OCC UCE - Kirwin Deck Exam updated
actual questions and CORRECT answers
Detective controls - CORRECT ANSWER Type of control (preventative, detective,
corrective) designed to search for and identify errors after they have occurred. They are more
expensive than preventive controls, but still essential since they measure the effectiveness of
preventive controls and are the only way to effectively control certain types of errors.
Account reviews and reconciliations, observations of payroll distribution, periodic physical
inventory counts, passwords, transaction edits and internal auditors are all examples of
detective controls.
Corrective controls - CORRECT ANSWER Type of control (preventative, detective,
corrective)designed to remedy the circumstances that allowed the unauthorized activity or
return conditions to what they were before the violation. They begin when improper
outcomes occur and are detected and keep the spotlight on the problem until management can
solve the problem or correct the defect. Quality circle teams and budget variance reports are
examples of corrective controls.
Goals of the overall control system: - CORRECT ANSWER help maintain authority
recognize and identify the need for timely reporting and information.
Goals of an internal controls system - CORRECT ANSWER protect bank assets assure
integrity of financial and operating records. Promote operatin
Effective audit program depends on: - CORRECT ANSWER competence and
independence of auditor proper audit scope adequate procedures
Chapter 7 bankruptcy: who can file, what happens to debt - CORRECT ANSWER This
type of bankruptcy can be filed by individuals, corporations, and partnerships. Complete
liquidation of assets to pay off debt. Remaining debt is discharged.
Chapter 11 bankruptcy: who can file, what happens to debt - CORRECT
ANSWER Type of bankruptcy available to individuals, corporations, and partnerships,
but primarily used for businesses. Allows debtor to remain in operation while being sheltered
from some of its debts
,Chapter 13 bankruptcy: who can file, what happens to debt - CORRECT
ANSWER Type of bankruptcy - available only to individuals Debt reorganization to
allow repayment under 3-5 year plan. Creditors are unable to pursue legal action.
12 CFR 1 USC 24 - CORRECT ANSWER Regulation for Investment Securities
12 CFR 3 - CORRECT ANSWER Regulation for Capital Adequacy Standards:
Minimum Capital Ratios, Issuance of Directives
12 CFR 5 - CORRECT ANSWER Regulation for Rules Policies and procedures for
corporate activities
12 CFR 6 - CORRECT ANSWER Regulation for Prompt Corrective Action
12 CFR 7 - CORRECT ANSWER Regulation for Bank activities and operations
12 CFR 9 - CORRECT ANSWER Regulation for Fiduciary activities (Trust) for
National Banks
12 CFR 21 - CORRECT ANSWER Regulation for Minimum Security Devices and
Procedures, Suspicious activity reports (SARs), The Bank Secrecy Act (BSA) compliance
program
12 CFR 22 - CORRECT ANSWER Regulation for loans in areas having special flood
hazards
12 CFR 25 - CORRECT ANSWER Regulation for CRA, Interstate Deposit Production
,12 CFR 30 - CORRECT ANSWER Regulation for Safety and Soundness Standards
Appendix A ; Interagency Safety and Soundness standards Appendix B ; Information Security
Program
12 CFR 31 - CORRECT ANSWER Regulation for Extensions of credit to insiders and
transactions with affiliates
12 CFR 32 and 12 USC 84 - CORRECT ANSWER Regulation and law for Legal
Lending Limits
12 CFR 34 - CORRECT ANSWER Regulation for Real Estate Lending and
Appraisals---Part A: General---Part B: Adjustable Rate Mortgages----Part C: Appraisals-----
Part D: RE lending standards-----Part E: OREO
12 CFR 40 - CORRECT ANSWER Regulation for Privacy of Consumer Financial
Information
12 CFR 206 (Reg F) - CORRECT ANSWER Regulation for Interbank Liabilities
12 CFR 215 (Reg O) - CORRECT ANSWER Regulation for Loans to Executive
Officers, Directors, and Principal Shareholders of member banks
12 CFR 221 (Reg U) - CORRECT ANSWER Regulation for Credit by banks and other
persons for the purposes of carrying margin stock
12 CFR 223 (Reg W)12 USC 371(c) - CORRECT ANSWER Regulation and law for
Transactions between member banks and their affiliates
12 CFR 363 - CORRECT ANSWER Regulation for Annual independent audits and
reporting requirements (Sarbanes Oxley)
, 12 USC 56 - CORRECT ANSWER law for Prohibition of withdrawal of capital,
unearned dividends (can not dividend more than retained earnings)
12 USC 60 - CORRECT ANSWER law stating National bank dividends (can't pay
more than current year earnings + past 2 years)
12 USC 161 - CORRECT ANSWER law code for Reports to the Comptroller (call
reports)
12 USC 282 - CORRECT ANSWER law code for Investment in Federal Reserve
Banks
12 USC 371(d) - CORRECT ANSWER law code for Investment in Bank Premises
Special Mention definition - CORRECT ANSWER Potential Weakness that deserves
mgt close attention. If left uncorrected, potential weaknesses may result in deterioration of
repayment prospects.
