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

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2
 
HJY Co is a large multinational organisation that is required to have annual audits. The 
company has two sets of auditors: 
A Internal 
auditors 
B External 
auditors 
Required: 
(a) Classify the following as features of either A (internal auditors) or B (external 
auditors): 
(i) 
Their main purpose is to offer advice to management about the company’s 
internal controls 
(ii) 
Management define the scope of their work 
(iii) They must be independent of the company 
(iv) Corporate 
Governance 
suggests that if they are not present in a listed 
company, the company must assess the need for them on an annual basis 
(2 marks) 
(b) 
Organisations can fall victim to a number of different types of fraud, including: 
A 
Teeming and lading fraud 
B Ponzi 
scheme 
C 
Advance fee fraud 
D 
Window dressing fraud 
The following sentences contain gaps which specify a particular fraud from the above 
list. 
One of HJY’s employees has been discovered to have set up a 1 which involved him 
using money from receivables to clear the balances of other receivables whose 
receipts he had already stolen. 
Required: 
(i) 
Select the correct type of fraud which appropriately fills gap 1 above; i.e. 
select A, B, C or D. 
(1 mark) 
HJY also paid for an advertisement in a new local trade publication. It sent a cheque 
for £6,000 to the publication in order to secure a large full page advertisement. 
However, the publication was found to be fictitious and HJY lost its money – a classic 
example of a 
2
.
(ii) 
Select the correct type of fraud which appropriately fills gap 1 above; i.e.