ACFE Auditing and Internal Controls 5

Question 1

Under the IIA Three Lines Model, which function provides independent and objective assurance to the governing body?

Accepted Answer

Internal audit

Answer

Internal audit is the third line, providing independent assurance and advice.

Question 2

Strong internal controls most directly reduce which element of the fraud triangle?

Accepted Answer

Opportunity

Answer

Internal controls limit the perceived opportunity to commit and conceal fraud.

Question 3

A fraud examiner expresses each income statement line item as a percentage of net sales for the same year. This technique is called:

Accepted Answer

Vertical analysis

Answer

Vertical analysis states each line item as a percentage of a base figure within one period.

Question 4

Which control is most effective at uncovering an ongoing lapping scheme in accounts receivable?

Accepted Answer

Mandatory vacations and job rotation for the receivables clerk

Answer

Lapping requires constant manipulation, so a substitute performing the clerk's duties is likely to expose it.

Question 5

Which control best helps prevent or detect ghost employee schemes?

Accepted Answer

Distributing paychecks through someone independent of hiring and payroll preparation

Answer

Independent paycheck distribution exposes checks with no actual employee to claim them.

(ACFE) Association of Certified Fraud Examiners Practice Test