FRAUD PREVENTION AND DETECTION DECEMBER 2023 PAST PAPER

MONDAY: 4 December 2023. Morning Paper. Time Allowed: 3 hours.

Answer ALL questions by indicating the letter (A, B, C or D) that represents the correct answer. This paper is made up of one hundred (100) Multiple Choice Questions. Each question is allocated one (1) mark.

1. Anti-fraud/corruption professionals believe that, increasing the perception of detection is the most effective method of fraud/corruption prevention.

Which of the following statement is NOT accurate in regard to increasing perception of detection?

A. To increase the perception of detection, parties in the organisation should not be made aware that the
organisation would conduct surprise audits
B. To increase the perception of detection, parties in the organisation should be made aware that the
organisation could conduct surprise audits
C. A surprise audit is a proactive fraud prevention activity that helps to increase the perception of detection
D. A surprise audit is a positive reinforcement measure, that helps to increase the perception of detection
(1 mark)

2. Fraud prevention health check–up is an inexpensive tool that can be used to evaluate an organisation’s fraud prevention health.

Which of the following BEST describes the component that creates a foundation for the internal control system?

A. Proactive detection
B. Risk ownership
C. Fraud risk tolerance and risk management
D. None of the above (1 mark)

3. According to BF Skinner, positive reinforcement measures are the most effective measures of modifying behavior.

Which of the following BEST describes positive reinforcement measure?

A. Positive reinforcement measures help to enhance the internal controls
B. Segregation of duties are examples of positive reinforcement measures
C. Positive reinforcement measures are examples of strong controls
D. None of the above (1 mark)

4. Which of the following should management NOT do to create an anti-fraud culture?

A. Develop a comprehensive compliance program
B. Demonstrate zero tolerance for fraud and unethical behavior
C. Create an open-door policy environment
D. Define zero appetite for fraud risks (1 mark)

5. Which of the following is NOT accurate in regard to assignments and Certified Fraud Examiners?

A. A Certified Fraud Examiner cannot accept an assignment where he/she has a major interest
B. A Certified Fraud Examiner must be an accountant to conduct a forensic audit assignment
C. A Certified Fraud Examiner can accept an assignment where he/she has a major interest
D. None of the above (1 mark)

6. Which of the following statements is NOT accurate in regard to the external auditor’s responsibility for fraud?

A. International Standard on Auditing (ISA 240) has put express responsibility on the auditor to detect fraud in the course of auditing financial statements
B. Auditors have a responsibility for identify fraud risks in all the processes
C. Auditors have a responsibility for detecting risks and red flags of fraud
D. None of the above (1 mark)

7. Which of the following does NOT describe the pressure leg of the fraud triangle?

A. “I am in a financial crisis”
B. “I need money to repay my debts”
C. “Possibility of detection is very high”
D. “I have an emergency; I have no other way to solve the problem” (1 mark)

8. According to International Standard on Auditing (ISA 240), the auditor is only concerned with fraud that.

A. Is perpetrated by management and not employees
B. Perpetrated through collusion
C. Causes misstatement in the financial statements
D. None of the above (1 mark)

9. Silk and Vogel found that businesses justify illegal or noncompliant conduct. Which of the following statements is NOT a justification made by the businesses for their behavior?

A. The purpose for violations is to secure employees’ jobs
B. Compliance with government regulations is too expensive
C. The damage is shared among a large number of consumers
D. None of the above (1 mark)

10. According to COSO, an internal control system should be designed to provide reasonable assurance in the achievement of the organisation’s objectives. Which of the following is NOT one of the objectives?

A. The effectiveness and efficiency of the organisation’s operations
B. To maximise profits
C. The organisation’s compliance with the laws and regulations
D. None of the above (1 mark)

11. Which of the following is NOT a core principle of sound corporate governance?

A. Responsibility
B. Integrity
C. Accountability
D. None of the above (1 mark)

12. Which of the following parties, is responsible for providing oversight over the design and implementation of the organisation’s fraud prevention program?

