Explain how a company could be the victim of fraud, even if ideal segregation of duties is enforced
What will be an ideal response?
Answer: When a system effectively incorporates a separation of duties, it should be difficult for any one employee to defeat the system and commit fraud. Fraud is possible when two or more employees agree to defeat the system for their own dishonest ends. This problem is known as collusion. When two or more employees act together to defeat the internal controls of the system, they may likely succeed. It is more difficult to detect such activity because the employees may have planned to "cover their tracks." This is why independent review of transaction activity by third parties is important to monitor that internal controls are in place and working as designed.
You might also like to view...
The two stages an organization should go through when deciding on monetary pricing are
a. determining demand functions and conducting a break-even analysis b. determining the demand and then the response functions c. determining the pricing objective and then the pricing strategy d. determining the perceived cost and then the monetary cost e. determining the benefit bundle and then the cost bundle
What are the four main areas of finance? Give a brief definition of each
What will be an ideal response?