Fraud Prevention and Detection: Best Practices for Management and the Board of Directors

The video tutorial discusses the importance of fraud prevention and detection, emphasizing management's role in setting an ethical tone and creating a positive workplace. It highlights the significance of employee training, whistleblower hotlines, and fraud risk management principles. The role of audit committees in overseeing fraud risk and the limitations of external auditors in detecting fraud are also covered.

What is the primary responsibility of management in preventing fraud?

• Increasing sales targets

• Hiring external auditors

• Setting financial goals

• Establishing an ethical tone

How can a positive workplace environment help in fraud prevention?

• By increasing employee salaries

• By reducing employee rationalization for fraud

• By implementing stricter dress codes

• By providing more vacation days

What is the most effective way to detect fraud according to the lesson?

• Through external audits

• By monitoring employee internet usage

• By increasing security cameras

• Via tips received from employees

Which of the following is NOT one of the five principles of fraud risk management?

• Increasing product prices

• Clarifying expectations in a written policy

• Assessing risk exposure

• Implementing control activities

What role does the audit committee play in fraud prevention?

• They manage the company's marketing strategies

• They oversee management's fraud risk assessment

• They handle employee payroll

• They set the company's sales targets

Why are external audits not very effective in detecting fraud?

• They focus on financial accuracy

• They are conducted too frequently

• They are not designed to detect concealed transactions

• They are too expensive

What is a key function of internal audits in fraud detection?

• To evaluate the efficiency of fraud controls

• To develop new products

• To increase company profits

• To manage employee benefits