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    Chapter 3-Ethics, Fraud, and Internal Control

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    sammie helson
    This document discusses ethics, fraud, and internal controls. It covers key topics such as the components of internal control including control environment, risk assessment, control activities, information and communication, and monitoring. It also discusses types of fraud such as corruption, bribery, economic coercion, and fraudulent statements. Additionally, it examines internal control objectives and limitations as well as definitions of key terms like fraud, preventive controls, and corrective controls.

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    Chapter 3-Ethics, Fraud, and Internal Control

    Uploaded by

    sammie helson
    84 views3 pages
    This document discusses ethics, fraud, and internal controls. It covers key topics such as the components of internal control including control environment, risk assessment, control activities, information and communication, and monitoring. It also discusses types of fraud such as corruption, bribery, economic coercion, and fraudulent statements. Additionally, it examines internal control objectives and limitations as well as definitions of key terms like fraud, preventive controls, and corrective controls.

    Original Description:

    CHAPTER-3 AIS

    Original Title

    CHAPTER-3 AIS

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    This document discusses ethics, fraud, and internal controls. It covers key topics such as the components of internal control including control environment, risk assessment, control activities, information and communication, and monitoring. It also discusses types of fraud such as corruption, bribery, economic coercion, and fraudulent statements. Additionally, it examines internal control objectives and limitations as well as definitions of key terms like fraud, preventive controls, and corrective controls.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    84 views3 pages

    Chapter 3-Ethics, Fraud, and Internal Control

    Uploaded by

    sammie helson
    This document discusses ethics, fraud, and internal controls. It covers key topics such as the components of internal control including control environment, risk assessment, control activities, information and communication, and monitoring. It also discusses types of fraud such as corruption, bribery, economic coercion, and fraudulent statements. Additionally, it examines internal control objectives and limitations as well as definitions of key terms like fraud, preventive controls, and corrective controls.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 3

    CHAPTER 3- ETHICS, FRAUD, and INTERNAL CONTROL

    1. This pertains to the entity-wide computer d. Accounting Records


    environment and make sure an organization's
    control environment is stable and well
    managed. 5. These are independent checks of the
    accounting system to identify errors and
    a. Physical control
    misrepresentations.
    b. IT control
    a. Supervision
    c. General control**
    b. Accounting Records
    d. Application control
    c. Access Control

    d. Independent Verification**
    2. It prevents, detects, and corrects transaction
    errors and fraud in application programs.
    6. It is the foundation for the other four control
    a. Physical control
    components. It sets the tone for the
    b. IT control organization and influences the control and
    awareness of it's management.
    c. General control
    A. Control environment
    d. Application control**
    B. Risk assessment

    C. Monitoring
    3. The work of one cannot be done by others. If
    so, then there would be a possible conflict of D. Information and communication
    interest that may lead to a fraud.

    a. Transaction Authorization
    7. It is the process by which the quality of the
    b. Segregation of Duties** internal control design and operation can be
    assessed.
    c. Supervision
    A. Information and communication
    d. Accounting Records
    B. Control activities

    C. Monitoring
    4. This is used to ensure that employees are
    carrying out only authorized transactions and D. Risk assessment
    that all material transactions processed by the
    information system are valid and in accordance
    with management’s objectives. 8. What does SAS stands for
    a. Transaction Authorization** A. Statement on Auditing Standards
    b. Segregation of Duties B. Statement on Accounting Standards
    c. Supervision C. Statement on Auditing System
    CHAPTER 3- ETHICS, FRAUD, and INTERNAL CONTROL

    D. Statement on Accounting System d. Illegal gratuities

    9. Denotes a false representation of a material 13. It is designed to reduce the frequency of


    fact made by one party to another party with occurrence of undesirable events.
    the intent to decieve the other party to
    a. Corrective Control
    justifiably rely on the fact.
    b. Preventive Control ***
    a. False Representation
    c. Detective Control
    b. Fraud
    d. All of the Above.
    c. Employee Fraud

    d. Management Fraud
    14. The following are the undesirable events in
    internal control system, except
    10. Involves an executive, manager or employee
    a. Attempts at unauthorized access to the firm's
    of the organization in collusion with an
    asset
    outsider, 10% of occupational fraud cases
    b. Errors due to employees incompetence,
    a. Corruption
    faulty computer programs and corrupted input
    b. Illegal gratuities data

    c. Bribery c. Fraud perpetrated by persons both inside and


    outside the firm,
    d. Fraudulent Statements
    d. Circumvention ***

    11. Usually does not involve the direct theft of


    assets and usually done by top management 15. A weakness in internal control may expose
    where internal controls can't detect the firm to one or more of the following risks.
    Except,
    a. Economic extortion
    a. Destruction of assets
    b. Employee Fraud
    b. Theft of assets
    c. Fraud Triangle
    c. Corruption in the management ***
    d. Management Fraud
    d. Disruption of the information system.

    12.Is the use of force by an individual or


    organization to obtain something value

    a. Conflict of interest

    b. Bribery

    c. Economic extortion
    CHAPTER 3- ETHICS, FRAUD, and INTERNAL CONTROL

    16. What are the limitations of internal control? 19. The following are the Legal definition of
    fraud, except
    a. Possibility of Errors, Circumvention,
    Management override, Changing conditions a. False representation

    b. Possibility of Errors, Fraud, Circumvention, b. immaterial fact


    Management override, Changing conditions
    c. Intent to deceive
    c. Possibility of Errors, Fraud, Destruction,
    d. Justifiable reliance
    Management override, Changing conditions

    d. Possibility of Errors, Fraud, Destruction,


    Circumvention, Management override, . 20. It is the control that actually fixes the
    Changing conditions problem

    a. Corrective Control
    17. Inherent in the internal control objectives b. Preventive Control
    are modifying assumptions that guide designers
    and auditors’ internal control, except c. Detective Control

    a. Management Responsibility d. All of the Above.

    b. Reasonable Assurance

    c. Methods of Data Processing

    d. safeguards the assets of the firm

    18. This concept holds the establishment and


    maintenance of a system of internal control.

    a. Management Responsibility

    b. Reasonable Assurance

    c. Methods of Data Processing

    d. Management Control

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