CPB / BookKeeping Internal Controls and Fraud Prevention

Question 1

Which internal control principle requires that no single employee handles all aspects of a financial transaction from beginning to end?

Accepted Answer

Segregation of duties

Answer

Management override

Answer

Dual custody

Answer

Audit trail

Question 2

A bookkeeper discovers that small amounts of cash are consistently missing from the petty cash fund. This is BEST described as:

Accepted Answer

Skimming

Answer

Lapping

Answer

Check kiting

Answer

Petty theft

Question 3

Which document provides written authorization before a company makes a payment to a vendor?

Accepted Answer

Purchase order

Answer

Remittance advice

Answer

Credit memo

Answer

Bank reconciliation

Question 4

Requiring two authorized signatures on checks above a specified dollar amount is an example of which control?

Accepted Answer

Dual authorization

Answer

Positive pay

Answer

Segregation of duties

Answer

Bank confirmation

Question 5

Which fraud scheme involves an employee stealing a customer payment and then using a later customer payment to cover the shortage?

Accepted Answer

Lapping

Answer

Kiting

Answer

Skimming

Answer

Embezzlement

Question 6

An unannounced cash count of the petty cash fund is an example of which internal control activity?

Accepted Answer

Surprise audit

Answer

Reconciliation

Answer

Positive pay

Answer

Authorization