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AGA CGFM Exam - Topic 3 Question 79 Discussion
Topic #: 3
A primary deterrent to fraud is
Deterrence of Fraud:
A primary deterrent to fraud is the fear of being caught. When individuals believe there is a high likelihood of detection, they are less likely to commit fraudulent acts.
Strong internal controls, monitoring, and audits increase this fear and serve as effective deterrents.
Explanation of Answer Choices:
A . Delegation of responsibility without oversight: Incorrect. Lack of oversight increases the risk of fraud rather than deterring it.
B . The fear of detection: Correct. The fear of being caught is one of the most effective fraud deterrents.
C . Job satisfaction and sense of 'team': While these contribute to a positive work environment, they do not directly deter fraud.
D . Performance of employee background checks: Background checks are a preventive measure but are less effective as a fraud deterrent compared to detection risk.
Association of Certified Fraud Examiners (ACFE), Fraud Prevention Guidance.
GAO, Fraud Risk Management Framework.
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