Exam 1: Certified Financial Services Auditor

__________ allows businesses that sell durable goods such as automobiles to finance inventories. As the business sells goods, the loan advance against those goods is repaid.

Options are quoted daily in the newspapers. The listing provides the name of the underlying stock and its closing price that day, the strike price of the option, the closing prices(premiums) of the 3 call and 3 put contracts trading closest to expiration. Listings can be divided into categories. Which of the following is/are out of those categories?

An example of an invalid deductive argument is as follows: Major premises: All employees who are committing fraud drive luxury cars. Minor premises: __________ Conclusion: Therefore, John Doe is committing fraud. What will be the minor premise in this example?

Banks generally record securities transactions as of trade date. However, it is acceptable to record the transactions as of the _________ if the difference between the settlement date and trade date is not materially different.

Asset/Liability (ALM) is a short and long term planning tool designed to maximize earnings. ALM tries to create optimal risk/reward decisions and focuses on creating prices that achieve spread. A sound ALM policy must manage following types of risks EXCEPT:

_________ stock generally costs more than __________ because of the additional rights its stockholders receive.

Some wills specify that more than one responsible party share the trustee's responsibilities of an estate .The condition depicts relation with which one of the following trust services:

Strategic planning is the process of taking a long-term view of the organization, the longer the view, the greater the uncertainty of risks and opportunities. Such reservations can better be handled by:

Enterprise risk management encompasses all EXCEPT:

CAMEL is an acronym that comes from the key areas of a financial institution's safety and soundness examination. It stands for:

Major types of individual long-term disability policies are all EXCEPT:

Which of the following is not a characteristic of a control environment?

Which one of the following Factors does NOT ensure the financial health and security of the organization?

Low-risk scores are those with an average of scores:

The purpose of audits of financial statements is to issue an opinion on the fairness of the financial statements and to evaluate all of the following assertions (explicit or implicit) by management EXCEPT:

Which of the following is NOT the benefit of an endowment insurance policy?

Which of the following are typical information system controls that are used to ensure properly authorized transaction?

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:

Reviewing counterparties for creditworthiness and obtaining master trade agreements and credit approval for counterparties before entering into a repurchase or reverse repurchase agreement Obtaining collateral from the counterparty Marking to market all collateral daily; if a deficit (within established guidelines) exists, additional collateral may be obtained from the counterparty Reconciling the repurchase and reverse repurchase subsidiary ledgers to the stock record and general ledger daily. Out-of-balances are recorded as suspense items and researched immediately These are actually:

It provides additional living expenses when the home is unlivable, so home owners can continue to live comfortably. While the home is made livable, the homeowner policy will pay for items such as rented rooms at a hotel, restaurant meals, and laundry expenses. What is it?