2. According to studies, the MAIN reason employees commit occupational fraud is:

A. Poor internal controls

B. Greed

C. Personal financial problems

D. Dissatisfaction with the employer

3. Of the key activities related to fighting fraud, which is the most important and the

most cost-effective?

1. Follow-up legal action/resolution
2. Early fraud detection
3. Fraud investigation
4. Fraud prevention

4. What is required to prove fraud, as opposed to negligence?

1. Gross error
2. Intent
3. Weighting of the evidence
4. Confession from the perpetrator

5. What is the strongest factor in deterring future fraud activity?

A. Condemnation of family and friends (humiliation)

B. Sanctions (punishment)

C. Termination

D. Counseling

6. In order to set a good "tone at the top," management must ______________proper behaviors.

1. Communicate
2. Expect
3. Model
4. All of the above

7. What is the most important element in a control environment?

1. Management's communication
2. Management's role and example
3. The hiring process
4. The internal audit department

8. Which one of the following is not an element of a good control environment?

1. Trust
2. Modeling
3. Appropriate hiring
4. Management's communication

9. Each of the following is an example of an inadequate control environment EXCEPT

1. The HR department failed to check an applicant's background and hired someone who had committed fraud in the past.
2. A manager instructs employees not to share passwords, and then shares her passwords with others.
3. A company does not establish codes of conduct and does not have training meetings to teach employees to distinguish between acceptable and unacceptable behavior.
4. The employees know who has responsibility for each business activity.

1. According to "The Fraud Scale," occupational fraud is more likely to occur when:
2. Perceived opportunities are high
3. Personal integrity is low
4. Situational pressures are high
5. All of the above
6. None of the above

11. Many people suspecting that fraud exists will not come forward because:

1. They think someone else will report the fraud
2. They do not want to wrongly accuse someone
3. Both A and B
4. Neither A or B

12. Which of the following is NOT part of a good corporate fraud policy?

1. Insisting top management model appropriate behavior
2. Establishing a threshold for which frauds will be prosecuted
3. Create a positive work environment
4. Hire the right kind of employees

13. Who wins when a fraud is committed?

1. The victim
2. The organization
3. The perpetrator
4. The perpetrator's family
5. Co-workers
6. No one

14. Even with the best possible internal control system in place, its effectiveness still depends on what?

1. Also creating an expectation of punishment.
2. Identifying the nature of the risks involved and the losses that could result from these risks.
3. The competency and dependability of the people enforcing and monitoring it.
4. All of the above.
   1. Send letters to vendors and contractors letting them know about your fraud prevention program and that they will be required to sign 'Right to Audit' agreements

15. To discourage collusion, companies should:

1. Require mandatory job transfers / rotation
2. Regularly review employees who are responsible for large contracts or accounts
3. All of the above

16. Even with internal control procedures in place, many companies routinely experience fraud. Why?

1. Management overrides controls
2. Control procedures are not followed
3. Control procedures are not effective fraud-prevention tools
4. Lack of rewards for complying with control procedures
5. All of the above except C.

17. Research in psychology indicates that after people commit a crime (especially for the first time); they are overwhelmed by ________ and __________?

A. Guilt and fear.

B. Stress and insomnia.

C. Confidence and rationalization.

D. Defensiveness and guilt.