Professional Documents
Culture Documents
What are the main points of theory of differential association? Edwin Sutherland
1. Criminal behavior is learned
2. Acquired through communication and personal groups
3. Learning differs from pure invitation
4. Criminal behavior is an expression of general needs and values
5. Motives and drives are learned from definitions of legal codes as being favorable or
unfavorable
A persons chances of violating the law are increased when a person fails to become
attached to the variety of control agencies of the society
Under social control theory, what are people likely to ask themselves when possibly
violating the law?
Under social control theory, what deters people from committing criminal acts?
People whose opinion or important to them will be disappointed or shamed. They feel
deeply about what these people think
What are some aspects of trials of punishment for white collar defendants?
1. White collar defendants are more likely to insist on a trial
2. The higher the social status, the more likely to be imprisoned
3. Offenders want fined rather than prison
4. The higher the status of the higher the penalty
What factors are contributing to the rise of white-collar crime?
1. Rising personal debt due to the economy
2. New technology gives rise to opportunity
3. A culture that promises that no one has to settle for second-best
What does Edward Gross state about the nature of organizations and crime?
All organizations are inherently prone to crime because the reliance on the bottom line.
They're not necessarily criminal.
What are the two main theories about how to prevent and reduce fraud?
Compliance and Deterrence
What elements of the fraud triangle need to be present for a violation to occur?
All three
What does Dr. Steve Albercht's finding state are the most highly ranked factors from the list of
personal characteristics that contribute to fraud?
1. Living beyond their means
2. An overwhelming desire for personal gain
3. High personal debt
4. Close association with customers
5. Feeling pay was not enough
What does Dr. Steve Albercht's Find means they are the most highly ranked factors from the list
of Organizational environment?
1. Placing too much trust in key employees
2. Lack of proper procedures for authorization of transactions
3. Inadequate disclosures of personal investments and incomes
4. Not separating authorization of transactions from the custody of related us assets
5. Lack of independent checks on performance
What were the 2016 report to the nations on occupational fraud and abuse's findings?
1. Cost of occupational fraud
2. How occupational fraud is committed
3. Detection of fraud schemes
What does the 2016 report say about the detection of fraud schemes?
Tips are the most common detection method for occupational fraud
What percentage of fraudsters have been convicted of fraud related offenses prior to committing
the crime's?**
5.2%
What is the biggest behavioral red flag for white collar crime?
Living beyond financial means
How does the organization for economic cooperation and development (OECD) define corporate
governance?
Procedures and processes on how organization is directed and controlled. The structure specifies
the distribution rights and responsibilities among the different participants in the organization.
What did sir Adrian Cadberry say was the purpose of corporate government?
To encourage the officiant use of resources and to acquire accountability for the stewardship of
those resources. To align the interest of individuals, corporations, and society
What is the hallmark source of guidance for corporate governance practices for organizations
throughout the world?**
OECD Principles of Corporate Governance
What do the OECD principles of corporate governance state about an entity's corporate
governance framework?
1. They should ensure the equitable treatment of all shareholders, including minority and foreign
shareholders
2. Encourage active corporation to create wealth, jobs, and to sustainability of enterprises
3. Ensure timely disclosure regarding the corporation's performance, ownership and governance
What do you do OECD principles of corporate governance state?
There's no single model of good corporate governance. They should be determined based on the
needs of each organization
What most directors and management consider when developing a corporate governance
framework for an organization?
The legal, regulatory, institutional, and ethical environments in which the company operates.
And be fluid to changes
What were the requirements for audit committee is that the Sarbanes-Oxley act established?
1. They are responsible for fraud prevention - , outside audit and internal reporting
2. They hire, oversee, and fire external auditors. Approve audit engagement terms.
3. They resolve disputes between management and external auditors
4. They establish procedures such as hotlines for complaints
5. Pre-approve our audit in non-audit services provided by the external auditors
What must NYSE and NASDAQ companies Board of Directors audit committee consisting of
the what are they do?
They have a minimum of three members, whom are all independent directors and are financially
literate. They're charged with oversight of external audit functions
What was the purpose of the Treadway commission?
