Compliance Testing Objectives and Approaches CT-FT Practice Questions (Page 2)

Questions 6–10

1. 6foundation · easy

   When is a data-driven approach to compliance testing most appropriate?

   • AWhen the compliance team has limited time and resources
   • BWhen testing a newly implemented process for the first time
   • CWhen the regulatory requirement is ambiguous and needs interpretation
   • DWhen testing large volumes of transactions for patterns of non-compliance
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2. 7foundation · easy

   Which characteristic of evidence ensures that it is directly connected to the compliance requirement being tested?

   • ASufficiency
   • BTimeliness
   • CRelevance
   • DReliability
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4. 8foundation · easy

   Which section of a compliance testing report typically describes the severity of identified issues?

   • ATest methodology
   • BFindings and risks
   • CTest scope
   • DExecutive summary
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5. 9application · medium

   A compliance tester has completed a review of the bank's customer due diligence (CDD) process and found that a significant number of customer files lack updated beneficial ownership information. The tester must communicate the results to the compliance manager. What is the most effective way to report this finding?

   • ASend a brief email stating that the CDD process has issues and needs improvement.
   • BReport the finding only to the internal audit team, as they are responsible for compliance.
   • CPresent the finding with the number of affected files, the regulatory requirement violated, and a recommendation to update the files.
   • DWait until the next quarterly compliance meeting to discuss the finding in person.
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6. 10application · medium

   A newly established online lender must comply with consumer protection regulations. The compliance team is small and has limited experience with the regulatory landscape. They need to ensure that their lending practices are compliant before launching. Which approach to compliance testing would be most appropriate in this context?

   • AData-driven testing, because it can analyze large volumes of loan applications for patterns of non-compliance.
   • BProcess-based testing, because it allows the team to understand and document each step of the lending process against regulatory requirements.
   • CRisk-based testing, because it focuses on the highest-risk areas and is efficient for small teams.
   • DExternal audit, because it provides an independent assessment of compliance.
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