What are the seven NCUA categories in internal auditing?

The correct option presents the seven categories of internal auditing as defined by the National Credit Union Administration (NCUA). This classification encompasses various risks that could affect a credit union's operations and overall health. Specifically, it identifies categories such as credit risk, which pertains to the risk of loss from borrowers failing to meet their obligations; interest rate risk, concerning the potential adverse effects on an institution’s financial condition due to movements in interest rates; and liquidity risk, which relates to the organization’s ability to meet its short-term financial demands.

Additionally, it includes operational risk, which covers risks arising from inadequate or failed internal processes, people, and systems, or from external events. Reputational risk reflects potential losses arising from negative public opinion, while strategic risk focuses on risks that could impede the institution's long-term goals. Understanding these categories enables auditors to effectively assess the various facets of a credit union's operations and contribute to its risk management framework.

The other choices either omit certain fundamental categories or include categories that do not align with the recognized NCUA framework, making them inaccurate in the context of internal auditing standards set forth for credit unions.