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

A ghost employee scheme places fake or former employees on the payroll, causing the government to issue salary payments that the fraudster intercepts.

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

GAGAS reporting requirements mandate that auditors communicate significant deficiencies and material weaknesses in internal control identified during the audit.

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

Control activities are the specific actions — authorizations, verifications, reconciliations, segregation of duties — that reduce the risk of errors and fraud in achieving objectives.

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

Risk assessment involves identifying and analyzing relevant risks to achieving objectives so that management can design appropriate controls to address those risks.

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

Checking invoice details against prior payment records before processing is a preventive control that flags potential duplicates before funds are disbursed.

CGAP - Certified Government Auditing Professional Practice Test

CGAP - Certified Government Auditing Professional Practice Test

CGAP Internal Controls and Fraud Detection in Government 3