Multiple Choice
According to the principles of the fraud triangle, which of the following best describes the responsibility of a licensed business and its employees regarding customers' illegal or disorderly activities?
1
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6. Internal Controls and Reporting Cash
Fraud and the Fraud Triangle
Multiple Choice
Which of the following statements about the protection of data is true in the context of fraud prevention?
A
Encryption of data is unnecessary if employees are trusted.
B
Implementing strong internal controls can help reduce opportunities for fraud by protecting sensitive data.
C
Only external threats, not internal employees, pose a risk to data security.
D
Data protection is unrelated to the risk of fraud within an organization.
Verified step by step guidance1
Understand the context of fraud prevention and data protection. Fraud prevention involves safeguarding sensitive data to reduce opportunities for fraudulent activities.
Evaluate the statement 'Encryption of data is unnecessary if employees are trusted.' This is incorrect because trust alone cannot ensure data security; encryption is a critical tool to protect data from both internal and external threats.
Analyze the statement 'Implementing strong internal controls can help reduce opportunities for fraud by protecting sensitive data.' This is correct because internal controls, such as access restrictions, monitoring, and encryption, are essential to mitigate risks and protect data from unauthorized access.
Review the statement 'Only external threats, not internal employees, pose a risk to data security.' This is incorrect because internal employees can also pose risks, whether intentionally or unintentionally, making internal controls vital.
Consider the statement 'Data protection is unrelated to the risk of fraud within an organization.' This is incorrect because data protection is directly related to fraud prevention, as safeguarding sensitive information reduces the likelihood of fraudulent activities.
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