AIS EF & IC

Question 1

Q1: What are business ethics?

Answer 1

A: Rules that guide good and fair behavior in business, especially during conflicts.

Question 2

Q2: List the four main areas of business ethics.

Answer 2

A: Equity, Rights, Honesty, Corporate Power.

Question 3

Q3: What is whistle-blowing?

Answer 3

: Reporting illegal or unethical actions inside a company.

Question 4

Q4: Define fraud.

Answer 4

A: Intentional lie or trick to gain unfair benefit, causing harm.

Question 5

Q5: What is the purpose of the Sarbanes-Oxley Act of 2002?

Answer 5

A: To stop accounting fraud and improve accuracy in financial reporting.

Question 6

Q6: Differentiate between employee fraud and management fraud.

Answer 6

Employee: Lower staff steals for themselves

Management: Executives lie in financial reports

Question 7

Q7: Name the five components of internal control.

Answer 7

Control Environment

Risk Assessment

Info & Communication

Monitoring

Control Activities

Question 8

Q8: What are the three types of fraud defined by the ACFE?

Answer 8

Fraudulent Statements

Corruption

Asset Misappropriation

Question 9

Q9: What is lapping in accounting fraud?

Answer 9

A: Hiding stolen money by using one customer’s payment to cover another’s.

Question 10

Q10: What is meant by segregation of duties?

Answer 10

A: Split tasks so no one person can complete and cover up a whole fraud.

Question 11

Q11: Discuss the importance of ethics in the business world. (10 Marks)

Answer 11

Builds trust

Reduces legal trouble

Encourages honesty

Avoids scandals

Supports long-term success

Question 12

Q12: Explain the different types of fraud and give examples of each. (10 Marks)

Answer 12

Fraudulent Statements: Fake financial reports

Corruption: Bribes, conflicts of interest

Asset Misappropriation: Stealing money or assets

Question 13

Q13: What are the objectives of internal controls, and why are they important? (8 Marks)

Answer 13

Protect assets

Keep records correct

Improve efficiency

Follow rules
Why? Helps avoid errors, fraud, and losses.

Question 14

Q14: Describe the Sarbanes-Oxley Act and its impact on corporate governance. (10 Marks)

Answer 14

Made after Enron

Created PCAOB

Requires fair audits

Punishes fraud

Protects whistle-blowers
Impact: Restored investor trust and improved company honesty.

Question 15

Q15: Explain the five internal control components as per COSO. (10 Marks)

Answer 15

Control Environment: Culture of honesty

Risk Assessment: Spot and manage risks

Info & Communication: Share important info

Monitoring: Check controls work

Control Activities: Rules like approvals and task splitting

Question 16

Q16: Describe common computer fraud schemes. (8 Marks)

Answer 16

Data Collection: Fake input

Program Fraud: Hidden code

Operations Fraud: Abusing systems

Database Fraud: Change/delete records

Info Fraud: Stealing reports

Scavenging: Trash searching for info

Question 17

Q17: List and explain any FOUR physical control types used in internal controls. (6 Marks)

Answer 17

Transaction Authorization: Approve actions

Segregation of Duties: Split roles

Access Control: Lock up sensitive data

Independent Verification: Double-check work