During the interview, the local director informs the audit manager that no internal or regulatory audits have occurred since the local director's appointment The local director relies on a locally- approved independent external review of Company A performed 12 months ago by a local firm How should the audit manager respond?
Answer(s): B
Steps to Assess the External Review Report:Validate the scope, methodology, and findings of the external review to determine its adequacy and reliability.Identify any gaps or areas that require additional scrutiny by internal audit.Rationale for Review Instead of Reliance:Relying solely on external reviews without validation risks overlooking key compliance deficiencies. Internal audit must establish an independent assessment to corroborate findings.CAMS-Audit Recommendations:CAMS-Audit stresses the importance of critical evaluation of third-party reports and ensuring internal audit findings align with organizational compliance priorities
Which should the auditor recommend to management in terms of the client's risk rating procedures?
Incorporating Comprehensive Risk FactorsBy including an assessment of channel, credit, and transaction risks, the client's overall risk profile is accurately determined. This aligns with risk-based approaches emphasized by FATF and CAMS-Audit standards.These risk factors provide a granular view of the client's risk level, ensuring proper classification into Standard or Enhanced Due Diligence categories.Regulatory AlignmentFATF Recommendations mandate that client risk assessments consider the products, services, and delivery channels used, as well as geographic and transactional risks.ConclusionImplementing composite AML and sanctions risk scores ensures the institution is compliant with regulatory standards and adequately mitigates risks associated with different client profiles.
Review of client files reveals that staff members have been performing negative media searches for clients only when they recognize the client name. When an interesting story is identified a print of the results is inserted in the client file. There are no clear procedures on adverse media screening.Which should the auditor recommend? {Select Two.)
Answer(s): B,E
Adverse Media Screening Requirements:Negative media screening is a critical part of customer due diligence (CDD) as highlighted in FATF Recommendation 10. Proper training ensures staff apply consistent procedures. Regular screening of all clients ensures ongoing monitoring of risks, aligning with the risk-based approach mandated by AML standards.Key Compliance Justification:Staff training and procedural updates mitigate the risk of inconsistent adverse media identification, a key finding in compliance audits.
The standard audit report format requires that an executive summary of the findings is included. Which statement is most appropriate for summarizing detailed findings'?
Answer(s): D
Executive Summary Requirements:The statement focuses on clear, evidence-based findings, critical for reflecting material deficiencies in enhanced due diligence (EDD) for high-risk clients.Guidelines for Reporting:FATF emphasizes the consistent application of risk rating systems to ensure ML/TF risks are adequately mitigated.
When sample testing client transaction records, the auditor finds that a client offered to sell a piece of art on a commission basis. A sale was completed and the purchase price was remitted to the client with less commission. What further investigation should the auditor undertake?
Enhanced due diligence is necessary to identify potential risks associated with high-value transactions such as art sales, a known method for money laundering. CAMS-Audit guidelines recommend updating client records with findings to maintain transparency and prepare for regulatory scrutiny.This approach ensures compliance with due diligence requirements and mitigates reputational and financial crime risks.
Post your Comments and Discuss ACAMS Advanced-CAMS-Audit exam prep with other Community members:
Our website is free, but we have to fight against AI bots and content theft. We're sorry for the inconvenience caused by these security measures. You can access the rest of the Advanced-CAMS-Audit content, but please register or login to continue.