Compliance Testing Objectives and Approaches CT-FT Practice Questions (Page 5)

Questions 21–24

1. 21application · medium

   A regional bank is required to demonstrate compliance with new data protection regulations. The compliance team must decide how to test the effectiveness of their data anonymization controls across multiple systems. They have access to large volumes of transaction data and need to identify patterns of potential non-compliance efficiently. Which approach is most suitable?

   • AProcess-based testing by walking through the data anonymization procedure step-by-step with the operations team.
   • BRisk-based testing focusing only on the systems that handle the most sensitive customer data.
   • CCompliance testing based on the regulator's inspection manual to ensure all checklist items are covered.
   • DData-driven testing using automated scripts to sample and analyze transaction data for anomalies.
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2. 22foundation · easy

   What does it mean for compliance testing evidence to be 'reliable'?

   • AThe evidence is directly related to the compliance requirement being tested
   • BThe evidence is sufficient in quantity to support the conclusion
   • CThe evidence is trustworthy and obtained from a credible source
   • DThe evidence is collected in a timely manner
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4. 23application · medium

   A global investment firm operates in multiple jurisdictions and must comply with both the European Union's General Data Protection Regulation (GDPR) and the local financial conduct rules. The compliance team is planning a test to verify that customer consent records are properly maintained and accessible. Which regulatory framework should primarily guide the design of this compliance test?

   • AThe local financial conduct rules, because they are specific to the firm's operations.
   • BGDPR, because it sets specific requirements for consent management and data subject rights.
   • CThe Basel Committee on Banking Supervision guidelines, as they apply to all financial institutions.
   • DThe International Financial Reporting Standards (IFRS), as they govern financial reporting.
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5. 24expert · hard

   A compliance tester is designing a test to verify that the bank's anti-fraud controls are effective. The bank has a low volume of fraud cases, but the potential impact of a single fraud event is high. The tester must decide on the sample size and testing method. Which approach is most appropriate?

   • AUse a data-driven approach and analyze all transactions for patterns of fraud.
   • BUse a process-based approach and review the fraud detection procedures with the operations team.
   • CUse a random sample of all transactions, including fraud and non-fraud cases, to ensure representativeness.
   • DUse a risk-based approach and test all fraud cases that occurred in the past year, along with a sample of non-fraud cases.
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