Question 1

You are an auditor reviewing the financial statements of a firm that manufactures construction equipment The firm's sales have slowed in recent months. Within the last quarter it has closed one of its lactones, however the firm's management are still reporting a positive outlook. Concerned shareholders have asked you to investigate (or possible signs of improper accounting or fraud. You are reviewing two balance sheets from the start and end of the quarter below Given this information and your knowledge of the company s status which issue is MOST likely to be a red flag?

Options :

A : Receivables and inventory levels have increased over three months despite a reduction in sales

B : Wages payable has reduced by nearly $100,000 in the last three months

C : The firm's property plant and equipment have dropped substantially in the past three months

D : Other liabilities have remained roughly the same over the three-monlh period despite a decline in total liabilities

Answer: A

Question 2

Your bank has recently been targeted by cyber attackers who have compromised the institutions network and stolen some customers online account credentials to conduct account takeovers. Your team is responsible for reporting the incident to law enforcement and regulatory authorities which includes filing Suspicious Activity or Transaction Reports (SAR/STR) You are reviewing accounts that are thought to have been affected to determine if reporting is needed. Which of the findings below would MOST likely trigger a SAR/STR report?

Options :

A : An account displays several withdrawals from ATMs within the past three days

B : A customer's account has not displayed any transaction activity in more than a month

C : An account has recently initiated a series of funds transfers to previously unknown recipients

D : An account received a fairly large cash deposit shortly before the cyber incident started

Answer: C

Question 3

You are the chief compliance officer for a non-U S Bank that maintains some accounts in the name of U S residents Your country has signed a FATCA Model 1 inter-governmental agreement. In developing your FATCA compliance program which should be incorporated into your program?

Options :

A : Customer due diligence for FATCA should be based on existing IRS requirements (or Qualified Intermediaries

B : Customer due diligence for FATCA should leverage your existing AML program

C : IRS reporting must include all account balances and securities held in the name of a US resident

D : Once evidence indicates a relationship with a U S resident, an exemption to file form must be obtained

Answer: C

Question 4

During a review of its compliance program, XYZ Bank discovers that it has processed transactions involving individuals and entities on the Office of Foreign Assets Control (OFAC) Specially Designated Nationals (SDN) list. What is the most appropriate action for XYZ Bank to take?

Options :

A : Immediately report the findings to OFAC and await further instructions.

B : Suspend all transactions until the individuals and entities are removed from the SDN list.

C : Implement enhanced due diligence procedures for transactions involving high-risk countries.

D : Conduct a retrospective review of transactions to assess the extent of potential violations.

Answer: A

Question 5

You work for a bank that is subject to U.S. sanctions overseen by the Office of Foreign Assets Control (OFAC). In the past your institution has had difficulty keeping the Specially Designated Nationals (SDN) lists up-to-date. Which is the recommended course of action when dealing with transactions from a sanctioned country through your bank?

Options :

A : Call Ihe OFAC to submit the blocking and reject reports

B : Ignore the SDN lists because they appear to be out-of-date again

C : Open the account and then contact the OFAC about blocking transactions

D : Submit blocking and reject reports to the OFAC in writing

Answer: D

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