ABA ABA Internal Controls & Risk Management 3

Question 1

What is 'occupational fraud' as defined by the Association of Certified Fraud Examiners (ACFE)?

Accepted Answer

The use of one's occupation for personal enrichment through deliberate misuse of resources

Answer

Fraud committed against businesses by their customers

Answer

Identity theft by outside parties targeting employees

Answer

Tax fraud by business owners on personal returns

Question 2

Which of the following is the most common type of occupational fraud according to ACFE research?

Accepted Answer

Asset misappropriation

Answer

Financial statement fraud

Answer

Corporate espionage

Answer

Money laundering

Question 3

What is a 'red flag' in fraud detection?

Accepted Answer

An unusual indicator that may suggest fraudulent activity

Answer

A regulatory penalty assessed by the IRS

Answer

A customer complaint about overcharging

Answer

An accounting error on a tax return

Question 4

Which document control procedure helps prevent check fraud?

Accepted Answer

Keeping blank checks locked and using pre-numbered checks with dual signatures

Answer

Storing blank checks in unlocked drawers for convenience

Answer

Issuing checks without reference numbers

Answer

Allowing employees to sign checks for personal reimbursements

Question 5

What is the 'fraud triangle'?

Accepted Answer

Three conditions (pressure, opportunity, rationalization) that typically lead to fraud

Answer

A three-step process for conducting a fraud audit

Answer

Three types of financial statement fraud

Answer

A classification system for fraud severity levels

Question 6

How does requiring physical inventory counts serve as an internal control?

Accepted Answer

It verifies that recorded inventory quantities match actual quantities on hand

Answer

It helps employees become familiar with company products

Answer

It speeds up the ordering process for new inventory

Answer

It eliminates the need for a perpetual inventory system