Substandard - definition - CORRECT ANSWER Inadequately protected by the current
sound worth and paying capacity of the obligor or of the collateral pledged. Well-defined
weakness that jeopardize liquidation of the debt. Distinct possibility that the bank will sustain
some loss if the deficiencies are not corrected.
Doubtful definition - CORRECT ANSWER All the weaknesses inherent in
substandard, with the added characteristic that the weaknesses make collection or liquidation
in full, on the basis of currently existing facts, highly questionable and improbable. Specific
pending event may strengthen the asset, so loss is deferred. Must be non-accrual
Loss- definition - CORRECT ANSWER Uncollectible and of such little value that their
continuance as a bankable asset is not warranted. Does not mean the asset has no recovery or
salvage value, but it is not practical or desirable to defer write-off of a basically worthless
asset even though partial recovery could occur in the future.
actual questions and CORRECT answers
Detective controls - CORRECT ANSWER Type of control (preventative, detective,
corrective) designed to search for and identify errors after they have occurred. They are more
expensive than preventive controls, but still essential since they measure the effectiveness of
preventive controls and are the only way to effectively control certain types of errors.
Account reviews and reconciliations, observations of payroll distribution, periodic physical
inventory counts, passwords, transaction edits and internal auditors are all examples of
detective controls.
Corrective controls - CORRECT ANSWER Type of control (preventative, detective,
corrective)designed to remedy the circumstances that allowed the unauthorized activity or
return conditions to what they were before the violation. They begin when improper
outcomes occur and are detected and keep the spotlight on the problem until management can
solve the problem or correct the defect. Quality circle teams and budget variance reports are
examples of corrective controls.
Goals of the overall control system: - CORRECT ANSWER help maintain authority
recognize and identify the need for timely reporting and information.
Goals of an internal controls system - CORRECT ANSWER protect bank assets assure
integrity of financial and operating records. Promote operatin
Effective audit program depends on: - CORRECT ANSWER competence and
independence of auditor proper audit scope adequate procedures
Chapter 7 bankruptcy: who can file, what happens to debt - CORRECT ANSWER This
type of bankruptcy can be filed by individuals, corporations, and partnerships. Complete
liquidation of assets to pay off debt. Remaining debt is discharged.
Chapter 11 bankruptcy: who can file, what happens to debt - CORRECT
ANSWER Type of bankruptcy available to individuals, corporations, and partnerships,
but primarily used for businesses. Allows debtor to remain in operation while being sheltered
from some of its debts
,Chapter 13 bankruptcy: who can file, what happens to debt - CORRECT
ANSWER Type of bankruptcy - available only to individuals Debt reorganization to
allow repayment under 3-5 year plan. Creditors are unable to pursue legal action.
