QUESTION: 5

Which segregation of duties would best reduce the risk of payroll fraud?

Human resources personnel add employees, and payroll personnel process hours and enter employee bank account numbers. Paychecks are automatically deposited in the employee's bank account.
Human resources personnel add employees, payroll personnel process hours, and human resources personnel deliver paychecks to employees.
Human resources personnel add employees, review and submit payroll hours to the payroll department for processing, and deliver paychecks to employees.
Human resources personnel add employees and enter employee bank information. Payroll personnel process hours, and paychecks are automatically deposited in the employee's bank account.

Answer(s): A

An organization is beginning to implement an enterprise risk management program. One of the first steps is to develop a common risk language.
Which of the following statements about a common risk language is true?

Management will be able to reduce inherent risk because they will have a better understanding of risk.
Internal auditors will be able to reduce their sample sizes because controls will be more consistent.
Stakeholders will have more assurance that the risks are assessed consistently.
Decision makers will understand that the likelihood of missing or ineffective controls will be reduced.

Answer(s): C

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QUESTION: 7

An organization invests its savings in a volatile stock with the potential for high gains rather than a mutual fund with a lower expected return and lower volatility. This best describes which of the following risk concepts?

Risk identification.
Risk appetite.
Risk capacity.
Risk tolerance.

Answer(s): D

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QUESTION: 8

Which of the following best describes the misdirection of payments on accounts receivable to an employee's bank account?

Fraud open on the books.
Fraud hidden on the books.
Fraud off the books.
Fraud on the balance sheet.

Answer(s): C

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