CIA CIA Fraud Examination & Prevention 2

Question 1

Under the Sarbanes-Oxley Act (SOX), which section requires management to assess and report on the effectiveness of internal controls over financial reporting?

Accepted Answer

Section 404

Answer

SOX Section 404 requires management to include in the annual report an assessment of the effectiveness of internal controls over financial reporting.

Question 2

Which fraud detection method relies on the statistical principle that in naturally occurring datasets, leading digits follow a predictable distribution?

Accepted Answer

Benford's Law

Answer

Benford's Law states that the digit 1 appears as the leading digit roughly 30% of the time in natural datasets, and deviations may indicate manipulation.

Question 3

An employee who steals cash before it is recorded in the accounting system is committing which type of fraud?

Accepted Answer

Skimming

Answer

Skimming is an off-book fraud where cash is stolen before it is ever entered into the accounting records, making it harder to detect through normal reconciliations.

Question 4

Which element of the fraud diamond theory was added to expand upon the original fraud triangle?

Accepted Answer

Capability

Answer

The fraud diamond adds 'capability' to the original triangle's three elements, recognizing that the perpetrator must also have the skill and position to commit fraud.

Question 5

Which of the following is the most common initial detection method for occupational fraud according to the ACFE?

Accepted Answer

Tips

Answer

According to the ACFE Report to the Nations, tips are the most common initial detection method, underscoring the importance of hotlines and whistleblower programs.

CIA - Certified Internal Accountant Practice Test

CIA - Certified Internal Accountant Practice Test

CIA CIA Fraud Examination & Prevention 2