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Review “Application Case 16-1: The High Cost of Theft and
Fraud” and answer the following questions.
How do internal controls such as separation of duties,
redundancy, and centralized processes discourage employees
from committing fraudulent acts?
Why are some small businesses more susceptible to employee
fraud and theft? Explain.
Given that the ACFE “2010 Global Fraud Study” reported that
employee tips were the most common way that fraudulent acts
are discovered, how can an organization encourage honest
employees to report fraudulent behavior committed by co-
workers, supervisors, clients, or vendors?
How important is it for an organization to have a code of
conduct that defines fraudulent behavior, and what happens to
those individuals who commit such acts?

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