Ethics: Fraud and Financial Risk Management

Question 1

Explain the term “Ethics”

Answer 1

Refers to a set of moral principles of values that are embraced within a certain community. Written or unwritten, they direct the business to encourage public confidence

Question 2

Name 12 VALUES that should be fundamental in a business community

Answer 2

• Honesty
• Self-control
• Trustworthiness
• Concern for others
• Keeping promises
• Respect for legitimate authority
• Fairness
• Civility
• Discipline
• Morality
• Accountability
• Integrity

Question 3

What happens when social values deteriorate?

Answer 3

It becomes increasingly difficult to maintain high ethical standards in accounting and business

Question 4

Name and explain the ELEMENTS of fraud

Answer 4

• Unlawfulness: wrong action in law and society
• Misrepresentation: False statements, undisclosed information
• Intent: Foresee that victim would be deceived
• Prejudice: Discrimination

Question 5

Name the areas where FRAUD CAN OCCUR in a business

Answer 5

• Asset misappropriation (Theft, misuse)
• Fraudulent financial statements
• Cheque fraud
• Computer crime

Question 6

Name six ways in which a business owner can COMBAT FRAUD

Answer 6

• Good staff development programmes
• Sound mutual in inter and intra-personal relationships
• Ragular stocktaking
• Internal and external audit
• Anti-corruption LAWS
• Solid PRESENTATION of techniques and procedures

Question 7

Suggest a FOUR STEP APPROACH that Annietjie could follow to prevent fraud in her hair salon in Katutura

Answer 7

1. SCREEN for fraudsters before hiring
2. REDUCE opportunities for fraud
3. Create an “anti-fraud” ENVIRONMENT
4. PROSECUTE all fraudsters

Question 8

What is financial risk management?

Answer 8

A business needs clear objectives. Human beings = theft, fraud, corruption.

• Know
• Anticipate
• Keep risks to a minimum

Question 9

Provide some guidelines in MANAGING FINANCIAL RISKS

Answer 9

• ASSES and analyse the system in use
• FORECAST what might go wring
• Asses the recording of a NEW ASSET bought
• Minimise risks

Question 10

How can one MINIMISE RISKS in financial risk management?

Answer 10

• DEFINE risks
• Be PRO-ACTIVE
• DESIGN systems, policies, rules, regulations
• Managers and employees must COMPLY
• Rules must be TRANSPARENT & objective