Fraud Prevention and Deterrence Test

Fraud Prevention and Deterrence Test An entity's corporate culture is most effectively assessed using a checklist of initiatives to make sure all the elements of a strong tone at the top are in place. A. True B. False - False A strong corporate culture can most often be observed by its outcome, rather than by any individual component. Fostering a culture of ethics and compliance runs deeper than simply implementing a checklist of initiatives; similarly, a culture of corruption can exist even in companies with seemingly sound policies in place. See pages 4.610 in the Fraud Examiner's Manual During the course of a fraud examination, Omar, an employee of XYZ Inc., approaches Maryam, a Certified Fraud Examiner and fellow employee of XYZ, and tells Maryam that he knows of a major fraud being committed by company management. However, Omar says he can only provide details if Maryam promises him absolute confidentiality. In response to Omar's condition, Maryam should agree to keep the source of the information confidential, even though she knows she will eventually have to reveal Omar's identity. A. True B. False - False Fraud examiners must remember that the confidentiality relationship runs first to the client or employer, and the promise of confidentiality is understood to exist without being spoken. In the case of Omar (the employee/informant), Maryam (the Certified Fraud Examiner) does not have an understood or unspoken promise of confidentiality. Maryam should tell Omar that she will try to keep the information as confidential as possible, but it would be unethical for Maryam to promise confidentiality to the employee; her first obligation is to the employer. Two selling points of a fraud prevention program are fraud's potentially negative impact on a company's profits and its potential effect on the organization's public image. A. True B. False - True One of the best ways to sell management on fraud prevention is by showing the impact on the bottom line; fraud can be very expensive. It is much more cost effective to proactively address fraud risks than to suffer preventable fraud and spend valuable resources on detecting, investigating, prosecuting, and cleaning up after it. In other words, stopping fraud before it occurs directly increases the organization's bottom line. Additionally, many corporate executives are more sensitive to adverse publicity than almost any other issue. Certainly, one way to convince management of the importance of fraud prevention is to point out that negative publicity, even in small cases, can have a devastating impact on the bottom line. This negative impact can be eliminated or reduced by a proactive fraud prevention program. Which of the following is true according to the differential reinforcement theory? A. Behavior is weakened when punishment is avoided. B. Behavior is weakened by positive stimuli. C. Behavior is reinforced by negative stimuli. D. Behavior is reinforced when rewards are gained. - Behavior is reinforced when rewards are gained. According to the differential reinforcement theory, people learn social behavior by operant conditioning, behavior controlled by stimuli that follow the behavior. Behavior is reinforced when positive rewards are gained (positive reinforcement) or punishment is avoided (negative reinforcement). It is weakened by negative stimuli (punishment) and loss of reward (negative punishment). Whether deviant or criminal behavior is begun or persists depends on the degree to which it has been rewarded or punished, as well as the rewards or punishments attached to its alternatives. See pages 4.127 in the Fraud Examiner's Manual White-collar criminals are more likely to be fined than to face prison terms as punishment. A. True B. False - True