Multiple Choice
According to the principles of internal control and the fraud triangle, under which circumstance should inspections not take place?
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6. Internal Controls and Reporting Cash
Fraud and the Fraud Triangle
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Business managers need a set of ethical guidelines to help them:
A
increase the likelihood of financial misstatements
B
maximize profits at any cost
C
avoid following internal controls
D
make decisions that reduce the risk of fraud within the organization
Verified step by step guidance1
Understand the role of ethical guidelines in financial accounting: Ethical guidelines are designed to ensure transparency, integrity, and accountability in financial reporting and decision-making processes.
Recognize the importance of reducing fraud risk: Ethical guidelines help managers make decisions that minimize the risk of fraudulent activities, which can harm the organization’s reputation and financial stability.
Identify the connection between internal controls and ethical behavior: Internal controls are mechanisms put in place to safeguard assets, ensure accurate financial reporting, and prevent fraud. Ethical guidelines reinforce adherence to these controls.
Evaluate the impact of ethical decision-making on organizational success: Ethical behavior fosters trust among stakeholders, including investors, employees, and customers, which is essential for long-term profitability and sustainability.
Apply ethical guidelines in practical scenarios: Managers should use these guidelines to assess risks, implement preventive measures, and make decisions that align with the organization’s values and legal requirements.
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