Ethics, Fraud, and Internal Control Quiz

Which of the following best describes the Grandfather-Father-Son (GFS) backup system?

• A method that only keeps the most recent backup file.  

• A structured approach that stores multiple historical copies of data.  

• A real-time backup system that updates every second.

• A system that does not rotate or overwrite backups. 

What is a key difference between real-time backup systems and batch backup systems?

• Real-time backups occur less frequently than batch backups.  

• Batch systems process transactions instantly, while real-time backups are delayed.  

• Real-time backups happen frequently and ensure immediate transaction backup.  

• Real-time systems do not require backups since they process transactions immediately.  

ETHICS are the principles of conduct that individuals use in making choices that guide their behavior in situations involving the concepts of right and wrong.

• True

• False

FRAUD is the false representation of a material fact made by one party to another party, with the intent to deceive and induce the other party to justifiably rely on the material fact to his or her detriment

• True

• False

What makes the actual cost of fraud difficult to quantify?

• Not all fraud is detected

• Some fraud cases go unreported

• Incomplete or mismanaged information

• All of the above

How does collusion between employees affect fraud risks?

• It makes fraud easier to detect

• It reduces the likelihood of fraud

• It allows perpetrators to bypass internal controls

• It only happens in large organizations

Once data passes the input stage, ________ ensure the application’s logic functions correctly.

• Batch Controls

• Run-to-Run Controls

• Hash Total Control

• Processing Control

 Controls focused on human activities in accounting systems

• IT Controls

• Physical Controls

• Access Control

• Input Controls:

Under the Preventive-Detective-Corrective Internal Control Model, which of the following scenarios best illustrates a detective control?

• A company requires dual approval for all wire transfers to prevent unauthorized transactions.

• An internal audit team regularly reviews financial statements to identify unusual variances.

• A supervisor rejects an employee’s fraudulent reimbursement request before it is processed. A supervisor rejects an employee’s fraudulent reimbursement request before it is processed.

• A company installs biometric authentication to restrict access to its accounting system.

According to the Sarbanes-Oxley Act (SOX), what is the primary role of external auditors in evaluating internal controls?

• To design and implement internal control measures within the company.

• To certify that all financial transactions are free from fraud.

• To independently assess and validate management’s evaluation of internal controls.

• To override management’s conclusions on internal control effectiveness.