Question 1

Data gathering and evaluation during field work includes:

Accepted Answer

A)  Gaining and understanding of the activity, system, or process under review 
B)  Observing conditions and operations 
C)  Interviewing people and examining assets and accounting, and other operational business, and other operational records. 
D)  All of these

Question 2

Which of the following is/ are the responsibility /ies of state insurance commission:

Accepted Answer

A)  Making the State's insurance rules and regulations 
B)  Authorizing companies to operate in the state through the issuance rules and regulations 
C)  Authorizing companies to operate in the state through the issuance of licenses and certificates of authority 
D)  Both of these 
E)  None of these

Question 3

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

A)  Allow client management to state concerns and objections to the findings and recommendations 
B)  Give the client management and the audit team the opportunity to identify and correct any errors or misinterpretations that may appear in the draft report 
C)  It should include a description of significant noteworthy accomplishments and issues that need further work 
D)  Provide the audit team with the formal opportunity to explain the remaining steps in the audit process prior to the release of the final report

Question 4

"An element of information, from a transaction to an entire system, is appropriately entered, developed, changed, or used with proper authority." Which of the following element of integrity supports this statement?

Accepted Answer

A)  Authorized 
B)  Accurate 
C)  Complete 
D)  Timely

Question 5

National banks must sell any real estate within _________ of acquisition if it is not used for banking purpose.

Accepted Answer

A)  Three years 
B)  Fourteen years 
C)  Four years 
D)  Five years

Question 6

For example, $50,000 five-year policy might decrease to $40,000 in benefits payable the second year, to $30,000 the third year, to $20,000 the fourth year, and to $10,000 in the final year. This is an example of:

Accepted Answer

A)  Level term insurance policies 
B)  Decreasing term life insurance policies 
C)  Modified premium whole life policies 
D)  First-to-die policies

Question 7

Considerations for determining required audit resources include:

Accepted Answer

A)  Training needed by the audit staff to meet the audit objectives 
B)  Contractual assistance needed to meet the audit objectives 
C)  Both A and B 
D)  None of these

Question 8

Which of the following activity/ies should be considered by the auditors whenever reviewing situations where broker-dealer finance proprietary or customer activity through collateralized bank loans?

Accepted Answer

A)  Ensuring that customer, noncustomer, and firm bank loans are separately maintained and that procedures are in place to prevent commingling of collateral 
B)  Maintaining separate accounts in the general ledger for the securities collateralizing each loan 
C)  Obtaining collateral from the counterparty 
D)  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

Question 9

Securities available for resale, by the bank, should be reported at:

Accepted Answer

A)  Principal value 
B)  Principal value + interest rate 
C)  Fair value 
D)  All of these

Question 10

Agents that represent one company exclusively are called:

Accepted Answer

A)  Independent Agents 
B)  Captive Agents 
C)  Exclusive Agents 
D)  Detached Agents

Question 11

IF a securitization transaction meets FAS 125 sale or servicing criteria, the seller must recognize any gain or loss on the sale of the pool immediately and carry any retained interests in the assets sold ( including servicing rights/obligation and interest-only strips) at ____________.

Accepted Answer

A)  Principal value 
B)  Fair value 
C)  Premium Amount 
D)  Both A&C

Exam 1: Certified Financial Services Auditor