dry Run' when designing controls?

To test control effectiveness before live deployment Signup and view all the answers

Why is it important to develop user-friendly reporting and monitoring tools in internal controls?

To make it easier to understand and measure progress Signup and view all the answers

How does trusting without verifying contribute to internal control risks?

It allows errors and discrepancies to go unnoticed Signup and view all the answers

What is the purpose of preventative controls in internal controls?

To deter potential risks before they happen Signup and view all the answers

What is a key step to encourage organization-wide buy-in for internal controls?

Support adoption through employee education and training Signup and view all the answers

How does management override of controls impact internal controls?

It increases the risk of fraudulent activities Signup and view all the answers

Why should the costs of implementing controls be considered in relation to benefits and risk tolerance?

To evaluate if the benefits outweigh the costs based on risk tolerance Signup and view all the answers

What is the purpose of internal controls in an organization?

To maintain process efficiency, performance, and reliability Signup and view all the answers

Which of the following is NOT mentioned as a form of internal controls in the text?

Employee welfare programs Signup and view all the answers

Why are internal controls important for organizations?

To improve operational performance and avoid adverse risk events Signup and view all the answers

What is one of the benefits of internal controls mentioned in the text?

Increasing asset security Signup and view all the answers

Which framework emphasizes the importance of internal controls and risk management?

COSO Enterprise Risk Management – Integrated Framework Signup and view all the answers

What is NOT a form of internal control mentioned in the text?

Employee satisfaction programs Signup and view all the answers

Which of the following is a key role of internal controls within an organization?

To safeguard assets and meet regulatory requirements Signup and view all the answers

Why do organizations need internal controls according to the text?

To avoid adverse risk events and safeguard assets Signup and view all the answers

What is one of the main functions of internal controls?