Fraud Prevention and Deterrence
questions with verified answers already
passed
"Under the Sarbanes-Oxley Act, members of the audit committee can be paid for consulting
work done for the company, but only if the transaction is documented and conducted at arm's
length.
A. True
B. False - correct answer ✔✔" FALSE
"The term _______ refers to the oversight responsibilities of different parties for an
organization's direction, operations, and performance.
A. Corporate compliance
B. Risk management
C. Corporate governance
D. Fraud risk assessment - correct answer ✔✔" Corporate governance
"The purpose of corporate governance is to:
A. Prevent and detect financial misstatements, whether caused by errors or fraud.
B. Encourage the efficient use of resources and require accountability for the stewardship of
those resources.
C. Ensure the accuracy and reliability of the organization's financial reports.
,D. Provide reasonable assurance regarding the organization's compliance with applicable laws
and regulations. - correct answer ✔✔" Encourage the efficient use of resources and require
accountability for the stewardship of those resources.
"The Treadway Commission was established with the purpose of defining the responsibility of
the auditor in preventing and detecting fraud.
A. True
B. False - correct answer ✔✔" TRUE
"Good corporate governance practices:
A. Define the relationships and expectations of the parties involved
B. Provide clear lines of accountability and reporting
C. Ensure that no single party is capable of making all the business decisions without influence,
input, or approval of other parties
D. All of the above - correct answer ✔✔" All of the above
"An entity's corporate governance structure specifies the distribution of rights and
responsibilities among the different participants in the organization and lays down the rules and
procedures for organizational decision-making.
A. True
B. False - correct answer ✔✔" TRUE
"The Treadway Commission made which of the following recommendations to reduce the
probability of fraud in financial reports?
,A. Adequate audit committee resources and authority
B. A written charter for the audit committee
C. A mandatory independent audit committee
D. All of the above - correct answer ✔✔" All of the above
"Good corporate governance is based on a framework that:
A. Takes into account the organization's cultural and ethical environment
B. Is appropriate for the organization's legal and regulatory environment
C. Remains adaptable
D. All of the above - correct answer ✔✔" All of the above
"The Sarbanes-Oxley Act requires that each member of a company's audit committee be
independent with respect to the company. Which of the following is NOT a violation of the
independence requirements for audit committee members?
A. Ownership of 18% of the company's voting stock
B. Serving as the CEO of a subsidiary of the company
C. The receipt of legal consulting fees from the company
D. The receipt of pension benefits from previous employment with the company - correct
answer ✔✔" The receipt of pension benefits from previous employment with the company
"According to the requirements of the Sarbanes-Oxley Act, which of the following parties is
responsible for establishing procedures to handle complaints regarding irregularities in a
publicly traded company's accounting methods, internal controls, or auditing matters?
A. The audit committee
B. The internal audit function
, C. Executive management
D. The external audit firm - correct answer ✔✔" The audit committee
"Who is responsible for holding the board of directors accountable for proper governance and
oversight?
A. Executive management
B. The chairman of the board
C. The external auditors
D. The shareholders - correct answer ✔✔" The shareholders
"Which of the following is a responsibility of the audit committee under the Sarbanes-Oxley
Act?
A. Resolving disputes about financial reporting between the auditors and management
B. Pre-approving all audit and non-audit services provided by the external auditor
C. Hiring, overseeing, and paying the company's external auditors
D. All of the above - correct answer ✔✔" All of the above
"Which of the following parties is responsible for directing employees to carry out business
activities and managing their performance of those tasks?
A. Shareholders
B. External auditors
C. The board of directors
D. Management - correct answer ✔✔" Management
questions with verified answers already
passed
"Under the Sarbanes-Oxley Act, members of the audit committee can be paid for consulting
work done for the company, but only if the transaction is documented and conducted at arm's
length.
A. True
B. False - correct answer ✔✔" FALSE
"The term _______ refers to the oversight responsibilities of different parties for an
organization's direction, operations, and performance.
A. Corporate compliance
B. Risk management
C. Corporate governance
D. Fraud risk assessment - correct answer ✔✔" Corporate governance
"The purpose of corporate governance is to:
A. Prevent and detect financial misstatements, whether caused by errors or fraud.
B. Encourage the efficient use of resources and require accountability for the stewardship of
those resources.
C. Ensure the accuracy and reliability of the organization's financial reports.
,D. Provide reasonable assurance regarding the organization's compliance with applicable laws
and regulations. - correct answer ✔✔" Encourage the efficient use of resources and require
accountability for the stewardship of those resources.
"The Treadway Commission was established with the purpose of defining the responsibility of
the auditor in preventing and detecting fraud.
A. True
B. False - correct answer ✔✔" TRUE
"Good corporate governance practices:
A. Define the relationships and expectations of the parties involved
B. Provide clear lines of accountability and reporting
C. Ensure that no single party is capable of making all the business decisions without influence,
input, or approval of other parties
D. All of the above - correct answer ✔✔" All of the above
"An entity's corporate governance structure specifies the distribution of rights and
responsibilities among the different participants in the organization and lays down the rules and
procedures for organizational decision-making.
A. True
B. False - correct answer ✔✔" TRUE
"The Treadway Commission made which of the following recommendations to reduce the
probability of fraud in financial reports?
,A. Adequate audit committee resources and authority
B. A written charter for the audit committee
C. A mandatory independent audit committee
D. All of the above - correct answer ✔✔" All of the above
"Good corporate governance is based on a framework that:
A. Takes into account the organization's cultural and ethical environment
B. Is appropriate for the organization's legal and regulatory environment
C. Remains adaptable
D. All of the above - correct answer ✔✔" All of the above
"The Sarbanes-Oxley Act requires that each member of a company's audit committee be
independent with respect to the company. Which of the following is NOT a violation of the
independence requirements for audit committee members?
A. Ownership of 18% of the company's voting stock
B. Serving as the CEO of a subsidiary of the company
C. The receipt of legal consulting fees from the company
D. The receipt of pension benefits from previous employment with the company - correct
answer ✔✔" The receipt of pension benefits from previous employment with the company
"According to the requirements of the Sarbanes-Oxley Act, which of the following parties is
responsible for establishing procedures to handle complaints regarding irregularities in a
publicly traded company's accounting methods, internal controls, or auditing matters?
A. The audit committee
B. The internal audit function
, C. Executive management
D. The external audit firm - correct answer ✔✔" The audit committee
"Who is responsible for holding the board of directors accountable for proper governance and
oversight?
A. Executive management
B. The chairman of the board
C. The external auditors
D. The shareholders - correct answer ✔✔" The shareholders
"Which of the following is a responsibility of the audit committee under the Sarbanes-Oxley
Act?
A. Resolving disputes about financial reporting between the auditors and management
B. Pre-approving all audit and non-audit services provided by the external auditor
C. Hiring, overseeing, and paying the company's external auditors
D. All of the above - correct answer ✔✔" All of the above
"Which of the following parties is responsible for directing employees to carry out business
activities and managing their performance of those tasks?
A. Shareholders
B. External auditors
C. The board of directors
D. Management - correct answer ✔✔" Management