A. The management
B. Internal auditors
C. External auditors
D. None of the above (1 mark)

13. Which of the following party, has responsibility for the design, implementation and monitoring of the effectiveness of the fraud risk management program?

A. Risk officer
B. External audit
C. Compliance officer
D. None of the above (1 mark)

14. Which of the following statements is ACCURATE in regard to internal control system?

A. An effective internal control system can mitigate fraud risks to a tolerance level
B. Absence of internal controls is the major root cause of fraud
C. Red flags and risks of fraud are evidence of fraud
D. None of the above (1 mark)

15. Which of the following is NOT accurate in regard to white collar offenders?

A. White collar offenders are less likely to plead guilty
B. White collar offenders are more likely to plead guilty
C. White collar offenders are more likely to be jailed
D. All the above (1 mark)

16. Which of the following theories BEST describes the use of threat of criminal sanctions?

A. Prevention
B. Deterrence
C. Compliance
D. None of the above (1 mark)

17. Which of the following parties in an organisation, has responsibility for providing the first line of defense against fraud and corruption?

A. Internal auditor
B. Risk manager
C. Compliance manager
D. Heads of departments (1 mark)

18. Organisations should make efforts to control corporate crime. Which of the following is an example of an approach that they should include?

A. Internal audit
B. Fraud hotlines
C. Voluntary changes in corporate attitudes
D. All of the above (1 mark)

19. The directors of ABC Company decided to inflate the company’s revenue, and conceal expenditure, to show that the company has met the profit targets.

Which of the following BEST describes the category of crime perpetrated by the directors and senior management?

A. Organisational crime
B. Occupational crime
C. Economic crime
D. None of the above (1 mark)

20. According to COSO, which of the following is NOT accurate in regard to the control environment of an organisation?

A. It provides a foundation for all other controls
B. Sets the moral and ethical tone of the organisation
C. It sets clear organisational objectives to enable assessment of risk associated with the achievement of the objectives
D. None of the above (1 mark)

21. Which of the following statements is ACCURATE in regard to white-collar crime?

A. In white-collar crime cases like corruption, the higher the offender’s status, the more likely the individual will not be incarcerated
B. In white-collar crime cases, the higher an offender’s status, the more likely the individual will be
convicted
C. In white-collar crime cases, the higher an offender’s status, the more likely the individual will not be
found guilty
D. None of the above (1 mark)

22. The evaluation and communication of internal control deficiencies in a timely manner to those parties responsible for taking corrective action is a principle related to which component of COSO’s Internal Control-Integrated Framework?

A. Control Environment
B. Control activities
C. Information and communication
D. Monitoring (1 mark)

23. Which of the following is NOT accurate in regard to a corporation’s board of directors?

A. The directors’ responsibility is to represent shareholders only
B. The directors are generally elected by the company stakeholders
C. The directors provide management responsibility for business operations by assessing the strategy and underlying purpose of management’s decisions and actions
D. None of the above (1 mark)

24. According to the 2022 ACFE Report to the Nations, which of the following is the second common fraud detection method?

A. Internal audit
B. External audit
C. Management review
D. None of the above (1 mark)

25. Which of the following is NOT a measure that can be used to evaluate an organisation’s corporate culture effectively?

A. Statements from the board and management in regard to their zero tolerance for fraud
B. The tone at the top
C. Management’s inconsistent disciplinary measures
D. Management’s response to fraudulent activities (1 mark)

26. According to BF Skinner’s behaviorist theories, destructive workplace behavior, such as fraud and corruption, can be modified through which of the following measures?

A. Strong internal controls
B. Punishment
C. Hard controls
D. None of the above (1 mark)

27. Strategy to control corporate crime that is designed to achieve conformity with the law by providing economic incentives for voluntary compliance with the law and using administrative efforts to control violations is referred to as _____________________________.

