ACE450_Management_Audit

The use of fraudulent means to take money or other property from an employer. It consists of three phases: (1) the fraudulent act, (2) the conversion of the money or property to the fraudster's use, and (3) the cover-up.

• Schedule of Interbank Transfers

• Proof of Cash

• Related Parties

• Employee Fraud (Misappropriation of Assets)

Who is involved in the risk reduction and fraud deterrence/detection across an organization. 

• 1. External Auditor

• 1. Management

• 1. Internal Auditor

• 1. Every stakeholder

Which of the following is a common motivation for management fraud?

• Desire to improve employee morale

•  Pressure to meet financial targets

• Need to comply with regulations

• Effort to enhance customer satisfaction

Which type of fraud involves manipulating financial statements to present a more favorable picture of the company's financial position?

• Asset misappropriation

• Corruption

•  Financial statement fraud

• Expense reimbursement fraud

Which of the following best describes extortion in the context of corruption?

• 1. An employee steals inventory to sell for personal profit

• 1. A supplier demands inflated prices under the threat of stopping supplies

• 1. An organization manipulates financial data to secure a loan

• 1. A company representative offers a client a gift to influence his or her decisions

What types of information can online sources provide about individuals that are useful in fraud investigations?

• 1. Criminal records and social media activity

• 1. Employment history, property ownership, and personal details

• 1. Bank account balances and credit scores

• 1. Insurance claims and medical records

When deciding whether or not to investigate, which of the following factors should an organization not consider?

• 1. Possible cost of the investigation

• 1. Perceived strength of the predication

• 1. Possible public exposure resulting because of the investigation

• 1. All of the above should be considered

You are auditing a mid-sized company and discover that the CEO has bypassed several internal controls to authorize a large contract with a supplier that was not vetted by the procurement department. Additionally, you find that the supplier is owned by the CEO’s cousin. What would be the most appropriate course of action in this situation?

•  Immediately report the CEO to law enforcement.

•  Confront the CEO directly and ask for an explanation.

• Investigate further to gather more evidence before reporting the issue to the board of directors or internal audit committee.

• Ignore the issue since the CEO likely has the authority to override internal controls.

During a routine audit, you notice that an employee who works in the accounts payable department has been taking unusually long lunches and often stays late in the office. There are also a few discrepancies in the vendor payment records they manage. How would you approach this situation?

• Report the employee immediately to upper management.

• Conduct interviews with the employee and their colleagues to understand the situation better.

• Assume the discrepancies are due to human error and let it go.

• Examine the payment records in more detail to identify patterns and possible fraudulent activities.

You are conducting an audit and find that a senior manager has consistently approved expenses for personal travel under the company’s name. When confronted, the manager argues that the travel was business-related, but no supporting documentation is provided. What should be your next step?

• Trust the senior manager's explanation and close the investigation.

• Escalate the issue immediately to the board of directors.

• Request additional documentation and verify the nature of the expenses.

• Disclose the issue publicly to create transparency.