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287 
PER performance objective PO4 requires you to contribute to the effective governance of an 
organisation and raise awareness of risk. The material covered in this chapter will help you achieve 
this. 
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PART C: ACCOUNTING AND REPORTING SYSTEMS, CONTROLS AND COMPLIANCE 
 
288
 

 
The practical aspects of fraud (where it might actually occur, how it can be detected) are the most likely 
topics to be examined. 

 
Common frauds
include payroll frauds, conspiracy with other parties and stealing assets. More subtle 
measures including teeming and lading and manipulation of bank reconciliations and cashbooks to 
conceal theft. 

 
There are three broad 
prerequisites 
or 'preconditions' that must exist in order to make fraud a possibility: 
dishonesty, motivation and opportunity. 

 
Signs of high fraud risk include indications of 
lack of integrity
, 
excessive pressures
, 
poor control 
systems
, 
unusual transactions
and 
lack of audit evidence
. 

 
A number of factors tend to crop up frequently as 
indicators
of potential fraud situations; these can be 
categorised under business and personnel risks. 

 
In order to prevent fraud, managers must be aware of the 
risks 
and 
signs 
of fraud. 

 
Prevention policies include emphasis on 
ethics 
and 
personnel and training procedures
. Controls within 
particular business areas, such as