A. Deterrence
B. Prevention
C. Compliance
D. None of the above (1 mark)

28. Which of the following is NOT accurate in regard to the OECD Principles of Corporate Governance?

A. Establishment of a law, where governments should put in place an appropriate framework to support
good corporate governance practices
B. An emphasis on the importance of timely, accurate, and transparent disclosure mechanisms
C. Recognition of the importance of the role of stakeholders in corporate governance
D. All of the above (1 mark)

29. Which of the following is NOT one of the examples of the non-shareable financial need, leg of the fraud triangle?

A. Alcohol and drugs problem
B. Addiction problems
C. Gambling debts
D. None of the above (1 mark)

30. An organisation’s ethics policy is an essential tool for fraud prevention. Which of the following is NOT accurate in regard to an ethics policy?

A. The ethics policy should be communicated to all company employees
B. In developing the policy, management should consider how various members of the organisation define success
C. In developing the policy, management should consider the existing ethical tone set by management
D. None of the above (1 mark)

31. Polly, a Certified Fraud Examiner, conducted a fraud examination at ABC Corporation where Rose is suspected of embezzlement. Polly later found out that Rose is working for XYZ Corp, another client of hers. Under most of the anti-fraud and other professional bodies’ Code of Professional Ethics, what code of ethic would guide Polly on what action to take?

A. Confidentiality
B. Transparency
C. Honesty and integrity
D. Loyalty and due care towards her client (1 mark)

32. All Professional organisations have code of ethics. Which of the following is NOT a purpose for professional code of ethics?

A. Provide more specific solutions to professional ethical dilemmas that might not be found under general ethical principles
B. Facilitate practical enforcement and profession-wide internal discipline
C. To serve as an ethical reference and benchmark
D. Provide general solutions to professional ethical dilemmas that might not be found under specific ethical principles (1 mark)

33. Which of the following parties is responsible for directing employees to carry out business activities and manage the expected performance?

A. Board of directors
B. Internal auditors
C. The audit and risk committee
D. Management (1 mark)

34. Which of the following BEST describes an element of the fraud triangle?

A. Justification to commit fraud
B. Pressure to achieve targets
C. Low personal integrity
D. None of the above (1 mark)

35. Effective ownership and reporting structures within an organisation are necessary to ensure which of the following principles of corporate governance?

A. Transparency
B. Accountability
C. Responsibility
D. All the above (1 mark)

36. A forensic fraud examiner, while conducting an investigation on alleged financial reporting is NOT permitted to express an opinion regarding which of the following?

A. The effectiveness of the internal controls
B. Failure to comply with IFRS
C. Failure to comply with IAS
D. None of the above (1 mark)

37. The corporate governance principle that pertains to the duty of internal parties to act in the best interest of the organisation is referred to as:

A. Accountability
B. Transparency
C. Fairness
D. None of the above (1 mark)

38. According to the 2022 ACFE Report to the Nations, which of the three major categories of occupational fraud was most expensive?

A. Fraudulent disbursement
B. Financial statement fraud
C. Asset misappropriations
D. None of the above (1 mark)

39. The Public Interest Oversight Board (PIOB) includes which of the following functions?

A. Developing best practices for corporate governance for global organisations
B. Establishing international standards for financial reporting

C. Providing oversight over the process of setting international auditing standards
D. None of the above (1 mark)

40. Which of the following procedures should the external auditor NOT use to obtain information for identifying the risks of material misstatement due to fraud?

A. Conduct interviews of the entity’s management only, to obtain clear and accurate views on the risks of
fraud
B. Examine any unusual or unexpected relationships identified through analytical procedures
C. Consider fraud risk assessment results that indicates medium to high fraud risk
D. None of the above (1 mark)

41. Which of the following is NOT accurate in regard to occupational fraud?

A. Most embezzlers are repeat trusted violators
B. Most of the occupational offenders are first trusted violators
C. Most of the occupational offenders do not have prior criminal records
D. None of the above (1 mark)

42. The primary responsibility for evaluating the effectiveness of the compliance program rests with which of the following parties?

