FRM Part II · FRM Exam Part II · Case Study: Financial Crime and Fraud
A bank reviews a fraud in which an employee took leave only rarely and no one else ever handled his accounts. Which preventive control would be most effective against this specific pattern of concealment?
Mandatory consecutive-day leave combined with job rotation is most effective. Many frauds need the perpetrator's continuous involvement to keep concealing entries, so having another person take over the accounts is likely to expose irregularities quickly.
- AMandatory consecutive-day leave with job rotation so another person takes over the accountsCorrect
- BRaising the employee's performance bonus to reduce incentive to commit fraud
- CReplacing quarterly reviews with an annual review
- DAllowing the employee to self-certify reconciliations
Explanation
Fraud that depends on continuous personal manipulation is often exposed when someone else takes over the activity. Mandatory leave and rotation break concealment. Higher bonuses may increase pressure, less frequent reviews and self-certification weaken oversight.
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