CGAP Study Guide 2026

Most annual appropriations expire at the end of the fiscal year, meaning no new obligations can be incurred after that date.

Rationalization is the self-justification fraudsters use to make dishonest behavior seem acceptable to themselves, such as 'I'll pay it back' or 'the government wastes money anyway.'

Management override allows senior officials to bypass controls that exist to prevent fraud, making it difficult to detect because those with override authority also supervise the very controls they bypass.

Materiality is the threshold at which a misstatement or omission could reasonably be expected to influence the decisions of financial statement users.

Continuous audit involves the auditor's staff being present throughout the year or at regular intervals to check transactions as they occur. This ongoing review allows for the prompt detection of errors and fraudulent activities, as issues are identified and addressed much sooner than with a traditional annual audit.

When auditing the share capital issue of a newly established company, the auditor must refer to the Memorandum of Association and Articles of Association. These foundational documents define the company's authorized share capital, the classes of shares it can issue, and the rules and procedures for their issuance. They provide the legal framework against which the actual share issue is verified.