A. Internal Auditor
B. Management
C. Board of Directors
D. Compliance Officer (1 mark)

43. Which of the following is NOT a detective anti-fraud control?

A. Continuous audit techniques
B. Code of ethics
C. Analytical data review
D. Independent reconciliations (1 mark)

44. Preventive anti-fraud controls include all the following EXCEPT?

A. Proactive forensic audits
B. Fraud awareness training
C. Hiring policies
D. Segregation of duties (1 mark)

45. If an employee perceives high detection, he or she would be demotivated from committing fraud. Which of the following procedures would discourage individuals in an organisation from engaging in fraudulent and corrupt activities?

A. Regular management oversight
B. Regular forensic audits
C. An anti-fraud policy
D. None of the above (1 mark)

46. Which of the following statements is ACCURATE in regard to an effective internal control system?

A. Well-designed and implemented internal control system is effective in fraud prevention
B. An effective internal control system must be well-designed, implemented, and continuously monitored
C. An effective internal control system must be well-designed, implemented and well enhanced
D. None of the above (1 mark)

47. Which of the following is statement is MOST accurate in regard to fraud prevention?

A. Fraud prevention is made up of a set of rules and procedures which in their aggregate encourage and
discourage potential fraudsters from perpetrating fraud
B. Fraud prevention is a process that ensures reasonable assurance in regard to fraud prevention
C. A thorough fraud prevention control system can eliminate fraud
D. Fraud prevention is made up of a set of rules which in their aggregate discourage potential fraudsters in engaging in fraud (1 mark)

48. Which of the following is the primary foundation for the INTOSAI professional framework for auditing in the public sector?

A. The call for supreme audit institutions to develop their own independence standards
B. The call to keep government auditors employed by the organisations that they audit
C. The call for supreme audit institutions to influence industry regulations
D. The call for legislated independence of government auditing institutions (1 mark)

49. Which of the following statement is NOT accurate in regard to employees’ loyalty?

A. According to Diane Vaughan, an employee who is truly loyal to a company can perpetrate fraud on
behalf of the organisation
B. According to Diane Vaughan, an employee who is truly loyal to a company cannot perpetrate fraud on
behalf of the organisation
C. According to Diane Vaughan, an employee who is truly loyal to a company can perpetrate fraud against the organisation
D. None of the above (1 mark)

50. According to ISA 240, the auditor’s assessment of the risk of material misstatement due to fraud at the financial statement level should NOT have an effect on which of the following aspect(s) of an audit?

A. Selection of auditing tests and procedures
B. Assignment and supervision of personnel
C. Consideration of accounting principles applied
D. None of the above (1 mark)

51. Which of the following is ACCURATE in regard to the objectives of good corporate governance?

A. Enhance the accuracy and reliability of the organisation’s financial reports
B. Detect financial misstatements, whether caused by errors or fraud
C. Provide reasonable assurance regarding the organisation’s compliance with applicable laws and
regulations
D. None of the above (1 mark)

52. According to the authors of Crimes of the Middle Classes, which of the following factors is NOT accurate in regard to the rising problem of economic crime?

A. The economy’s increased reliance on credit
B. The increased opportunity for wrongdoing facilitated by advanced information technology
C. The continued pressures of a culture that awards honesty and integrity
D. None of the above (1 mark)

53. An employee anti-fraud training should include which of the following elements?

A. Detailed information on how the organisation will be responding on each fraud
B. Detailed information of the organisation’s anti-fraud controls
C. Detailed information of the procedures management will use to detect fraud
D. None of the above (1 mark)

54. Which of the following factors does NOT affect employees’ ethical decisions?

A. Tension between personal ethics and organisational needs
B. Industry and organisational ethical codes
C. The law and other government regulations
D. None of the above (1 mark)

55. Which of the following fraud risk is associated with inadequate oversight over management, in financial reporting?

A. Rationalisation
B. Perceived situational pressure
C. Pressures / incentives
D. Opportunity (1 mark)

56. Which of the following parties has responsibility for assisting management in fraud risk management within an organisation?

