QUESTION: 37

Which of the following statements is FALSE regarding an organization's fraud risk management program?

The program must include mechanisms to address breaches in compliance.
The punishment for intentional noncompliance should be carried out in a consistent and firm manner.
Formal sanctions for intentional noncompliance should be determined and enacted privately
A specific individual or team should be designated as responsible for monitoring compliance with the program

Answer(s): C

During an external audit, the audit team identifies evidence that management has intentionally omitted some expenses from the company's financial statements in order to conceal an asset misappropriation scheme. However, the amount of the resulting misstatement does not meet the quantitative materiality threshold for the audit.
Which of the following is TRUE regarding this situation?

The auditors should assume that all audit evidence collected previously is unreliable and withdraw from the audit engagement
The auditors should assess the need to adjust the nature, timing, and extent of remaining audit procedures based on this evidence.
The auditors can ignore the misstatement because the omitted amount is less than the quantitative materiality threshold and therefore immaterial to the audit.
The auditors do not need to be concerned with this evidence, as asset misappropriation schemes are not considered relevant or material for external audit purposes.

Answer(s): C

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QUESTION: 39

Which of the following is TRUE regarding prosecutions of white-collar criminals?

Only a small percentage of perpetrators are punished when an organization deals with a fraud case internally.
Most fraud cases are only handled internally and are not referred to law enforcement for prosecution
The primary reason organizations decline to prosecute fraud cases is a belief that their internal discipline methods are sufficient
When fraud cases are handled internally, an employee is more likely to be suspended or put on probation than to be terminated for their crime.

Answer(s): A

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QUESTION: 40

Based on research regarding the criminogenic nature of organizations, employees with strong personal values and ethics will always disobey a superior's direct order to engage in fraudulent behavior, despite an inherent desire to obey authority figures.

True
Flase

Answer(s): B

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QUESTION: 40