Question 1

One fund may invest on mostly established "blue chip" (Companies that pay regular dividends). Another fund may invest in newer technology companies that pay no dividends but that may have more potential for growth. These are the examples of:

Accepted Answer

A)  Mutual funds 
B)  Index funds 
C)  Stock funds 
D)  Bond funds

Question 2

Visa and MasterCard have teamed up to develop payment card Industry ( PCI) Data Security standards to govern the safekeeping of account information. Which of the following is NOT out of the major goals of PCI standards?

Accepted Answer

A)  Build and maintain secure network 
B)  Protect Card holder Data 
C)  Maintain vulnerability management program and regularly monitor and test networks 
D)  Annual review of an information security policy

Question 3

System tailoring is accomplished by setting optional system parameters and, therefore, has an impact on system performance and security. Control techniques for system's software include:

Accepted Answer

A)  Setting appropriate system parameters and security options for operating system 
B)  Verifying the accuracy of output through manual or automated reconciliation activities 
C)  Using the security features of security software effectively 
D)  Controlling procurement and maintainace of software licenses

Question 4

The extent to which an organization has implemented controls to minimize the actual occurrences of the risk determines the vulnerability to the risk actually occurring, or the "_______"

Accepted Answer

A)  Inherent Risk 
B)  Understanding Risk 
C)  Control Risk 
D)  Disguised Risk

Question 5

Which of the following is NOT the requirement of Exempt Securities Act?

Accepted Answer

A)  Non-Profit groups 
B)  Private placement 
C)  Fees for underwriter of the issue. 
D)  fixed annuity contracts and insurance policies.

Question 6

Risk is the probability that an event or action may adversely affect the organization or activity under review. In other words, risk is anything that can prevent an organization from achieving an objective. Major components of risk are as follows EXCEPT:

Accepted Answer

A)  Non- Compliance with the laws, rules and regulations 
B)  An event or cause that can interfere with achieving the objective (e.g. What can go wrong?) 
C)  A probability or likelihood of occurrence 
D)  The negative consequences of not achieving the objective

Question 7

Performance as _____________ is normally the only true trust relationship administered by a corporate trust department.

Accepted Answer

A)  Trustee under a bond indenture 
B)  Bank under a bond indenture 
C)  Trust under a bond indenture 
D)  None of these

Question 8

Personal liability covers claims for bodily injury or property damage caused by the insured. And, Medical payment provides a low level of medical payment to help avoid legal action between the insured and the injured part, regardless of whether or not the insured is legally liable for the incident. These are two major types of liability coverage provided by:

Accepted Answer

A)  Homeowner policies 
B)  Term insurances 
C)  Auto coverage policies 
D)  Casualty insurance policies

Question 9

__________pays damaged insured by the injured and the insured's passenger when injured in an auto accident caused by a motorist without liability insurance. The coverage also covers accidents caused by hit-and-run drivers.

Accepted Answer

A)  Uninsured motorist coverage 
B)  Auto coverage 
C)  Medical coverage 
D)  Liability coverage

Question 10

Charitable trust that is an irrevocable trust and that may be testamentary or inter-vivos (Between living persons) is called:

Accepted Answer

A)  Foundations 
B)  Charitable Remainder Unitrust 
C)  Charitable Remainder Annuity Trust 
D)  None of these

Question 11

All of the following phrases are used to express the auditor's opinion EXCEPT:

Accepted Answer

A)  Give a true and fair view 
B)  Present fairly, in all material respects 
C)  Timely and consistent opinion 
D)  Comprehensible and realistic view

Question 12

Negotiable certificates are:

Accepted Answer

A)  Mutual funds that invests in short-term liquid securities. 
B)  Tradable certificates issued by commercial banks in exchange for time deposits. 
C)  Are instruments issued by corporations with good credit ratings and are in effect an unsecured promissory note 
D)  Are U.S. currency deposited in banks outside the United States

Question 13

Major categories of loans include all of the following EXCEPT:

Accepted Answer

A)  Commercial loans 
B)  Residential loans 
C)  Consumer loans 
D)  Agricultural loans

Question 14

Entrance Conference- The entrance conference may be the auditor's first face-to-face contact with client. The objective/s of the entrance conference is/are to:

Accepted Answer

A)  Explain preliminary audit scope 
B)  Present projected audit milestone dates and completion dates 
C)  Identify key contacts and desired communication protocols 
D)  All of these

Question 15

Commercial banks create money by:

Accepted Answer

A)  Making loans 
B)  Selling government bonds to the public 
C)  Placing reserves at the Federal Reserve Bank. 
D)  Repurchasing their stock on the open market.

Question 16

A commercial or consumer loan made to foreign branch of a large bank is also considered as:

Accepted Answer

A)  A Federal Government loan 
B)  International loan 
C)  Financial insurance loan 
D)  Term loan

Question 17

Which one of the following questions is NOT considered when claims department review the claims?

Accepted Answer

A)  Did a loss occur? 
B)  Was the loss covered by the policy? 
C)  Who are not the beneficiaries? 
D)  How much is payable to the insured or beneficiaries?

Question 18

All of these are disadvantages of mutual funds EXCEPT:

Accepted Answer

A)  Cost despite negative returns 
B)  Liquidity 
C)  Lack of control 
D)  Price uncertainty

Question 19

Management must ___________ assess business risk and develop clearly defined control objectives:

Accepted Answer

A)  Continually 
B)  Annually 
C)  Periodically 
D)  Weekly

Question 20

Leases allow a customer to use an institution's property for a specified period. Most lease agreements give the lessee the option of purchasing the property:

Accepted Answer

A)  at principal amount 
B)  below fair market value 
C)  above fair market value 
D)  None of these

Exam 1: Certified Financial Services Auditor

One fund may invest on mostly established "blue chip" (Companies that pay regular dividends) . Another fund may invest in newer technology companies that pay no dividends but that may have more potential for growth. These are the examples of: