CFE – Fraud Prevention and Deterrence — Question 73

Adan, an internal auditor who works at BKY Co., is reviewing the auditing procedures for his company. He is specifically considering the ways BKY can proactively audit for fraud. Which of the following is TRUE regarding the use of proactive fraud auditing procedures at BKY?

Answer options

• A. Auditors should avoid asking questions such as. "Has anyone ever asked you to do something unethical?" as part of their audits, as this can limit employees' willingness to communicate.
• B. Fraud assessment questioning techniques are most effectively used as part of the normal audit process.
• C. Analytical review of BKY's financial statements is the best way to uncover small frauds that might be missed by other detection methods.
• D. Fraud audit procedures should be designed to avoid an element of surprise.

Correct answer: B

Explanation

The correct answer, B, emphasizes that incorporating fraud assessment questioning techniques into the regular audit process enhances their effectiveness. Option A is incorrect because asking direct questions about unethical behavior may actually foster openness. Option C is misleading as analytical reviews are valuable, but not necessarily the best for uncovering minor frauds. Option D is also wrong since surprise elements can sometimes be beneficial in detecting fraud.