Acca paper F1 fia diploma in Accounting and Business Accountant in Business (AB/fab) exam kit

S EC T I O N 3
K APLA N PUBLISH ING
149 
FRAUD, FRAUDULENT BEHAVIOUR AND THEIR PREVENTION IN 
BUSINESS 
210 A 
The third prerequisite is dishonesty. An honest employee is unlikely to commit fraud even if 
given the opportunity and motive. 
211 B 
The fraudster hopes that no one will notice or bother to investigate the small differences 
individually, although in aggregate they can total a worthwhile sum. 
212 D 
This fraud is covered up by mis-posting future receipts to the accounts which earlier had 
not been credited. 
This fraud is often uncovered when the perpetrator takes a holiday and is unable to make 
the necessary mis-postings to cover his tracks. 
213 B 
These transactions are often reversed out after the year-end. 
Typically, sales made just before the year-end are the subject of inflated invoices which are 
corrected by the issue of credit notes in the New Year. 
214 D 
An example is a two-year lease of a building. Under current accounting practices you do not 
have to show the asset or the related obligation to pay the rental amounts on the balance 
sheet. However, you have the use of the asset and a contractual obligation to pay the 
rentals.
215 D 
In practice many organisations find that fraud is impossible eradicate. With regards to 
error, as it is unintentional, it will be hard to prevent such mistakes from taking place.
In addition, there is an implied duty within an employment contract so as to encourage 
staff to be honest and report any actual or suspected fraud. 
216 C 
The auditors’ primary concern is to establish whether the accounts give a true and fair view. 
Only if the incident of fraud was material in value, and it is not properly reflected in the 
financial statement, would the auditors need to qualify the financial statement. 
217 C 
People living beyond their means are often driven to make up the shortfall of money 
necessary to support such a luxury lifestyle by committing fraud. 
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