Which of the following is one of the four recommendations made by the National Commission on Fraudulent Financial Reporting (the Treadway Commission) to reduce the probability of fraud in financial reports?

• A. Develop a written charter for the audit committee.
• B. Provide adequate resources and authority to the internal audit function.
• C. Assign oversight of the hotline reporting program to company shareholders.
• D. Have a mandatory independent finance committee.

Which of the following is NOT an effective way to help prevent fraud through the organization ' s performance measurement and management programs?

• A. Including ethics-based metrics as a component of performance evaluations
• B. Providing regular training to ensure that all employees are sufficiently prepared to perform their tasks
• C. Establishing loosely defined job descriptions that allow employees flexibility in their roles
• D. Tying employee compensation to reasonable organizational performance goals

According to the authors of Crimes of the Middle Classes, all of the following factors have contributed to the rising problem of economic crime EXCEPT:

• A. The economy ' s increased reliance on credit
• B. The increased opportunity for wrongdoing as a result of advancing information technologies
• C. The increased constraints of the regulatory environment for businesses
• D. The continued pressures of a culture that rewards affluence and success

The Committee of Sponsoring Organizations of the Treadway Commission (COSO) defines internal control as:

• A. A process, effected by an entity's board of directors, management, and other personnel, designed to provide reasonable assurance regarding the achievement of objectives relating to operations, reporting, and compliance.
• B. A process aimed at proactively identifying, evaluating, and addressing an organization's vulnerabilities to fraud by both internal and external sources.
• C. A process involving personnel at all levels of the organization that aims to eliminate all uncertainty and risk while also ensuring the effectiveness of the organization's strategy.
• D. A process implemented to review how well the organization's risk management capabilities have increased value over time and how they will continue to drive value for the organization.

(Sill, Inc. is a specialty retailer of customized window frames. The company receives a very large order from A & P Company, a new customer from another country that is known to have high corruption risks. Which of the following is MOST ACCURATE regarding the due diligence procedures that Sill should perform on A & P before proceeding with this transaction?)

• A. Sill needs to undertake due diligence procedures only if A & P requests to pay on credit.
• B. Sill should perform the same level of due diligence as it would for any other customer to avoid claims of discrimination.
• C. Sill should consider A & P's expected purchasing pattern and method of payment in determining whether to accept the transaction.
• D. Sill does not need to undertake any specific due diligence procedures for this transaction.