CPB / BookKeeping Internal Controls and Fraud Prevention 2

Question 1

Which of the following BEST describes the 'three-way match' in accounts payable controls?

Accepted Answer

Matching the purchase order, receiving report, and vendor invoice

Answer

The three-way match verifies that the purchase order, receiving report, and vendor invoice all agree before a payment is approved.

Question 2

A bookkeeper who opens mail, records receipts, AND deposits checks violates which control principle?

Accepted Answer

Segregation of duties

Answer

Handling all steps of cash receipts without oversight creates an opportunity for theft that segregation of duties would prevent.

Question 3

Which control requires the bank to verify each check number and amount against a company-provided list before paying it?

Accepted Answer

Positive pay

Answer

Positive pay is a bank fraud prevention service where the bank matches checks presented for payment against the company's authorized list.

Question 4

Physical controls over assets include all of the following EXCEPT:

Accepted Answer

Approving journal entries before posting

Answer

Approving journal entries is an authorization control, not a physical safeguard over assets.

Question 5

Which term describes the practice of requiring employees to take mandatory vacations to help detect fraud?

Accepted Answer

Mandatory leave policy

Answer

Mandatory vacations force another employee to handle duties, which can expose fraudulent schemes that require daily maintenance.

CPB / BookKeeping Practice Test