Question

Which of the following conditions are not generally present in an organization when fraud occurs?

1) Strong internal controls
2) Effective segregation of duties
3) Transparent financial reporting
4) Regular external audits

Answer 1

The conditions that are not generally present in an organization when fraud occurs are strong internal controls, effective segregation of duties, and regular external audits.

Step-by-step explanation:

Fraud can occur in an organization even when certain conditions are present. The conditions that are not generally present in an organization when fraud occurs include:

1. Strong internal controls: Internal controls help prevent and detect fraud by implementing processes and procedures that safeguard assets and ensure accurate financial reporting.
2. Effective segregation of duties: Segregation of duties involves dividing key tasks among different individuals to ensure that no single person has too much control over a process, reducing the risk of fraud.
3. Regular external audits: External audits are conducted by independent auditors to review the organization's financial records and provide assurance on their accuracy and compliance with financial reporting standards.

While these conditions are generally considered important in deterring and detecting fraud, their absence does not guarantee fraud will occur. Fraud can still happen due to various factors, including individuals finding ways to bypass controls or collusion among employees.