SOLUTIONS FOR MULTIPLE‑CHOICE QUESTIONS
6. 24a. CorrectRisk is high when the company always estimations the inventory but under no circumstances takes a full physical rely. b. IncorrectRisk is low when the petty cash box is always locked in the table of the custodian. c. IncorrectRisk is low when managing has printed a company code of integrity and directs frequent connection newsletters regarding it. d. IncorrectRisk is low when the board of company directors reviews and approves most investment orders.
6. 25a. IncorrectAn foolproof control system of checks and supervision is not possible because of collusion and management override. b. IncorrectThis is a positive step however, not the best long‑run way to halt fraud. c. IncorrectDedicated " hotline” phones are a great idea, but you didn't want that will put them in walls surrounding the workplace exactly where anonymity can be impaired. d. CorrectSince " people” are essential to a scam prevention system, Practice administration " of the people and for the people” to help them share personal and professional concerns is the best long‑run way to avoid fraud.
6th. 26a. CorrectProblems due to personal debt, addictions, or perhaps family challenges motivate staff to commit frauds. Establishing an employee assistance program details these issues and ultimately might reduce the determination to devote fraud for a few employees.
b. IncorrectA fidelity connect reduces raise the risk to the company for thievery because this is a form of insurance. It also offers a background check on employees. Not of these issues addresses the basic issue of employee determination.
c. IncorrectReconciliations are methods of detecting problems that have occurred. Whilst these are great controls and might reduce the options for employees to steal, reconciliations tend not to address worker motivation to commit scam.
d. IncorrectAudits may discover fraud and even provide deterrence for fraudulence, but they usually do not address the employees' determination to commit fraud.
six. 27a. IncorrectAn appointment of your chief ethics officer could increase the efficiency of the code of ethics.
b. IncorrectA hot line that allowed workers to survey ethical violations would raise the effectiveness from the code of ethics.
c. CorrectThe breach of the code of integrity by senior management might reduce the effectiveness of the code of integrity because the strengthen at the top could send an unacceptable message to employees that the code of ethics has not been important.
deb. IncorrectThe placing of the code of integrity and any other means of showing the code of ethics to staff in the workplace would increase the efficiency of the code of ethics.
6. 28a. IncorrectNumerous money refunds designed to different people at the same post office package address can be an signal of cash reimbursement fraud.
b. IncorrectInternal auditor cannot identify several credit rating memos to aid reductions of customers' balances is a great indicator of accounts receivable fraud especially if there is not a proper separation of duties.
c. CorrectBank reconciliations which often not have excellent checks or perhaps deposits more aged than 15 days are often positive indications and are not indicative of fraudulent activity.
d. IncorrectThree everyone was absent the afternoon the auditors handed out the paychecks and possess not chosen them up four weeks afterwards is a great indicator of " ghosting employees” (payroll fraud).
six. 29a. IncorrectOverstating sales earnings and overstating customer accounts receivable amounts is a method to misstate financial transactions for managing (financial reporting) fraud.
n. CorrectOverstating product sales revenue and overstating negative debt expenditure by the same amount will not overstate net gain or total assets (which is often a target of financial reporting fraud). Yet , this action might help to cover a manager's theft of assets (i. e., embezzlement).
c. IncorrectUnderstating interest charge and understating accrued interest payable is actually a way to misstate economical statements intended for...