Fraud Prvention Programs Flashcards
A detailed anti-fraud policy should outline the types of actions that are considered to be fraud. Which of the following should be included on that list?
A. Disclosing proprietary information to competitors
B. Using company equipment for personal reasons
C. Forging or altering documents
D. All of the above
D. All of the above
Which of the following is FALSE regarding employee anti-fraud education?
A. Fraud awareness training efforts should be restricted to formal educational mechanisms.
B. Fraud awareness training should be required for employees both at time of hire and periodically thereafter.
C. Mid-level managers should be tasked with assisting in training their teams about fraud.
D. All anti-fraud training should be based on the organization’s specific operations and fraud risks.
A. Fraud awareness training efforts should be restricted to formal educational mechanisms.
Requiring employees in certain functions (e.g., accounting clerks) to periodically rotate job duties can be an effective anti-fraud measure.
A. True
B. False
True
Surprise audits can be effective in both preventing and detecting fraudulent conduct.
A. True
B. False
True
Which of the following components would NOT be present in a well-designed organizational structure?
A. Written summaries that outline departmental roles and responsibilities
B. Reporting lines that are informally established and communicated
C. Documentation of organizational hierarchies, such as flowcharts
D. Organization-wide visibility into the proper flow of information
B. Reporting lines that are informally established and communicated
In developing an anti-fraud policy, it is good practice for an organization’s management to consult legal counsel to ensure that every fraud allegation is managed uniformly.
A. True
B. False
True
Unless specific unacceptable conduct is detailed in an anti-fraud policy, there can be legal problems in terminating a dishonest employee.
A. True
B. False
Submit
True
Which of the following is an effective way to help prevent fraud through an organization’s performance measurement and management programs?
A. Giving employees sole responsibility for identifying their own training needs and performance deficiencies
B. Including ethics-based metrics as a component of performance evaluations
C. Tying employee compensation to aggressive organizational performance goals
D. Establishing loosely defined job descriptions that allow employees to have flexibility in their roles
B. Including ethics-based metrics as a component of performance evaluations
An organization’s whistleblower procedures should be made public so that individuals both inside and outside of the organization are aware of the appropriate channels for reporting misconduct.
A. True
B. False
True
Which of the following controls can help minimize the pressures that might lead an employee to commit fraud?
A. Fair personnel policies and procedures
B. Open-door management policies
C. Employee support programs
D. All of the above
D. All of the above
For analytical review procedures performed during a financial statement audit to be most effective in uncovering fraud, the scheme must materially impact the financial statements.
A. True
B. False
True
Managers should be instructed to observe employees’ lifestyles for warning signs of fraud, and employees should know that supervisors are watching for unexplained or suspicious anomalies of this nature.
A. True
B. False
True
Proactive audit procedures, such as fraud assessment questioning and surprise audits, can help demonstrate management’s intention to aggressively look for fraud.
A. True
B. False
True
According to best practices, which of the following should be included in a formal whistleblower policy?
A. Procedures for reporting suspicions or concerns
B. Types of misconduct that should be reported
C. Any rewards available for providing credible tips
D. All of the above
D. All of the above
To reinforce an anti-fraud culture, management should:
A. Create an environment in which employees feel safe challenging management’s decisions
B. Show employees that unethical behavior will not be tolerated
C. Visibly adhere to the same set of ethics policies that is required of all employees
D. All of the above
D. All of the above
Communications regarding the organization’s anti-fraud policy should be presented in a positive, non-accusatory manner.
A. True
B. False
True
Which of the following is NOT a recommended way for management to respond to incidents of fraud within an organization?
A. Maintaining a policy of zero tolerance for fraud
B. Allowing all employees one warning before termination
C. Reporting known incidents of fraud to law enforcement
D. Consistently punishing all fraud perpetrators
B. Allowing all employees one warning before termination
Of the following, which is the MOST EFFECTIVE method of preventing fraud?
A. Screening employees
B. Conducting covert audits
C. Having an open-door policy
D. Increasing perception of detection
D. Increasing perception of detection
Most experts agree that it is much easier to detect fraud than it is to prevent it.
A. True
B. False
False
Which of the following is TRUE regarding an organization’s ethics policy?
A. The policy should only be accessible to company employees.
B. In developing the policy, management should consider how various members of the organization define success.
C. The policy should be limited to external parties only.
D. In developing the policy, management should not consider the existing ethical tone set by leadership.
B. In developing the policy, management should consider how various members of the organization define success.
An entity’s corporate culture is MOST EFFECTIVELY assessed by using a checklist of initiatives to make sure all the elements of a strong tone at the top are in place.
A. True
B. False
False
In countries with limited legal protections for whistleblowers, employment laws might be used as a framework to protect employees when they encounter retaliation for reporting workplace misconduct.
A. True
B. False
True
Which of the following is NOT a topic that should be covered in employee anti-fraud training?
A. Common characteristics that lead individuals to commit fraud
B. What constitutes fraud, including examples of acceptable and unacceptable behavior
C. How fraud hurts the organization and its employees
D. Specific controls and procedures that the organization uses to detect fraud
D. Specific controls and procedures that the organization uses to detect fraud
There are specific anti-retaliation laws in every country that protect whistleblowers against adverse action for reporting misconduct in the workplace.
A. True
B. False
False
