AGA Exam GFMC Topic 2 Question 6 Discussion

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.