An auditor is asked to select a judgmental sample from a population of 1 000 clients onboarded during the previous 12 months. Which step should the auditor take first?
Answer(s): A
First Steps for Sampling:Reviewing onboarding policies ensures the sampling aligns with established risk criteria, improving the relevance and accuracy of the audit findings.Regulatory Emphasis:FATF guidance stresses aligning audit sampling with organizational risk assessments and onboarding standards.
An audit determines that an important control is not being performed. The operational manager responds to the audit comment stating that they do not have adequate resources in the department to accomplish this task. The audit item discussion between the auditor and the operational manager is a(n):
Answer(s): D
Nature of Discussion:Root cause analysis is required to identify underlying reasons for the failure to perform the control, particularly resource constraints.Key Compliance Justification:Addressing the root cause aligns with Basel Committee guidelines on improving control environments and addressing systemic issues in AML compliance.
A financial institution (FI) recently updated its transaction monitoring (TM) thresholds During validation which should be provided as evidence of optimized thresholds'? (Select Two.)
Answer(s): B,C
Comparison Against Past Suspicious Activity Reported:This evaluates whether the new thresholds are identifying similar or improved patterns of suspicious activity compared to prior thresholds.Helps validate that the updated thresholds align with the institution's AML risk profile and regulatory expectations.Above-the-Line and Below-the-Line Testing:Above-the-line tests verify that alerts generated by the thresholds include expected suspicious transactions.Below-the-line tests assess transactions below the threshold to ensure no significant suspicious activities are missed.CAMS-Audit
Advanced CAMS-Audit frameworks emphasize the importance of both historical comparison and robust testing methodologies to validate transaction monitoring system updates.
What is the role of the internal audit in the governance process?
Answer(s): C
Role of Internal Audit:Internal audit is tasked with evaluating and improving the effectiveness of governance, risk management, and control processes within the organization. Periodic evaluations ensure that AML/CFT processes remain robust and effective against emerging risks.Alignment with CAMS-Audit Guidance:Advanced CAMS-Audit training highlights the need for internal audit to focus on process effectiveness rather than operational responsibilities, such as quality assurance or corrective actions.
An audit finding can be closed when:
Conditions for Closing Audit Findings:Findings can only be closed when the corrective actions identified in response to the audit findings are implemented and verified as effective.This includes addressing underlying risks and documenting the resolution process.CAMS-Audit Best Practices:The audit process must ensure that all follow-up actions mitigate the identified risks, aligning with regulatory and operational standards.
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