ACFE Auditing and Internal Controls 1

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

The Control Environment is the foundation of the COSO framework and encompasses the ethical values, governance structure, and management philosophy that set the tone for internal control.

Question 2

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

Accepted Answer

Detective control

Answer

Detective controls are designed to identify and surface fraud or errors that have already occurred, such as account reconciliations or exception reports.

Question 3

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

Accepted Answer

Authorization, custody, and recordkeeping

Answer

Effective segregation of duties requires that no single individual can authorize a transaction, maintain physical custody of the related asset, and record the transaction.

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

When one employee controls both the authorization of a purchase and the disbursement of funds, a critical segregation of duties weakness exists that enables fraud.

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

The Risk Assessment component requires management to identify internal and external risks and analyze their likelihood and impact on achieving organizational objectives.

(ACFE) Association of Certified Fraud Examiners Practice Test

(ACFE) Association of Certified Fraud Examiners Practice Test

ACFE Auditing and Internal Controls 1