Podcast
Questions and Answers
Which of the following is NOT a type of fraud?
Which of the following is NOT a type of fraud?
Fraud risk management programs require a verbal agreement from the board of directors.
Fraud risk management programs require a verbal agreement from the board of directors.
False
What is the intent behind misrepresentation in fraud?
What is the intent behind misrepresentation in fraud?
to deceive
Fraud risk exposure should be assessed __________ by the organization.
Fraud risk exposure should be assessed __________ by the organization.
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Match the elements of fraud with their descriptions:
Match the elements of fraud with their descriptions:
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Which of the following is a common action taken by a fraudster within an organization?
Which of the following is a common action taken by a fraudster within an organization?
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Detection techniques are essential only if preventive measures are ineffective.
Detection techniques are essential only if preventive measures are ineffective.
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What should an organization have to solicit input on potential fraud?
What should an organization have to solicit input on potential fraud?
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Which of the following is NOT a type of opinion that internal auditors may provide?
Which of the following is NOT a type of opinion that internal auditors may provide?
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Internal audit reports are similar in format and content to external audit reports.
Internal audit reports are similar in format and content to external audit reports.
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Name two qualities that should be present in audit communication.
Name two qualities that should be present in audit communication.
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Auditors need to provide timely and _____ communication of their findings.
Auditors need to provide timely and _____ communication of their findings.
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Match the following qualities of audit communication with their descriptions:
Match the following qualities of audit communication with their descriptions:
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What is one of the primary purposes of communicating audit results?
What is one of the primary purposes of communicating audit results?
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Audit reports must always include the purpose, scope, and results of the audit.
Audit reports must always include the purpose, scope, and results of the audit.
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What is the role of management in the context of audit communication?
What is the role of management in the context of audit communication?
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Which of the following is NOT an element of the Fraud Triangle Theory?
Which of the following is NOT an element of the Fraud Triangle Theory?
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Embezzlement is a type of fraud that involves the theft of government property.
Embezzlement is a type of fraud that involves the theft of government property.
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What is the primary purpose of forensic accounting?
What is the primary purpose of forensic accounting?
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One way to combat fraud is to ensure proper _____ of responsibilities.
One way to combat fraud is to ensure proper _____ of responsibilities.
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Match the following common types of fraud with their descriptions:
Match the following common types of fraud with their descriptions:
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Which of the following is a common red flag for fraud detection?
Which of the following is a common red flag for fraud detection?
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Conducting surprise cash counts is an effective preventive measure against fraud.
Conducting surprise cash counts is an effective preventive measure against fraud.
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What is a likely consequence of poor internal controls in an organization?
What is a likely consequence of poor internal controls in an organization?
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What is a Positive Opinion in an audit context?
What is a Positive Opinion in an audit context?
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The CAE is not responsible for communicating the results of the audit.
The CAE is not responsible for communicating the results of the audit.
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What are the four components necessary for the Basis of Audit Observations?
What are the four components necessary for the Basis of Audit Observations?
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A Disclaimer of Opinion suggests that the auditor is unable to provide a _____ on the subject matter.
A Disclaimer of Opinion suggests that the auditor is unable to provide a _____ on the subject matter.
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Which of the following is NOT a component of the audit report composition?
Which of the following is NOT a component of the audit report composition?
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Match each type of audit opinion with its description:
Match each type of audit opinion with its description:
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Management action does not need to be monitored after the results are communicated.
Management action does not need to be monitored after the results are communicated.
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What must the CAE assess before releasing audit results to outside parties?
What must the CAE assess before releasing audit results to outside parties?
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Study Notes
Fraud Risk Assessment, Awareness, Prevention, and Detection
- Fraud is the use of one's occupation for personal enrichment through deliberate misuse or misapplication of resources.
- Fraud elements include misrepresentation of a material fact with intent to deceive.
- Fraud types include misappropriation of assets and fraudulent financial reporting.
- Identifying fraudsters involves looking for common characteristics in individuals involved in fraudulent activities.
- Fraud perpetrators come from various levels, such as management, employees, and vendors.
- Managing fraud involves five key principles: governance structure with a written policy for expectations; periodic assessment of fraud risk exposure; prevention techniques to mitigate fraud risks; detection techniques for fraud events; and a reporting process for fraud input.
Fraud Triangle Theory
- Fraud involves a confluence of opportunity, pressure, and rationalization in the fraud triangle.
- Opportunity is a weakness in the system exploited by an individual.
- Pressure motivates unethical behaviors, stemming from personal incentives.
- Rationalization is the justification of unethical behavior as a lack of personal integrity.
Fraud Diamond Theory
- The Fraud Diamond theory expands on the Fraud Triangle by adding capability, which is the fraudster's ability to turn identified opportunities into reality.
Fraud Detection: Common Types of Fraud
- Common fraud types include false claims, mischarging, product substitution, kickbacks, bribery, theft, embezzlement, and computer crimes.
Fraud Detection: Red Flags
- Red flags for fraud detection include frequent sole source contracts, unusually high indirect charges, and lack of supporting documentation.
- Other red flags include double or inflated charges, contractor issues, restrictions of records, delays in project milestones, and poor internal controls.
Fraud Prevention
- Fraud prevention strategies include proper segregation of responsibilities, reconciliation reports, review of approval authorities, and scrutiny of procurement card statements, travel documents, emails, and phone communications.
- Other preventative measures involve regular inventory counts, surprise cash counts, and whistle-blowing.
Communicating Audit Results
- Internal audit reports differ from external audit reports.
- Internal audit reports summarize findings, recommendations, and management responses or action plans.
- Audit reports should include purpose, scope, and results.
- Audit communication must be accurate, objective, clear, concise, constructive, complete, timely.
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Description
This quiz covers fraud risk assessment, awareness, prevention, and detection. It explores key principles for managing fraud and the Fraud Triangle Theory, which includes opportunity, pressure, and rationalization. Test your understanding of the elements and types of fraud, as well as how to identify and mitigate risks.
