Which of the Following Combinations of Conditions Is Most Likely

question 265

Multiple Choice

Which of the following combinations of conditions is most likely a red flag for fraud?

• A) The practice of surprise audits and the implementation of an employee support program.
• B) Hiring an employee with a prior fraud conviction and yearly management review.
• C) Occasional accounting department overrides and discontinuation of the anonymous fraud hotline due to infrequent use.
• D) A veteran employee in upper management experiencing financial difficulties and recently implemented enhanced controls.

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Definitions:

Over the Counter

Describes securities trading through a dealer network rather than on a centralized exchange, often for stocks that do not meet the requirements to be listed on major exchanges.

1934 Act

Refers to the Securities Exchange Act of 1934, which governs the trading of securities in the U.S., including the establishment of the SEC.

Registration Under

The process of officially recording or enlisting something or someone under certain conditions or regulations, often related to securities laws.

1933 Act

A U.S. federal law, officially known as the Securities Act of 1933, enacted to ensure more transparency in financial statements to protect investors from fraud.