Chapter 4

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People will often be dishonest if they are placed in an environment of:
a) poor controls
b) high pressure
c) low integrity
d) loose accountability
e) all of the above
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Terms in this set (26)
Which of the following is usually the most effective tool in preventing and detecting fraud?
a) discouraging collusion between employees and customers or vendors
b) effective investigations of fraud symptoms
c) having a good system of internal controls
d) creating an expectation of punishment in the company
Which of the following is the typical fraud model that describes most firms?
a) fraud incident, assessing risk, investigation, reporting
b) fraud incident, investigation, action, resolution
c) assessing risk, fraud incident, investigation, resolution
d) assessing risk, investigation, implementing a fraud program, reporting
The "tone at the top" is an important element in fighting fraud, which involves:
a) doing a good job of integrity risk assessment
b) having a positive organization where effective fraud teaching and training is conducted
c) setting a proper example or modeling appropriate management behavior
d) both b and c
Which of following is NOT a recognized method of eliminating fraud opportunities? a) having good internal controls b) monitoring employees c) creating an expectation of punishment d) engendering employee goodwill by having lax rulesd) engendering employee goodwill by having lax rulesWhich of the following is NOT a reason identified by Deloitte why whistle-blowing systems fail? a) lack of anonymity b) pressure to comply c) culture d) lack of awarenessb) pressure to complyAlerting vendors and contractors to company policies often result in: a) loss of interest in the organization by vendors b) discovery of current frauds and the prevention of future frauds c) strained vendor/purchaser relationships d) heightened incidence of recurrent reverse vendor fraudsb) discovery of current frauds and the prevention of future fraudsEven with the right opportunity or significant pressure, most people would probably not steal or embezzle.falseStudies show that a positive and honest work culture in a company does little to prevent fraud.falseAn important factor in creating a culture of honesty, openness, and assistance in the workplace is maintaining an employee assistance program.trueA good internal control system within a company can ensure the absence of fraud.falseWhen fraud is committed, the problem is often not a lack of controls, but the overriding of existing controls by management and others.trueThe two elements in creating a positive work environment are (1) having an open-door policy and (2) having positive personnel and operating procedures.falseNot prosecuting fraud perpetrators is cost-effective both in the short run and the long run.falseEven a good system of internal controls will often not be completely effective because of fallibilities of the people applying and enforcing the controls.trueThe increasingly complex nature of business helps to decrease the number of collusive frauds.falseTips and complaints are the most common way fraud is detected.trueThe major role of employee assistance programs is to help employees recover from the damaging psychological effects of fraud.falseNot all possible controls should be implemented; rather, one must assess a control's cost and benefits before implementation.trueCreating an expectation of punishment causes firm morale to deteriorate and often results in lower productivity.false