ACCA Applied Knowledge · Business and Technology · Internal controls
Which of the following is a fraud prevention measure, as opposed to a fraud detection measure?
Requiring two authorised signatories for large payments is a preventive measure. It stops one person from misappropriating funds alone by building authorisation into the process beforehand. Surprise counts, exception reports and analytical review are detective controls because they identify problems after transactions have occurred.
- ASurprise cash counts carried out by internal audit
- BException reports highlighting unusual journal entries
- CRequiring two authorised signatories for payments above a set limitCorrect
- DAnalytical review of monthly expenses against budget
Explanation
Prevention controls stop fraud before it occurs by making it harder to commit. Dual authorisation of payments removes a single person's ability to misappropriate funds. The other options look for fraud after it may already have happened, so they are detective controls.
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