ARM 400 Practice Exam Questions WITH
MULTIPLE QUESTIONS AND THE CORRECT
ANSWERS Chosen from Top Universities
Which one of the following statements is true regarding separation of ownership and control in
corporations? - -correct ans- -The incentive for managers and non-management board members
to pursue their own interests at the expense of shareholders gives rise to agency costs
Some best practices models call for the formation of a risk committee with a risk management
focus at the organization's executive management level. Which one of the following statements
best describes one of the responsibilities of an executive-level risk committee? - -correct ans- -To
approve the organization's risk management strategies, including their design and
implementation
The managers and executives at Oakes Corporation feel pressure to improve quarterly financial
results because they have become the laughingstock of their competitive niche. They wish to
change this and restore the excellent light in which competitors once viewed them. Such
concerns of the past of Oakes leadership reflect concern for - -correct ans- -Management
reputation
All of the following are mechanisms to align manager and shareholder interests, EXCEPT - correct
ans- -Expansion and growth
As a category of agency costs, bonding costs include - -correct ans- -Stock options and restricted
stock
One example of a bonding cost, as it relates to separation of ownership and control in a
corporation, is a manager's - -correct ans- -Willingness to accept non-cash compensation that
links the manager's compensation to the corporation's performance
,Corporate governance is defined as - -correct ans- -The mechanisms and procedures that
determine how corporations are run
The fees paid to external auditors to verify the corporations financial statements are an example
of - -correct ans- -A monitoring cost
Though various parties incur costs in monitoring corporate decision-makers, most monitoring
costs are shouldered by which one of the following? - -correct ans- -Shareholders
The data quality principle of reasonability refers to - -correct ans- -The materiality or relevance of
data
Which one of the following statements is correct regarding the personal data and privacy
positions of the European Union (EU) and the U.S.? - -correct ans- -The EU has one
allencompassing data protection framework and the U.S. has several more targeted privacy laws
Which one of the following is a basic process in any data security program? - -correct ans- -of the
European Union (EU) and the U.S.?
Which one of the following is a data governance committee (DGC) responsibility? - -correct ans- A
data governance committee ensures there are few conflicts or redundancies in data standards
and practices
A data governance committee (DGC) - -correct ans- -Is cross-functional
Which one of the following defines the duties of a data steward? - -correct ans- -A data steward
is an experienced business analyst
In terms of data governance, IT employees hold the role of - -correct ans- -Data custodians
, To gain a competitive advantage, maintain profitability, and satisfy customers an organization
must - -correct ans- -Be able to trust its data.
Which one of the following is an example of a data governance tool? - -correct ans- -External
policy
Which one of the following data governance tools allows the data governance committee to look
at data relationships and interdependencies across the organization? - -correct ans- -Enterprise
data models
Ensuring quality data requires a - -correct ans- -Systematic and purpose-driven review process
Which one of the following defines the duties of a data steward? - -correct ans- -A data steward
is an experienced business analyst
Which one of the following provides the frame of reference needed so data can be used
appropriately for analysis and decision-making? - -correct ans- -Metadata
Under the General Data Protection Regulation (GDPR), a data controller's role is to - -correct ans-
-Define how and for what purpose personal data should be processed
The Auditing Standard No. 5 (AS 5) calls for a specific fraud assessment because - -correct ans-
The failure to prevent or detect fraudulent misstatements is higher than the risk of failing to
prevent or detect other types of errors
One internal control integrated framework consists of five essential components: the control
environment, risk assessment, control activities, information and communication, and
monitoring activities. When these components are applied across the organization, they create a
"cube." This framework is the - -correct ans- -Committee of Sponsoring Organizations of the
Treadway Commission's (COSO's) framework
MULTIPLE QUESTIONS AND THE CORRECT
ANSWERS Chosen from Top Universities
Which one of the following statements is true regarding separation of ownership and control in
corporations? - -correct ans- -The incentive for managers and non-management board members
to pursue their own interests at the expense of shareholders gives rise to agency costs
Some best practices models call for the formation of a risk committee with a risk management
focus at the organization's executive management level. Which one of the following statements
best describes one of the responsibilities of an executive-level risk committee? - -correct ans- -To
approve the organization's risk management strategies, including their design and
implementation
The managers and executives at Oakes Corporation feel pressure to improve quarterly financial
results because they have become the laughingstock of their competitive niche. They wish to
change this and restore the excellent light in which competitors once viewed them. Such
concerns of the past of Oakes leadership reflect concern for - -correct ans- -Management
reputation
All of the following are mechanisms to align manager and shareholder interests, EXCEPT - correct
ans- -Expansion and growth
As a category of agency costs, bonding costs include - -correct ans- -Stock options and restricted
stock
One example of a bonding cost, as it relates to separation of ownership and control in a
corporation, is a manager's - -correct ans- -Willingness to accept non-cash compensation that
links the manager's compensation to the corporation's performance
,Corporate governance is defined as - -correct ans- -The mechanisms and procedures that
determine how corporations are run
The fees paid to external auditors to verify the corporations financial statements are an example
of - -correct ans- -A monitoring cost
Though various parties incur costs in monitoring corporate decision-makers, most monitoring
costs are shouldered by which one of the following? - -correct ans- -Shareholders
The data quality principle of reasonability refers to - -correct ans- -The materiality or relevance of
data
Which one of the following statements is correct regarding the personal data and privacy
positions of the European Union (EU) and the U.S.? - -correct ans- -The EU has one
allencompassing data protection framework and the U.S. has several more targeted privacy laws
Which one of the following is a basic process in any data security program? - -correct ans- -of the
European Union (EU) and the U.S.?
Which one of the following is a data governance committee (DGC) responsibility? - -correct ans- A
data governance committee ensures there are few conflicts or redundancies in data standards
and practices
A data governance committee (DGC) - -correct ans- -Is cross-functional
Which one of the following defines the duties of a data steward? - -correct ans- -A data steward
is an experienced business analyst
In terms of data governance, IT employees hold the role of - -correct ans- -Data custodians
, To gain a competitive advantage, maintain profitability, and satisfy customers an organization
must - -correct ans- -Be able to trust its data.
Which one of the following is an example of a data governance tool? - -correct ans- -External
policy
Which one of the following data governance tools allows the data governance committee to look
at data relationships and interdependencies across the organization? - -correct ans- -Enterprise
data models
Ensuring quality data requires a - -correct ans- -Systematic and purpose-driven review process
Which one of the following defines the duties of a data steward? - -correct ans- -A data steward
is an experienced business analyst
Which one of the following provides the frame of reference needed so data can be used
appropriately for analysis and decision-making? - -correct ans- -Metadata
Under the General Data Protection Regulation (GDPR), a data controller's role is to - -correct ans-
-Define how and for what purpose personal data should be processed
The Auditing Standard No. 5 (AS 5) calls for a specific fraud assessment because - -correct ans-
The failure to prevent or detect fraudulent misstatements is higher than the risk of failing to
prevent or detect other types of errors
One internal control integrated framework consists of five essential components: the control
environment, risk assessment, control activities, information and communication, and
monitoring activities. When these components are applied across the organization, they create a
"cube." This framework is the - -correct ans- -Committee of Sponsoring Organizations of the
Treadway Commission's (COSO's) framework
