Fraud Prevention/Detection Questions and Answers with Verified Solutions

Fraud Prevention/Detection Questions and Answers with Verified Solutions Internal Auditors detect _____ % of fraud 14 Under the Corporate Sentencing Guidelines, when the offending organization has committed a felony, probation must run for at least one year Internal Auditing Standard 1220 states that internal auditors must apply the care and skill expected of a reasonably prudent and competent internal auditor THREE levels of responsibility for finding and reporting illegal acts: 1. Evidence Accumulation w/ NO Reason to Believe Indirect-Effect Illegal Acts Exist 2. Evidence Accumulation & Other Actions w/ REASON to Believe Direct or Indirect-Effect Illegal Acts May Exist 3. Actions When the Auditor KNOWS of an Illegal Act According to the joint IIA, AICPA, and ACFE publication Managing the Business Risk of Fraud: A Practical Guide, who has responsibility for dealing with fraud risk? Personnel at all levels of the organization Restitution is not a form of punishment, but rather as a means of remedying the harm caused by the offense. fraud examiners _____ legally obligated to blow the whistle on clients or employers. are NOT As of 2005, judges ________ required to sentece w/in range set by USSC guidelines are not Most common type of occupational fraud Asset Misappropriation Three major categories of occupational fraud Corruption, Asset Misappropriation, and Financial Statement Fraud According to SarbOx this party is responsible for establishing procedures to handle complaints regarding irregularities in a publicly traded company's accounting methods, internal controls, or auditing matters Audit Committee Who is responsible for developing a strategy to assess and manage fraud risks that aligns with the organization's risk appetite and strategic plans? The Board of Directors Of the following parties, who is responsible for developing a strategy to assess and manage fraud risks that aligns with the organization's risk appetite and strategic plans? Board of Directors Under SarbOx, all audit committee members must be members of the BoD and "independent," meaning they receive compensation only for their service on the board. Both the NYSE and the NASDAQ rules state that: A majority of the directors on a listed company's board must be independent. "Under Section 404 of the Sarbanes-Oxley Act, public U.S. companies must include all of the following in their annual report EXCEPT: A.A statement identifying the framework used in performing the assessment of the effectiveness of internal controls over financial reporting B.A statement of management's responsibility for establishing and maintaining adequate internal controls over financial reporting C.A report explaining any discovered deficiencies in the company's internal controls over financial reporting D.Management's assessment of the effectiveness of the company's internal controls over financial reporting" C.A report explaining any discovered deficiencies in the company's internal controls over financial reporting "Which of the following should be covered in employee anti-fraud training? A.The exact procedures management uses to detect fraud B.A detailed explanation of the company's anti-fraud controls C.Examples of past transgressions and