A. Risk Management Officer
B. Management
C. Board of Directors
D. Internal auditors (1 mark)

57. According to COSO, the effectiveness of the internal control system can be evaluated by assessing whether the five components of the COSO internal control integrated framework are in place, functioning effectively and operating together in an integrated manner.

Which of the following is NOT one of the components?

A. Control environment
B. Fraud risk governance
C. Information and communication
D. Control activities (1 mark)

58. Which of the following is NOT important for a company, to consider in regard to establishment of a document retention policy?

A. General rules for documenting and retaining records
B. Specific requirements related to electronic documents
C. Laws and regulations regarding recordkeeping requirements
D. None of the above (1 mark)

59. Which of the following statements is NOT correct in regard to fraud examination and integrity?

A. Fraud examination requires independence of mental attitude and avoidance of conflict of interest
B. Fraud examination requires subordination of desires for personal gain to the interests of clients,
employers and the public
C. Fraud examination requires ability to analyse situations only where there are professional codes
applicable and determine right from wrong
D. None of the above (1 mark)

60. Which of the following is NOT the IOSCO Principles for Auditor Oversight in regard to audit?

A. The oversight should be performed by a body that acts and is seen to act in the best interest of the client
B. The oversight involves a regular review process designed to ascertain whether audit firms adhere to
quality control policies and procedures
C. The oversight should take place within the audit firm, by professional associates, and through government
regulation
D. None of the above (1 mark)

61. According to The Institute of Internal Auditors’ International Standards for the Professional Practice of Internal Auditing, the internal audit team must NOT do which one of the following?

A. Evaluate the risks of fraud
B. Identify and assess risk of fraud
C. Evaluate the fraud risk management initiatives
D. Evaluate an area as high risk only if fraud had occurred previously (1 mark)

62. According to the IOSCO Principles for Auditor Oversight, effective oversight of the auditing profession does NOT include which one of the following principles?

A. The mechanism does not require auditors to be subject to the discipline of an auditor oversight body that is independent of the audit profession
B. A mechanism to require that auditors have proper qualifications and competency
C. A mechanism to require that auditors are independent of the enterprises that they audit
D. All of the above (1 mark)

63. Which of the following BEST describes the rationalisation leg of the fraud triangle?

A. “I am entitled to more than what I am getting?”
B. “I need money to pay for my parent’s hospital bills”
C. “I do not see any possibility of being caught”
D. “I have an emergency I have no other way to solve the problem” (1 mark)

64. Which of the following BEST describes the opportunity leg of the fraud triangle?

A. “Management and the board are engaging in a conflict of interest, so it is okay”
B. “I need money for an emergency”
C. “I can override the controls”
D. “I need to pay my debts” (1 mark)

65. Which of the following BEST describes situational pressure due to unrealistic targets?

A. “Management and the board are taking kickbacks, so it cannot be that bad?”
B. “I need money to pay my debts”
C. “We have not met the revenue targets; we have no option, so we have to do what it takes”
D. None of the above (1 mark)

66. Which of the following factors should an organisation NOT consider when designing the components of its compliance and ethics program?

A. Law and regulatory environment
B. Non-occurrence of similar conduct
C. Industry size and standards
D. None of the above (1 mark)

67. Which of the following is NOT one of the principles involved in the risk assessment process, as laid out by COSO?

A. Conducting ongoing monitoring of the risk management strategy
B. Assessing changes that could significantly impact the internal control system
C. Setting clear organisational objectives
D. Identifying risks of fraud (1 mark)

