IIA Certified Financial Services Auditor (IIA-CFSA) Free Practice Test
Question 1
Banks can record interest earned on trading securities as either interest income or trading income. However, the recommended method is:
Correct Answer: B
Question 2
Call provisions are often part of ______________, but usually not bonds issued by ______________.
Correct Answer: D
Question 3
IIA's code of ethics applies to __________ that provide internal auditing services:
Correct Answer: A
Question 4
__________ 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.
Correct Answer: A
Question 5
A manufacturer wants to protect the company from financial loss resulting from third-party lawsuits. The manufacturer has learned of several recent jury awards over $7 million for product defects. The manufacturer currently has only $5 million in this type of coverage. The manufacturer has also learned that several automobile claims have been recently awarded against other company's cars in accidents over $1 million. The manufacturer has damaged his competition and the manufacturer wants to protect his company further than the current policy allows. What insurance coverage product will the manufacturer likely buy?
Correct Answer: A
Question 6
Hedge funds:
Correct Answer: A
Question 7
Nature of internal audit activities and quality criteria against which the performance of these services can be evaluated is best portrayed by:
Correct Answer: A
Question 8
If a corporation has an asset sensitive gap in a rising rate environment, which of the following would be considered an appropriate hedging strategy to prevent a decrease in net interest income?
Correct Answer: B
Question 9
Many group disability income policies contain a physical examination provision that requires a doctor to examine a claimant before the claim is paid. The insurer may also require the claimant to undergo periodic examinations to verify:
Correct Answer: B
Question 10
Auditors testing mutual funds transactions will typically focus on whether customer purchases and redemptions are accounted properly. In cases where brokers are used to maintain customer accounts, auditors may need to confirm:
Correct Answer: C
Question 11
There are different classes of mutual funds. Classes that typically do not have a front-end sales load. Instead they may impose a contingent deferred sales load and a 12b-1 fee (along with other annual expenses) is called:
Correct Answer: C
Question 12
Insurance policies are good for insurance needs, however, as a main investment vehicles, they have considerable downsides.
Correct Answer: D
Question 13
A client makes the following statement: "If you make us put property tags and numbers on major equipment, next we will have to put tags on every pen, pencil, and paper clip in the place." This is the argument that if a particular action is taken, it will inevitably lead to another, less desirable action. We may call this:
Correct Answer: B
Question 14
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
"_______"
"_______"
Correct Answer: C
Question 15
Under the interagency statement when a bank recommends or sells non-deposit investment product it should inform the customer that the product is:
Correct Answer: B