The second step to develop an approach to fraud detection is to:
A) develop an understanding of the control environment.
B) develop a system of internal controls.
C) define the authority of the audit committee.
D) identify the members of internal audit and the audit committee.

Question

Quizplus · Accepted Answer

Developing an understanding of the control environment is necessary to identify the potential areas of fraud and the key control points that can be implemented to minimize or mitigate the risk of fraud. Without this understanding, it is difficult to design an effective approach to fraud detection. The other options may be important in the overall governance structure, but they are not directly related to developing an approach to fraud detection.

The Second Step to Develop an Approach to Fraud Detection