Internal Controls and Fraud Prevention Flashcards
6 cards from real CPB / BookKeeping practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Internal Controls and Fraud Prevention flashcards as text
Which internal control principle requires that no single employee handles all aspects of a financial transaction from beginning to end?
Answer: Segregation of duties
Segregation of duties divides key tasks among multiple employees to reduce the risk of errors and fraud.
A bookkeeper discovers that small amounts of cash are consistently missing from the petty cash fund. This is BEST described as:
Answer: Skimming
Skimming involves removing cash before it is recorded in the accounting system, making it difficult to detect.
Which document provides written authorization before a company makes a payment to a vendor?
Answer: Purchase order
A purchase order authorizes the acquisition of goods or services and serves as a key control over expenditures.
Requiring two authorized signatures on checks above a specified dollar amount is an example of which control?
Answer: Dual authorization
Dual authorization requires two approvals for high-value transactions, reducing unauthorized disbursement risk.
Which fraud scheme involves an employee stealing a customer payment and then using a later customer payment to cover the shortage?
Answer: Lapping
Lapping is a receivables fraud where stolen payments are concealed by applying subsequent customer receipts to earlier accounts.
An unannounced cash count of the petty cash fund is an example of which internal control activity?
Answer: Surprise audit
Surprise audits deter theft by keeping employees uncertain about when a count or review will occur.