Question 1
Professional organizations, such as the Association of Certified Fraud Examiners, have
codes of ethics because:
A. They facilitate practical enforcement and profession-wide internal discipline
B. They serve as a reference and benchmark for ethical guidance
C. They provide more direct solutions to professional ethical dilemmas than might exist
under general ethical principles
D. All of the above
CORRECT ANSWER
D. All of the above
Question 2
Which of the following is regarded as the essential factor that makes a leader's authority
effective?
A. Ability to instill fear in subordinates
B. Experience in similar roles
C. Legitimacy
D. Strong morals
CORRECT ANSWER
Legitimacy
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,Question 3
In response to a risk identified during a fraud risk assessment, management decides to
purchase a bond to help protect the company against the associated risk of loss. This
response is known as:
A. Assuming the risk
B. Transferring the risk
C. Avoiding the risk
D. Mitigating the risk
CORRECT ANSWER
B. Transferring the risk
When responding to the organization's residual fraud risks, management may transfer
some or all of the risk by purchasing fidelity insurance or a bond. The cost to the
organization is the premium paid for the insurance or bond. The covered risk of loss is
then transferred to the insurance company.
Question 4
The managements from several IT consulting firms conspire to take turns submitting the
lowest bids for all contracts in their area; this is considered an organizational crime.
A. True B. False
CORRECT ANSWER
True
Question 5
Which of the following is INCORRECT regarding the code of ethics requirements under the
Sarbanes-Oxley Act?
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, A. Public U.S. companies must disclose in their annual report whether they have adopted a
code of ethics for senior financial officers, and if they have not, they must explain their
reasoning.
B. The SEC believes that determining the particular sanctions for violations of the code of
ethics is best left to the discretion of the company.
C. The SEC has laid out specific language that must be included in all public U.S. companies'
codes of ethics for senior financial officers.
D. Public U.S. companies must make publicly available the portions of their code of ethics
that address the ethical considerations that apply to senior financial officers.
CORRECT ANSWER
C. The SEC has laid out specific language that must be included in all public U.S.
companies' codes of ethics for senior financial officers.
Question 6
Which of the following is TRUE regarding organizational structure?
A. Companies with departments that are isolated geographically have a reduced risk of fraud
B. The existence of many specialized departments within a company generally increases the
overall risk of fraud within the organization
C. Misbehavior is more likely to be detected in a complex organizational structure than in a
simple organizational structure
D. All of the above
CORRECT ANSWER
B. The existence of many specialized departments within a company generally increases
the overall risk of fraud within the organization
Question 7
Which of the following is NOT one of the core principles of sound corporate governance?
A. Independence
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Professional organizations, such as the Association of Certified Fraud Examiners, have
codes of ethics because:
A. They facilitate practical enforcement and profession-wide internal discipline
B. They serve as a reference and benchmark for ethical guidance
C. They provide more direct solutions to professional ethical dilemmas than might exist
under general ethical principles
D. All of the above
CORRECT ANSWER
D. All of the above
Question 2
Which of the following is regarded as the essential factor that makes a leader's authority
effective?
A. Ability to instill fear in subordinates
B. Experience in similar roles
C. Legitimacy
D. Strong morals
CORRECT ANSWER
Legitimacy
1
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,Question 3
In response to a risk identified during a fraud risk assessment, management decides to
purchase a bond to help protect the company against the associated risk of loss. This
response is known as:
A. Assuming the risk
B. Transferring the risk
C. Avoiding the risk
D. Mitigating the risk
CORRECT ANSWER
B. Transferring the risk
When responding to the organization's residual fraud risks, management may transfer
some or all of the risk by purchasing fidelity insurance or a bond. The cost to the
organization is the premium paid for the insurance or bond. The covered risk of loss is
then transferred to the insurance company.
Question 4
The managements from several IT consulting firms conspire to take turns submitting the
lowest bids for all contracts in their area; this is considered an organizational crime.
A. True B. False
CORRECT ANSWER
True
Question 5
Which of the following is INCORRECT regarding the code of ethics requirements under the
Sarbanes-Oxley Act?
2
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, A. Public U.S. companies must disclose in their annual report whether they have adopted a
code of ethics for senior financial officers, and if they have not, they must explain their
reasoning.
B. The SEC believes that determining the particular sanctions for violations of the code of
ethics is best left to the discretion of the company.
C. The SEC has laid out specific language that must be included in all public U.S. companies'
codes of ethics for senior financial officers.
D. Public U.S. companies must make publicly available the portions of their code of ethics
that address the ethical considerations that apply to senior financial officers.
CORRECT ANSWER
C. The SEC has laid out specific language that must be included in all public U.S.
companies' codes of ethics for senior financial officers.
Question 6
Which of the following is TRUE regarding organizational structure?
A. Companies with departments that are isolated geographically have a reduced risk of fraud
B. The existence of many specialized departments within a company generally increases the
overall risk of fraud within the organization
C. Misbehavior is more likely to be detected in a complex organizational structure than in a
simple organizational structure
D. All of the above
CORRECT ANSWER
B. The existence of many specialized departments within a company generally increases
the overall risk of fraud within the organization
Question 7
Which of the following is NOT one of the core principles of sound corporate governance?
A. Independence
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