AAFM CTEP Exam - Topic 7 Question 5 Discussion

Actual exam question for AAFM's CTEP exam

Question #: 5
Topic #: 7

[All CTEP Questions]

Management of a publicly-held organization requires the internal audit activity to be involved with quarterly financial statements, which are made public and used internally. Which of the following explanations of management's decision is least plausible?

AManagement may be concerned about its reputation in the financial markets.

BManagement is following best-practice protocol, as stipulated by the Standards, which states that internal auditors must review quarterly financial statements.

CManagement may be concerned about potential penalties that could occur if quarterly financial statements are misstated.

DManagement may perceive that having quarterly financial information examined by the internal auditors enhances the information's value to internal decision making.

Show Suggested Answer

Suggested Answer: B

by Malcolm at Jun 01, 2022, 05:21 AM

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Bobbye

4 months ago

Following best practices is key, so B seems off to me.

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Hui

4 months ago

Not sure about D. Does internal review really add that much value?

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Murray

5 months ago

Surprised that some think penalties aren't a big deal. They can be huge!

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Mattie

5 months ago

I think option B is the least plausible. Not all companies follow those standards.

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Matt

5 months ago

Management cares about their reputation, totally makes sense.

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Elza

5 months ago

I think option D is likely true because internal audits can definitely add value, but I wonder if that's the main reason for their involvement.

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Wilburn

5 months ago

Option C makes sense since penalties for misstated financials can be serious, but I'm not sure if it's the least plausible.

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Merissa

5 months ago

I'm a bit unsure about option B; I thought the Standards were more about annual audits rather than quarterly ones.

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Gilma

5 months ago

I remember discussing how management's reputation is crucial, so option A seems plausible to me.

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Becky

5 months ago

Hmm, this seems like a straightforward membership issue. I'll carefully read through the options and think about the best way to resolve it.

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Louisa

5 months ago

I think using labels is the way to go here. It's a flexible way to group resources based on common policies.

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Royal

5 months ago

I'm feeling a bit lost on this one. There are a lot of details to keep track of when it comes to safety critical systems. I'll need to take my time and really think through each statement carefully.

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