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Management vs. Employee Fraud Risks

Management fraud poses a greater risk of not being discovered than employee fraud because managers have greater ability to override controls and conceal fraud. If top management is involved in fraud, it is unlikely that the fraud would be uncovered in a financial statement audit. Errors refer to unintentional misrepresentations and examples include suppressing or omitting the effects of transactions from records.

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1K views2 pages

Management vs. Employee Fraud Risks

Management fraud poses a greater risk of not being discovered than employee fraud because managers have greater ability to override controls and conceal fraud. If top management is involved in fraud, it is unlikely that the fraud would be uncovered in a financial statement audit. Errors refer to unintentional misrepresentations and examples include suppressing or omitting the effects of transactions from records.

Uploaded by

accounts 3 life
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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be fraud, the

22. In comparing management fraud with employee fraud. auditor's risk of failing to discover the
fraud is
Greater for management fraud because managers inherently smarter than employees Greater
for management fraud because of managemen ability to override existing internal controls
Greater for employee fraud because of the higher crim
rate among blue collar workers d. Greater for employee fraud because of the larger number
of employees in the organization,
b.

23. If there is fraud involving top management, the probability


that the fraud would be uncovered in a financial statement
audit is
b.
c. d.
Zero Unlikely Likely Very high
24. The term "error” refers to unintentional misrepresentation of financial information.
Examples of errors are when
I. Assets have been misappropriated II. Transactions without substance have
been recorded III. Records and documents have been manipulated and
falsified IV. The effects of the transactions have been omitted
from the records
a. b.
all of the above statements are true only statements I and III are true all of the above
statements are false only statements II and IV are true
d.
b.
Suppe
25. Which of the following is an example of an error? a. Defalcation
Suppression or omission of the effects of transactions from the records or
documents. Recording of transactions without substance. Misapplication of
accounting policies.
90

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