3. Fraud is considered to be: a. A serious problem that continues to grow. b. A problem that affects very few individuals. c. A mild problem that most businesses need not worry about. d. A problem under control.
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3. Fraud is considered to be:
a. A serious problem that continues to grow.
b. A problem that affects very few individuals.
c. A mild problem that most businesses need not worry about.
d. A problem under control.
Step by step
Solved in 2 steps
- Which of the following would a fraudster perceive as a pressure? A. lack of management oversight B. everyone does it C. living beyond ones means D. lack of an internal audit functionAll companies are vulnerable to fraud, but small businesses are particularly vulnerable. Why do you think this may be the case? What signs of possible fraud may be more pronounced in small businesses when compared to larger ones?1) What was the ethical misconduct in the WorldCom case? 2) What management behaviors led to the financial fraud that was committed? 3) What would you do if you were faced with a similar situation?
- Which of the following is NOT a trend in Corporate Fraud? a) Anti-fraud controls have little impact on reduced fraud losses and shorter fraud duration b) Tips are consistently the most common detection method c) Banking, financial services, government/public administration and manufacturing have the greatest number of fraud cases reportedQuestion 1 (i) Which of the following will NOT be a likely ground to blow the whistle?A. When there are serious breaches of company rules and regulationsB. When somebody feels personally aggrievedC. When there are threats to human safetyD. When there are serious concerns about a possible fraud (ii) Which of the following is not an example of internal control risk?A. Risks of errors or fraud in accounting systems and accounting and finance activities.B. Risks that important laws and regulations will not be complied with properly.C. Risks that arise in the business environment and markets in which the company operatesD. The risk of losses resulting from inadequate or failed internal processes, people and systems or external events. (iii) Which of the following is NOT a statutory duty of a director?A. Duty to disclose any money received in connection of a transfer of company property.B. Duty to exercise due diligence in their work C. Duty to contribute an appropriate sum of money to the…1. How do organizations create a culture of honesty, openness, and assistance? 2. What are different ways in which companies can eliminate opportunities for fraud? 3. What is the purpose of adopting a code of ethics throughout a company? 4. Why are good internal controls important? 5. In what ways can organizations discourage collusive fraud?
- The fraud triangle asserts that the following three factors must exist for a person to commit fraud.A. Opportunity B. Pressure C. RationalizationIdentify the fraud risk factor (A, B, or C) in each of the following situations. A worker feels that fellow employees are not honest.The following scenarios are taken from actual fraud cases. For each scenario, categorize as primarily indicating (A) An incentive to commit fraud (B) An opportunity to commit fraud or (C) a rationalization for committing fraud. State your reason for your answer in each scenario. 1. Top management of the company closely guards internal financial information, to the extent that even some employees on a "need to know basis" are denied full access.FRAUD-MOTIVATING FACTORSResearch has shown that situational pressures and opportunity are factors that contribute to fraudulent behavior. Requireda. Identify two situational pressures in a public company that would increase the likelihood of fraud.b. Identify three opportune moments that would increase the likelihood of fraud.
- 1. What does it mean to say that internal control has limitations and what are these limitations? 2. Provide an appropriate response based on the following scenarios. Assume that the accounting clerk posts a customer’s payment for the wrong amount, giving the customer credit for less than he or she actually paid. How will this error be detected? How might this error have been prevented? Assume that the employee who opens the mail steals a customer payment. How will this theft be detected? How might this theft have been prevented? 3. What is petty cash and what purpose(s) does it serve? 4. What types of controls should be in place to make sure people in the office don't just take from petty cash (for their own personal use) whenever they feel like it? In your opinion, what is an appropriate amount to have in petty cash? 5. Prepare the necessary journal entries for each of the following: (a) On March 1, issued a check to establish a petty cash fund of $1,410 (b)…Each of the following scenarios is based on facts in actual fraud. Categorize each scenario as primarily indicating (1) an incentive to commit fraud (2) an opportunity to commit fraud or (3) a rationalization for committing fraud. Also explain your reasoning for each scenario. a. There was intense pressure to keep the corporation’s stock from declining further. This pressure came from investors, analysts and the CEO, whose financial well-being was significantly dependent on the corporation’s stock price. b. A group of top-level management was compensated (mostly in the form of stock options) well in excess of what would be considered normal for their positions in the industry. c. Top management of the company closely guards internal financial information, to the extent that even some employees on a “need to know basis” are denied full access. d. Managing specific financial ratios is very important to the company, and both management and analysts are keenly observant of variability in…Explain the three special characteristics of management fraud: a. The fraud is perpetrated at levels of management above the one to which internal control structures generally relate. b. The fraud frequently involves using the financial statements to create an illusion that an entity is healthier and more prosperous than, in fact, it is. c. If the fraud involves misappropriation of assets, it frequently is shrouded in a maze of complex business transactions, often involving related third parties. Please provide me a correct and clear explanations. Thank you!
