CGAP Internal Controls and Fraud Detection in Government 3

Question 1

What is a 'ghost employee' fraud scheme?

Accepted Answer

Adding fictitious employees to the payroll to divert salary payments to the fraudster

Answer

Using a fake company name to submit vendor invoices

Answer

Stealing physical assets from government inventory

Answer

Submitting duplicate expense reimbursements

Question 2

Which GAGAS principle requires auditors to communicate all significant deficiencies and material weaknesses identified during the audit?

Accepted Answer

Reporting requirements for internal control findings

Answer

Professional skepticism

Answer

Continuing professional education

Answer

Independence standards

Question 3

In the context of the Green Book, what are 'control activities'?

Accepted Answer

Policies and procedures that help ensure management directives are carried out and risks are mitigated

Answer

Activities management undertakes to review audit findings

Answer

Performance metrics tracked in agency dashboards

Answer

Budget monitoring activities performed by the CFO

Question 4

What is the purpose of a 'risk assessment' component in an internal control framework?

Accepted Answer

To identify and analyze risks that could prevent the entity from achieving its objectives, informing how controls should be designed

Answer

To identify which employees have the highest fraud risk profiles

Answer

To assess the risk of external audit findings becoming public

Answer

To determine the appropriate level of insurance coverage for the agency

Question 5

Which control helps prevent duplicate payments in a government accounts payable process?

Accepted Answer

Matching invoice number, vendor ID, and dollar amount against prior payments before processing

Answer

Requiring all vendors to submit invoices electronically

Answer

Rotating the accounts payable clerk annually

Answer

Using a single checking account for all disbursements

Question 6

What is 'monitoring' as an internal control component in the Green Book?

Accepted Answer

Ongoing activities and periodic evaluations that assess whether internal controls are present and functioning effectively

Answer

Surveillance of employee computers and communications

Answer

Reviewing financial statements after the external audit

Answer

Tracking contractor performance against milestones