Question 1

Derivates can be effective low cost tools for managing expose experience losses due to:

Accepted Answer

Derivatives can be effective low cost tools for managing expose experience losses due to interest rate change, commodity price change, and master agreements.

Question 2

"A special type of annuity that involves a contract between the annuitant and insurer in which insurer credits the annuity account with return amounts based on changes in an equity index such as the S&P500 (composite price index)," is:

Accepted Answer

An equity indexed annuity is a type of annuity where the returns are based on the performance of a specified equity index, such as the S&P 500.

Question 3

At the end of the day all funds in a non-interest bearing checking account are cleared out and moved into a short-term investment account overnight. At the beginning of the next day, those funds are put back into the regular account for use that day. Such accounts are called:

Accepted Answer

Sweep accounts automatically transfer excess funds into a short-term investment account overnight and return them to the checking account the next day.

Question 4

Obtaining feedback from client management throughout the audit is encouraged in order to ensure that appropriate information is being obtained and to alleviate problems at the conclusions of the audit. Some specific components of continual communication to consider include:

Accepted Answer

Continual communication involves keeping client management informed of audit issues as they arise (A) and submitting a draft audit report to ensure accuracy (B).

Question 5

The reliability (competence) of evidence gathered by auditors is a __________. The reliability of evidence is a key factor in the audit analysis. Relevance is also a key factor in determining the quality of evidence.

Accepted Answer

The reliability of evidence is variable because it depends on the source and nature of the evidence, as well as the circumstances under which it is obtained.

Question 6

Bank may serve as trustee or custodian for pension and profit sharing plans that self- employed individuals establish for them selves and their employees. These types of trust are referred to as:

Accepted Answer

Keogh plans are retirement plans for self-employed individuals and their employees, allowing banks to serve as trustees or custodians.

Question 7

Cash on hand refers to:

Accepted Answer

Cash on hand includes all physical currency that a bank has, which encompasses funds at teller windows, in vaults, and in ATMs.

Question 8

Some organizations have information protection policies that place the burden of information protection on managers in individual organizational units. An information protection policy may include:

Accepted Answer

An information protection policy typically includes statements defining information as an asset that must be protected and outlines the responsibilities of information owners, custodians, and users.

Question 9

Information technology general controls set the foundation for effective control over computerized information system assets. General controls apply to the entire computer operation. Which of the following is/are NOT out of these controls?

Accepted Answer

Input controls are not general controls; they are application controls that ensure the accuracy, completeness, and validity of data entered into a system.

Question 10

If participation rate in an equity indexed entity is 80% and the index increases 9%, the return credited to the annuity would be:

Accepted Answer

The answer of If participation rate in an equity indexed...

Question 11

A bank may serve as ___________ for a company's employee benefit and retirement plans.

Accepted Answer

A bank can serve in various capacities such as administrator, agent, trustee, co-trustee, custodian, or depository for a company's employee benefit and retirement plans.

Question 12

An objective of an exit conference is that it provides the client management with findings and recommendations identified during the audit which addresses all of the followings EXCEPT:

Accepted Answer

The answer of An objective of an exit conference is...

Question 13

Workpapers serve as the connecting link between the audit assignment, the auditor's fieldwork, and the final report. Most importantly, the workpapers document the auditor's conclusions and the reasons those conclusions were reached. Workpapers also provide a basis for demonstrating compliance with the IIA's Standards. Among other things, workpapers may include all of the following EXCEPT:

Accepted Answer

The answer of Workpapers serve as the connecting link between...

Question 14

Continuous monitoring in systems and networks is a by-product of the increasing demand for immediate and continuous access to reliable information. Advancements in information monitoring and analysis are being accelerated both by increasing demands for timely and accurate information and by advances in technology that contribute to the:

Accepted Answer

Advancements in technology enhance both the intelligence and capabilities of systems, allowing for better monitoring and analysis.

Question 15

When looking at account receivables auditors should ensure:

Accepted Answer

Auditors should ensure that receipts are processed and recorded timely to verify the accuracy and completeness of account receivables.

Question 16

Surrender charges usually apply only if the annuity has been in free:

Accepted Answer

Surrender charges typically apply if the annuity has been held for less than a minimum period of time, often several years, as specified in the contract.

Question 17

Continuous auditing is a method used to automatically perform control and risk assessment more frequently. Technology is the key to enable such an approach. Continuous auditing changes the audit paradigm from periodic reviews of a sample to ongoing audit testing of ______ percent of transactions.

Accepted Answer

Continuous auditing involves ongoing audit testing of 100 percent of transactions, as it leverages technology to continuously monitor and assess all transactions rather than just a sample.

Question 18

Due from bank balances are used to:

Accepted Answer

Due from bank balances are used to ensure liquid reserves and facilitate the transfer of funds and to use as compensation for correspondent banking services.

Question 19

When the maturity date of the annuity arrives, the insurer begins making a series of payment to the annuitant over a stated period (Known as__________).

Accepted Answer

The pay-out period is when the insurer starts making regular payments to the annuitant after the annuity has matured.

Question 20

Which one of the following does NOT depicts a common indexing method?

Accepted Answer

The answer of Which one of the following does NOT...

Exam 1: Certified Financial Services Auditor