Devon Company is using an enterprise risk management system. Management of the company has set the company's objectives, identified events, and assessed risks. What is the next step in the enterprise risk management process?

Devon Company is using an enterprise risk management system. Management of the company has set the company's objectives, identified events, and assessed risks. What is the next step in the enterprise risk management process?



a. Establish control activities to manage the risks.
b. Monitor the risks.
c. Determine responses to the risks.
d. Identify opportunities.



Answer: C

In the COSO enterprise risk management framework, the term risk tolerance refers to

In the COSO enterprise risk management framework, the term risk tolerance refers to



a. The level of risk an organization is willing to accept.

b. The acceptable variation with respect to a particular objective.

c. The risk of an event after considering management's response.

d. Events that require no risk response.



Answer: B

Jarrett Corporation is considering establishing an enterprise risk management system. Which of the following is not a benefit of enterprise risk management?

Jarrett Corporation is considering establishing an enterprise risk management system. Which of the following is not a benefit of enterprise risk management?



a. Helps the organization seize opportunities.
b. Enhances risk response decisions.
c. Improves the deployment of capital.
d. Insures that the organization shares all major risks.


Answer: D

Which of the following would generally be entitled to a reward for whistle-blowing under the Dodd-Frank Act?

Which of the following would generally be entitled to a reward for whistle-blowing under the Dodd-Frank Act?



a. An external auditor who discovers a violation while performing an audit of a company's financial statement and internal control under SEC requirements.

b. A customer of a company who discovers a violation in the course of doing business with the company.

c. A director of a company who discovers a violation while performing her duties as a director.

d. An internal auditor of a company who discovers a violation while performing an audit of compliance.


Answer: B

According to COSO, the use of ongoing and separate evaluations to establish a new baseline after changes have been made can best be accomplished in which of the following stages of the monitoring-for-change continuum?

According to COSO, the use of ongoing and separate evaluations to establish a new baseline after changes have been made can best be accomplished in which of the following stages of the monitoring-for-change continuum?



a. Control baseline.
b. Change identification.
c. Change management.
d. Control revalidation/update.



Answer: C

Which of the following is not true regarding the information and communication component of internal control?

Which of the following is not true regarding the information and communication component of internal control?



a. The information system captures both internal and external sources of data.

b. The information and communication component involves developing channels for communication from external stakeholders.

c. A whistle-blower hotline is an important aspect of the information and communication component.

d. An important aspect of the information and communication component is assessment of information about fraud.



Answer: D

The Institute of Internal Auditors' International Standards for the Professional Practice of Internal Auditing cover what two major types of internal auditing services?

The Institute of Internal Auditors' International Standards for the Professional Practice of Internal Auditing cover what two major types of internal auditing services?



a. Assurance and consulting.
b. Financial and operational.
c. Compliance and taxation.
d. Audit and review.



Answer: A

An important corporate governance mechanism is the internal audit function. For good corporate governance, the chief internal audit executive should have direct communication to the audit committee and report to

An important corporate governance mechanism is the internal audit function. For good corporate governance, the chief internal audit executive should have direct communication to the audit committee and report to 



a. The chief financial officer.
b. The chief executive officer.
c. The controller.
d. The external auditors.


Answer: B

Which of the following is not a statutory requirement regarding the committees of the board of directors of publicly held corporations registered with the SEC?

Which of the following is not a statutory requirement regarding the committees of the board of directors of publicly held corporations registered with the SEC?



a. All members of the compensation committee must be independent.

b. At least one member of the compensation committee must be a "compensation expert."

c. All members of the audit committee must be independent.

d. At least one member of the audit committee must be a "financial expert."



Answer: B

Which of the following is not a requirement of the New York Stock Exchange regarding corporate governance of companies listed on the exchange?

Which of the following is not a requirement of the New York Stock Exchange regarding corporate governance of companies listed on the exchange?



a. Have a majority of independent directors of the corporate board.

b. Adopt and make publicly available a code of conduct.

c. Prohibit the chief financial officer from serving on the board of directors.

d. Have an independent audit committee.



Answer: C

The articles of incorporation and bylaws of a corporation serve as a basis for the governance structure of a corporation. Which of the following items are normally included in the bylaws of the corporation as opposed to the articles of incorporation?

The articles of incorporation and bylaws of a corporation serve as a basis for the governance structure of a corporation.
Which of the following items are normally included in the bylaws of the corporation as opposed to the articles of incorporation?



a. Purpose of the corporation.
b. Number of authorized shares of stock.
c. Procedure for electing directors.
d. Powers of the corporation.

Answer: C

Which of the following is correct with respect to the rights of stockholders in a corporation?

Which of the following is correct with respect to the rights of stockholders in a corporation?



a. Stockholders have no right to manage their corporation unless they are also directors or officers.

b. Stockholders have a right to receive dividends.

c. Stockholders have no right to inspect the books and records of their corporation.

d. Stockholders have a right to get a list of their corporation's customers to use for a business


Answer: A