12 CFR 1 USC 24 - CORRECT ANSWER Regulation for Investment Securities
12 CFR 3 - CORRECT ANSWER Regulation for Capital Adequacy Standards:
Minimum Capital Ratios, Issuance of Directives
12 CFR 5 - CORRECT ANSWER Regulation for Rules Policies and procedures for
corporate activities
12 CFR 6 - CORRECT ANSWER Regulation for Prompt Corrective Action
12 CFR 7 - CORRECT ANSWER Regulation for Bank activities and operations
12 CFR 9 - CORRECT ANSWER Regulation for Fiduciary activities (Trust) for
National Banks
12 CFR 21 - CORRECT ANSWER Regulation for Minimum Security Devices and
Procedures, Suspicious activity reports (SARs), The Bank Secrecy Act (BSA) compliance
program
12 CFR 22 - CORRECT ANSWER Regulation for loans in areas having special flood
hazards
12 CFR 25 - CORRECT ANSWER Regulation for CRA, Interstate Deposit Production
,12 CFR 30 - CORRECT ANSWER Regulation for Safety and Soundness Standards
Appendix A ; Interagency Safety and Soundness standards Appendix B ; Information Security
Program
12 CFR 31 - CORRECT ANSWER Regulation for Extensions of credit to insiders and
transactions with affiliates
12 CFR 32 and 12 USC 84 - CORRECT ANSWER Regulation and law for Legal
Lending Limits
12 CFR 34 - CORRECT ANSWER Regulation for Real Estate Lending and
Appraisals---Part A: General---Part B: Adjustable Rate Mortgages----Part C: Appraisals-----
Part D: RE lending standards-----Part E: OREO
12 CFR 40 - CORRECT ANSWER Regulation for Privacy of Consumer Financial
Information
12 CFR 206 (Reg F) - CORRECT ANSWER Regulation for Interbank Liabilities
12 CFR 215 (Reg O) - CORRECT ANSWER Regulation for Loans to Executive
Officers, Directors, and Principal Shareholders of member banks
12 CFR 221 (Reg U) - CORRECT ANSWER Regulation for Credit by banks and other
persons for the purposes of carrying margin stock
12 CFR 223 (Reg W)12 USC 371(c) - CORRECT ANSWER Regulation and law for
Transactions between member banks and their affiliates
12 CFR 363 - CORRECT ANSWER Regulation for Annual independent audits and
reporting requirements (Sarbanes Oxley)
, 12 USC 56 - CORRECT ANSWER law for Prohibition of withdrawal of capital,
unearned dividends (can not dividend more than retained earnings)
12 USC 60 - CORRECT ANSWER law stating National bank dividends (can't pay
more than current year earnings + past 2 years)
12 USC 161 - CORRECT ANSWER law code for Reports to the Comptroller (call
reports)
12 USC 282 - CORRECT ANSWER law code for Investment in Federal Reserve
Banks
12 USC 371(d) - CORRECT ANSWER law code for Investment in Bank Premises
Special Mention definition - CORRECT ANSWER Potential Weakness that deserves
mgt close attention. If left uncorrected, potential weaknesses may result in deterioration of
repayment prospects.
Substandard - definition - CORRECT ANSWER Inadequately protected by the current
sound worth and paying capacity of the obligor or of the collateral pledged. Well-defined
weakness that jeopardize liquidation of the debt. Distinct possibility that the bank will sustain
some loss if the deficiencies are not corrected.
Doubtful definition - CORRECT ANSWER All the weaknesses inherent in
substandard, with the added characteristic that the weaknesses make collection or liquidation
in full, on the basis of currently existing facts, highly questionable and improbable. Specific
pending event may strengthen the asset, so loss is deferred. Must be non-accrual
Loss- definition - CORRECT ANSWER Uncollectible and of such little value that their
continuance as a bankable asset is not warranted. Does not mean the asset has no recovery or
salvage value, but it is not practical or desirable to defer write-off of a basically worthless
asset even though partial recovery could occur in the future.
