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3) Research indicates that the most effective way to prevent and deter fraud is to:A) implement programs and controls that are based on core values embraced by the company.B) hire highly ethical employees.C) communicate expectations to all employees on an annual basis.D) terminate employees who are suspected of committing fraud.Answer: ATerms: Most effective way to prevent and deter fraudDiff: ModerateObjective: LO 11-4AACSB: Reflective thinking skills4) Fraud awareness training should be:A) broad and all-encompassing.B) extensive and include details for all functional areas.C) specifically related to the employee's job responsibility.D) focused on employees understanding the importance of ethics.Answer: CTerms: Fraud awareness trainingDiff: ModerateObjective: LO 11-4AACSB: Reflective thinking skills16
5) Which party has the primary responsibility to oversee an organization's financial reporting andinternal control process?6) Management is responsible for:Taking steps to mitigate identifiedrisksYesYesTaking steps to mitigate identifiedrisksNoNoTaking steps to mitigate identifiedrisksYesNo17
7) The "tone at the top" provides a foundation upon which a more detailed code of conduct can be developed to provide specific guidance for the organization and its employees. Components of a code of conduct may include sections on 1) general employee conduct, 2) relationships with clients and suppliers and 3) conflicts of interest. Give a narrative description of what might be included in each of the above components of a code of conduct.Answer: (may vary)Employee conduct–Employees should conduct themselves in a professional manner and prohibit unprofessional behaviorRelationships with client and suppliers: Employees should avoid investing in or acquiring a financial interest in any business organization that has a contractual relationship with the organizationsConflicts of Interest– Employees are expected to perform their duties conscientiously, honestly, and in accordance with the best interests of the organization and to not use their positions or knowledge gained for private or personal advantageTerms: Elements for Code of ConductDiff: ChallengingObjective: LO 11-4AACSB: Reflective thinking skillsTopic: Public8) Senior management is responsible for promoting a culture of honesty and ethics. Describe what that implies for the organization.