1. When management does not act ethically, fraud is more likely to occur. 2. In the Phar-Mor fraud case, management did not write or adopt a code of ethics. 3. Maintaining high ethics can help prevent fraud but will not help to detect fraud. 4. Due to management's responsibility to monitor operations by examining reports that summarize the results of operations, it is necessary that the system provide timely and accurate information. 5. In order to fulfill the obligations of stewardship and reporting, management has to create a code of ethics. 6. In most cases, a fraud will include altering accounting records to conceal the fact that a theft has occurred. 7. According to the 2004 Report to the Nation by the Association of Certified Fraud Examiners, the estimate of losses due to fraud would total approximately $2,800 per employee. 8. The most common method for detecting occupational fraud is a tip - from an employee, a customer, vendor, or anonymous source. 9. Defalcation and internal theft are names that refer to the misstatement of financial records. 10. The three conditions that make up the fraud triangle are theft, concealment, and conversion. 11. A good set of internal controls may not be as effective in reducing the chance of management fraud as it would be in reducing the change of fraud committed by an employee. 12. The most effective measure to prevent management fraud is to establish a professional internal audit staff that periodically checks up on management and reports directly to the audit committee of the board of directors. 13. Collusion between employees is one of the easiest frauds to detect and prevent. 14. Collusion can make it much easier to commit and conceal a fraud or theft, even when proper internal controls are in place