68. COSO identified five components that must be integrated into which of the following?

A. Compliance program
B. Ethics program
C. Anti-fraud policy
D. None of the above (1 mark)

69. Which of the following is NOT one of the COSO interrelated components of a company’s internal control system?

A. Fraud risk oversight
B. Risk assessment
C. Fraud risk governance
D. None of the above (1 mark)

70. Which of the following elements is NOT desirable for a corporate compliance program to be effective?

A. Due diligence in the hiring process
B. Appropriate incentives for compliance with the program
C. Continuous evaluation of the compliance program
D. None of the above (1 mark)

71. Which of the following controls CANNOT help to mitigate the risk of rationalisation?

A. Fraud awareness training
B. Employees support program
C. Proactive audit procedures
D. None of the above (1 mark)

72. Which of the following is NOT a proactive fraud detection activity?

A. Regular analytical review procedures
B. Regular fraud assessment questioning
C. Training and awareness
D. None of the above (1 mark)

73. Which of the following is a criteria of fraud prevention health check-up, that is related to the extent that the board of directors is providing oversight over fraud risk management?

A. Fraud risk ownership
B. Fraud risk tolerance
C. Fraud risk assessment
D. None of the above (1 mark)

74. Which of the following is NOT a component of a comprehensive ethics program?

A. Focus on ethical leadership
B. Vision statement
C. Values statement
D. None of the above (1 mark)

75. Which of the following is NOT a desirable component of a comprehensive ethics program?

A. An ethics officer with other major responsibilities
B. Ethics task force or committee
C. Ethics communication and training
D. None of the above (1 mark)

76. Which of the following statements is MOST accurate in regard to the internal auditor’s responsibility for fraud?

A. Conduct further investigation where they detect a fraud scheme
B. Evaluate whether management is actively retaining responsibility for oversight of the fraud risk
management program
C. Detect fraud risks in the assessment of internal control design and determination of audit steps to perform
D. Evaluate if the internal controls are working (1 mark)

77. The commission formed in 1985 with the purpose of defining the auditor’s responsibility for preventing and detecting fraud is known as which of the following?

A. COSO Commission
B. Sarbanes Oxley
C. International Securities Commission
D. None of the above (1 mark)

78. Which of the following is NOT good corporate governance practice?

A. Define only the expectations of the parties involved
B. Provide clear lines of accountability and reporting
C. Ensure that a few individuals are not capable of making all the business decisions without influence, input or approval of other parties
D. None of the above (1 mark)

79. Which of the following is NOT correct in regard to good corporate governance framework?

A. It is adaptable to change
B. Is appropriate for the organisation’s legal and regulatory environment
C. Takes into account the organisation’s cultural and ethical environment
D. None of the above (1 mark)

80. Which of the following statements is ACCURATE in regard to OECD principles of Corporate Governance?

A. The OECD Principles of Corporate Governance support establishing stronger protection for foreign
shareholders than domestic shareholders
B. The OECD Principles of Corporate Governance support establishing stronger protection for domestic
shareholders than foreign shareholders
C. The OECD Principles of Corporate Governance support equitable treatment for all shareholders
D. None of the above (1 mark)

81. According to the OECD Principles of Corporate Governance, an entity’s corporate governance framework, which of the following is NOT accurate?

A. Ensure commensurate treatment of all shareholders, including minority and foreign shareholders, based on their investment
B. Encourage active cooperation between corporations and stakeholders in creating wealth and jobs
C. Ensure the timely and accurate disclosure of all material matters regarding the corporation
D. None of the above (1 mark)

82. Which of the following parties is responsible for holding the board of directors accountable for the shareholder’s resources?

A. The external auditor
B. The chairman of the board
C. Executive management
D. None of the above (1 mark)

83. Which of the following is NOT a recommendation of the Treadway Commission to the audit committee to prevent financial statement fraud?

A. To have written charter for the audit committee
B. To be informed and a working committee
C. To have adequate resources and authority
D. None of the above (1 mark)

84. 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 (1 mark)

85. Effective corporate governance practices are desirable for any organisation.

Which of the following organisation must have effective corporate governance practices?

