Multiple Choice Questions
1. Which of the following methods would be most practical and effective in preventing employee abuse of company credit cards?
a. Placing monthly limits on credit card purchase.
b. Requiring supervisor review and approval.
c. Periodically applying data mining techniques to employee receipts.
d. Requiring an internal audit review of all credit card receipts.
This would normally be too costly.

2. Which of the following prohibits employees from hiring friends or relatives who do not have proper training, hiring them at a pay rate that is too high, or even hiring phantom employees?
a. Requiring all hires to be approved by management.
This would not prevent employees from being paid too highly.
b. Requiring background checks.
c. Both a and b
d. Neither a nor b.

3. Except for payroll-related problems, the biggest fraud-related problem in the production cycle involves which of the following?
a. Fraudulent production orders.
b. Theft of raw materials and finished goods.
c. Diverted production orders.
d. None of the above.

4. In cases of fraud, which is the most important factor relevant to the prevention, detection, and identification of the guilty?
a. Chain of custody.
b. Authorization and approval.
c. Audit trail.
d. Internal audit.

5. When are assets most vulnerable to fraud?
a. Before they are entered into the accounting system.
b. Before they are put into the inventory system.
c. During disposal.
d. During changes of custody.