Preview Questions Internal Auditor | Role Specific Skill

Question 1: Which of the following statements about internal audits is true in the context of financial institutions?

Which action should you take?

Choose only one option

Internal auditors should focus only on the financial operations of the institution

Internal audits should be performed periodically but not necessarily be independent of management

Internal auditors should act as consultants for senior management

Internal auditors must report directly to the board or audit committee

Question 2: In the context of financial reporting, what is the primary concern of an internal auditor regarding management estimates?

Which action should you take?

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Reviewing the impact of estimates on cash flows

Verifying if the estimates are accurate based on historical data

Evaluating whether the estimates are reasonable, consistent, and in line with industry standards

Ensuring that management estimates do not affect tax liabilities

Question 3: How should banks treat loan loss provisions in their financial statements under IFRS 9?

Which action should you take?

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By recognizing expected credit losses based on a three-stage model (12-month, lifetime, and default)

By recognizing provisions as contingent liabilities based on customer risk profiles

By recognizing losses when they become evident, typically after a default occurs

By estimating losses at the end of each financial quarter based on market trends

Question 4: In financial reporting for banks, what is the purpose of the "loan loss reserve"?

Which action should you take?

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To provide a cushion for interest rate fluctuations

To reflect the fair value of loans on the balance sheet

To ensure that adequate funds are available to cover potential losses from defaulted loans

To cover operational costs unrelated to loan losses

Question 5: What is the treatment of a financial instrument's change in fair value under IFRS 9 when classified as "fair value through profit or loss"?

Which action should you take?

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Recognize the change in the income statement

Recognize the change in other comprehensive income

Recognize the change directly in the equity section

Do not recognize the change unless it is a realized gain

Question 6: Which statement is correct regarding the accounting treatment of financial instruments under IFRS 9?

Which action should you take?

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Financial assets are classified into two categories: amortized cost and fair value

Financial assets must be measured at fair value at all times

Financial instruments are measured solely based on their risk profile

Financial liabilities can only be measured at amortized cost