ICAEW ACA Certificate Level · Assurance and Risk Fundamentals

Risk, internal controls and information flows

12 practice questions, each with the answer and an explanation.

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All 12 questions

  1. The audit risk model states that audit risk is a function of which three components?
  2. An auditor wants audit risk to be 5%. Inherent risk is assessed at 100% and control risk at 50%. Using the audit risk model, what is the maximum acceptable detection risk?
  3. Which of the following is a detective control?
  4. Which of the following arrangements shows a weakness in segregation of duties?
  5. In a three-way match before paying a supplier invoice, which documents are agreed to each other?
  6. Which control would best reduce the risk of payments to fictitious (ghost) employees?
  7. Which of the following is an application control rather than a general IT control?
  8. Management's commitment to integrity and ethical values, and active oversight by the board, are examples of which component of internal control?
  9. Which limitation of internal control cannot be overcome simply by improving segregation of duties?
  10. What is the main role of an internal audit function?
  11. An employee's login details were stolen in a phishing attack. Which control would most effectively stop the thief from accessing the accounting system with the stolen password?
  12. A manufacturer relies on a single supplier for a component. Which control best mitigates the supply-chain risk?

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