A. A limited partnership
B. A sole proprietor enterprise
C. A public company
D. A general partnership enterprise (1 mark)

86. Which of the following BEST describes oversight responsibilities of different parties for an organisation’s direction, operations and performance?

A. Risk management
B. Risk governance
C. Corporate compliance
D. None of the above (1 mark)

87. Which of the following BEST describes the principle related to clarity, accuracy, completeness, and timeliness of the financial statements and other information provided by management to shareholders?

A. Fairness
B. Accountability
C. Responsibility
D. None of the above (1 mark)

88. Which of the following is the MOST effective method of fraud prevention?

A. Putting detective controls in place
B. Putting strong controls in place
C. Putting preventive controls in place
D. All the above (1 mark)

89. Which of the following statements BEST describes reengineering of controls?

A. Reengineering of controls involve enhancing the controls
B. Reengineering of controls involve enforcing the controls
C. Reengineering of controls involve compromising controls
D. Reengineering of controls is an art of reorganising the existing controls (1 mark)

90. Which of the following is NOT a control environment principle of the COSO that supports the design and implementation of an effective control environment?

A. Personnel at all levels demonstrate commitment to integrity and ethical values
B. Board should be independent of management and oversee the design and implementation of the internal control
C. Organisation holds individuals accountable of internal controls
D. None of the above (1 mark)

91. Which of the following is NOT a fraud risk assessment principle of the COSO

A. The organisation sets clear objectives to enable the identification and assessment of risks relating to the objectives
B. The organisation detects risks to the achievement of the objectives
C. The organisation identifies changes that would significantly impact the system of internal controls
D. None of the above (1 mark)

92. Which of the following is among the board’s responsibilities for fraud risk management?

A. Design and implementation of controls to mitigate the risks
B. Monitoring and proactively improving the fraud risk management programme
C. Performing and regularly updating the fraud risk assessment framework
D. None of the above (1 mark)

93. Which of the following topics should be covered in employee anti-fraud training?

A. A detailed explanation of how management is going to respond to fraud allegation
B. A detailed explanation of the company’s anti-fraud controls
C. The exact procedures management uses to detect fraud
D. None of the above (1 mark)

94. Inadequate oversight of management, a complex organisational structure, and deficient internal control components are all examples of which type of fraud risk factor relating to fraudulent financial reporting?

A. Rationalisation
B. Pressure
C. Overriding of controls
D. None of the above (1 mark)

95. Which of the following parties is responsible for fraud prevention in an organisation?

A. Internal auditors
B. Management
C. All levels of personnel
D. Board of Directors (1 mark)

96. Which of the following is statement is ACCURATE according to the differential reinforcement theory?

A. Behavior is modified by punishment
B. Behavior is weakened when punishment is avoided
C. Behavior is reinforced when punishment is applied
D. None of the above (1 mark)

97. Which of the following is NOT an effective method of increasing the perception of detection?

A. Requiring strong management oversight
B. Forcing employees to take time off
C. Conducting surprise audits
D. Conducting forensic audits (1 mark)

98. Which of the following is NOT a principle pertaining to the information and communication component of the COSO’s Internal Control – Integrated Framework?

A. The organisation communicates information, including objectives and responsibilities for internal control, necessary to support the functioning of internal control internally
B. The organisation put in place control activities to enforce the other controls
C. The organisation obtains or generate and uses relevant, quality information to support the functioning of internal control
D. None of the above (1 mark)

99. Which of the following statements is NOT accurate in regard to the role of human resource (HR) in fraud prevention?

A. HR has responsibility for assessing and maintaining employees’ sense of ownership
B. HR has responsibility for developing employees’ loyalty to the organisation
C. HR can support in conducting employee’s fraud risk assessment
D. None of the above (1 mark)

100. Which of the following is a measure that employers can put in place to mitigate fraud risks associated with employees’ greed?

A. Proactive fraud audits
B. Fraud awareness and education training
C. Support programs for, alcohol, drugs abuse
D. None of the above (1 mark)

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