Fraud Prevention & Deterrence Flashcards

According to ACFE research, what percentage of occupational fraud cases are detected through tips?

Answer: About 43%

ACFE's Report to the Nations consistently shows that tips are the most common detection method, accounting for roughly 43% of cases.

Which element is considered the most cost-effective fraud deterrent in an organization?

Answer: Strong internal controls

Strong internal controls are considered the most cost-effective deterrent because they proactively prevent fraud rather than detect it after the fact.

What is the primary purpose of a fraud risk assessment?

Answer: To identify and prioritize fraud vulnerabilities

A fraud risk assessment identifies where an organization is vulnerable to fraud so resources can be prioritized to address the highest-risk areas.

The 'fraud triangle' concept was developed primarily by which researcher?

Answer: Donald Cressey

Donald Cressey developed the fraud triangle model based on his research into embezzlers, identifying pressure, opportunity, and rationalization as the three elements.

Which component of an ethics program is MOST critical for setting the right organizational culture?

Answer: Tone at the top from leadership

Tone at the top—the ethical example set by senior management—is widely considered the most critical factor in establishing an anti-fraud culture.

A company implements mandatory job rotation for employees handling cash. This control primarily addresses which fraud triangle element?

Answer: Opportunity

Job rotation reduces the opportunity for fraud by preventing any single employee from maintaining exclusive, continuous control over assets or processes.

Which type of background check is MOST relevant when hiring for a position with access to financial assets?

Answer: Credit history check

A credit history check is especially relevant for financial positions because financial stress is a key fraud pressure, and past financial irresponsibility may signal risk.