Question

Questions

1.Assume you have evaluated an event and given it a score of 2 for probability and 3 for impact. Another event was given a score of 3 for probability and 2 for impact. What can be said about the two events given they both had scores of 5.

A.The event with the highest probability should be given the most concern

B.The event with the highest impact should be given the most concern

c. Judgment of the auditor determines which event should be given the most concern

D. Can not be determined with the information given

2.What best describes residual risk?

A. Risk that cannot be mitigated

B.	Risks that, if properly managed, will make the organization successful in the achievement of its objectives or, if not well managed, it (the organization) will not achieve its objectives

C. A component of overall audit risk

D. None of the above describes residual risk

3.Which of the following represents the greatest risk?

A. The loss of a substantial customer

B.	Excessive turnover of management

C. No audit committee

Poor cash flow

4.Which of the following ERM components are the external auditors most concerned with?

A.	Reporting and operations

B. Reporting and compliance

C. Compliance and operations

D.Compliance and strategy

5.Which of the following generally reviews and documents ERM?

A. Management

B.	Internal auditors

C.	Board of directors

D. External auditors

Answer 1

1) C. As the Probability and the impact is similar in both cases Auditors judgement will best determine which event should be given more concern

2) A. Risk that remains after elimination of all possible natural and inherent risk have been reduced by risk control is residual risk

3) B. Excessive Turnover of Management implies rotating key personal of Organisation on a frequent basis which can be the greatest risk for an organisation

4) B. External auditor are more concerned with reporting and compliance, Operations are looked after by the internal auditors.

5) C. Board of Directors generally review and document ERM.