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CHAPTER 5 COMPUTER FRAUD AND SECURITY SUGGESTED ANSWERS TO THE PROBLEMS 5.1 Adapted from the CIA Examination a. This is an indication of fraud because there is a conflict of interest situation which should have alerted the auditor to the possibility of fraud. It is a red flag warning signal and may be in conflict with the organization's code of ethics and conduct. b. This is a fraudulent act because there is a knowingly false representation. c. This is a fraudulent act by the supervisor of receiving because there is an intent to deceive as indicated by the efforts to conceal the act. Alternately, this is unrelated to the investigation because while the chain is damaged by the theft, it is not due to an act by the buyers. d. This is a weakness in the system of internal control, and is unrelated to the investigation. e. This is an indicator of fraud because the receiving supervisor is advocating a system of weak internal control. 5.2 Adapted from the CIA Examination. a. Fraud encompasses an array of irregularities and illegal acts characterized by intentional deception. It can be perpetrated for the benefit of or to the detriment of the organization and by persons outside as well as inside the organization. Fraud deterrence consists of those actions taken to discourage the perpetration of fraud. Fraud detection consists of identifying indicators of fraud sufficient to warrant recommending an investigation. Fraud investigation consists of performing the extended procedures needed to determine
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This note was uploaded on 10/02/2010 for the course ACCT 5457 taught by Professor Polm during the Fall '10 term at Rensselaer Polytechnic Institute.

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