Louwers_3e_ch_6_sol_mc - SOLUTIONS FOR MULTIPLE-CHOICE...

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SOLUTIONS FOR MULTIPLE-CHOICE QUESTIONS 6.24 a. Correct Risk is high when the company always estimates the inventory but never take a complete physical count. b. Incorrect Risk is low when the petty cash box is always locked in the desk of the custodian. c. Incorrect Risk is lower when management has published a company code of ethics and sends frequent communication newsletters about it. d. Incorrect Risk is lower when the board of directors reviews and approves all investment transactions. 6.25 a. Incorrect Airtight control systems of checks and supervision is not the best long-run way to stop fraud. b. Incorrect Name an “ethics officer” who is responsible for receiving and acting upon fraud tips is not the best long-run way to stop fraud. c. Incorrect Place dedicated “hotline” telephones on walls around the workplace with direct communication to the company ethics officer is not the best long-run way to stop fraud. d. Correct Practice management “of the people and for the people” to help them share personal and professional problems is the best long-run way to stop fraud.
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6.26 a. Correct Many frauds are motivated by employees who have problems due to debt, addictions, or family problems. Establishing an employee assistance program addresses these issues and may reduce the motivation to commit fraud for some employees. b. Incorrect A fidelity bond reduces the risk to the employer for theft since this is a form of insurance. It also provides a background check on employees. Neither of these issues addresses employee motivation. c. Incorrect Reconciliations are methods of detecting problems that have occurred. While these are good controls and may reduce the opportunities for employees to steal, reconciliations to not address employee motivation to commit fraud. d. Incorrect Audits may detect fraud and even provide a deterrence for fraud. Audits do not address the employees motivation to commit fraud. 6.27 a. Incorrect An appointment of a chief ethics officer would increase the effectiveness of the code of ethics. b. Incorrect A hot line that allowed employees to report ethical violations would increase the effectiveness of the code of ethics. . c.
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Louwers_3e_ch_6_sol_mc - SOLUTIONS FOR MULTIPLE-CHOICE...

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