ACFE Auditing and Internal Controls

Question 1

Which component of the COSO Internal Control Framework addresses the tone set by leadership regarding ethics and control?

Accepted Answer

Control Environment

Answer

Risk Assessment

Answer

Control Activities

Answer

Monitoring Activities

Question 2

Which type of internal control is designed to detect fraud after it has occurred?

Accepted Answer

Detective control

Answer

Preventive control

Answer

Corrective control

Answer

Directive control

Question 3

Segregation of duties is most effective at preventing fraud when it separates which three functions?

Accepted Answer

Authorization, custody, and recordkeeping

Answer

Purchasing, receiving, and shipping

Answer

Payroll, HR, and benefits

Answer

Budgeting, forecasting, and variance analysis

Question 4

An internal auditor discovers that the same employee approves purchase orders and signs vendor checks. This is an example of:

Accepted Answer

A segregation of duties weakness

Answer

An adequate compensating control

Answer

A detective control deficiency

Answer

A corrective control failure

Question 5

Which COSO framework component involves identifying and analyzing risks that could prevent an organization from achieving its objectives?

Accepted Answer

Risk Assessment

Answer

Control Activities

Answer

Information and Communication

Answer

Monitoring Activities

Question 6

A fraud examiner is reviewing an organization's internal controls. Which condition most increases the risk that internal controls will fail to prevent fraud?

Accepted Answer

Management override of established controls

Answer

The use of manual rather than automated controls

Answer

Hiring new employees without industry experience

Answer

Outsourcing payroll to a third-party provider