What recommendations do the Treadway commission make it to reduce the probability of fraud
and financial reports?
1. Board of Directors should have mandatory independent audit committee is made up of outside
directors
2. There must be a written charter stating the audit committee duties and responsibilities
3. Audit committee's should have adequate resources to do their job
Who ultimately has the responsibility for the prevention and detection of fraud within an
organization?
Management
Can corporations be held Liable for criminal acts committed as a master of organizational
policies?
Yes
Can a corporation avoid liability by claiming that it did not know what was going on?
No, because they are deemed to have knowledge of all facts known by its officers and employees
Can companies be held responsible even if management had no knowledge or participation of
criminal events and there were policies prohibiting it?
Yes
Can companies be held responsible even if they were policies prohibiting the activity of the
employee?
Yes
Who is responsible for ensuring that internal controls are in place to prevent and detect fraud?
Management even if they do not execute all of the controls
Who does the internal control integrated frame work apply to?
Both public and private entities regardless of size
According to the internal control integrated framework how is internal control defined?
A process, affected by entities BOD, management, personnel, designed to provide reasonable
assurance regarding the achievement of objectives related to operations, reporting and
compliance
What is monitoring?
Assess the effectiveness of a control system over time.
Who must personally certify their company's annual and quarterly SEC filings?
The CEO and CFO of publicly traded companies
What are the two categories officer certifications that are required?
1. Criminal certifications
2. Civil certifications
What 6 items must the CFO and CEO certify in every Annual and quarterly report?
1. They personally reviewed the report
2. There are responsible for the design, maintenance, and valuation of the company's internal
controls
3. It doesn't contain any material misstatement
4. It's presented fairly in all material respects
5. Any material weaknesses have been disclosed
6. No significant changes in internal controls
Who must assess the operating effectiveness of internal controls over financial reporting?
Management
What most public US companies disclose in their annual report about ethics?
Whether they have adopted a code of ethics for senior financial officers. If they have not, they
must explain their reasoning
What two provisions did the sSarbanes Oxley act create to protect whistleblowers?
1. Civil liability
2. Criminal liability
What does the Sarbanes Oxley act say about civil liability for corporate whistleblowers?
Employers are civilly liable for acting out against an employee who assisted in an investigation
of fraudulent activity OR Or about an allegation of violations of securities laws and regulations
The Sarbanes-Oxley act says criminal sanctions will be in force if what happens?
Anyone intentionally retaliates against another party for providing information regarding a
federal offense to a law Enforcement officer
What is the purpose of PCAOB AU section 240 - Consideration of fraud in the financial
statement audit?
The auditor has responsibility to plan and perform audit to get reasonable assurance for financial
statements as a whole and weather due to fraud and error. To establish standards and provide
guidance to auditors in fulfilling
their fraud responsibilities
Does the auditor make legal determination of whether fraud actually occurred?
No
What considerations of external and internal factors affecting the entity that should be
considered?
1. Create incentives or pressure to commit fraud
2. Provide opportunities for fraud to be committed
3. Indicate a culture or environment that rationalizes committing fraud
At what level should you identify risks of material miss statement due to fraud?
At the financial statement level and the assertion level for classes of transactions, account
balances, and disclosures
What can be done to assess risk of material misstatement due to fraud at the financial statement
level?
1. Incorporate an element of unpredictability in audit procedures
2. Assignment and supervision of personal
3. Evaluate the entities selection and application of accounting policies
What is the purpose of PCAOB AS 2200 - An audit of internal control over financial reporting
that is integrated with an audit of financial statements?
To improve the efficiency and effectiveness of internal control audits, while reducing
unnecessary costs, especially in small public companies
What must IIA IPPF practice guide on internal auditing and fraud say the internal auditors
should do?
1. Consider fraud risks in the assessment of internal control design and determination of audit
steps to perform
2. Have knowledge of fraud risks
3. Be alert to opportunities that could allow fraud such as control deficiencies
4. Evaluate management oversight of fraud risk management programs, timeliness to correct
control deficiencies, and monitor the programs ongoing success