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Module # 2 – Management/Key Employee Assessment
The management/key employee assessment questions are designed to assess the
probability of a fraudulent event occurring within the organization based on:
• Internal controls.
• Internal control environment.
• Resources available to prevent, detect, and deter fraud.
Questionnaire Key
1. Is the board of directors composed of mainly officers of the company or related
individuals?
The board of directors should include independent board members that are not
associated with or employed by the company. In theory, independent directors are not
subject to the same pressures as management and, therefore, are more likely to act in
the best interest of shareholders.
2. Is there an independent audit committee?
Independent audit committee members with financial and accounting expertise can be
instrumental in preventing and detecting financial fraud.
3. Has there been high turnover of managers and members of the board of
directors?
Management should investigate the reasons for high turnover and implement measures
to reduce it.
4. Have an unusually high number of key employees left the company recently?
Management should investigate the reasons for their departure and implement
measures to reduce turnover.
5. Is the company involved in any litigation?
Management should determine the reason for the litigation, monitor the filings, and take
corrective action where necessary.