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Ghost employees can be prevented by requiring HR approval and documentation for all new hires, terminations, and pay changes. Sequential numbering (Option B) applies to documents. Vendor audits (Option C) relate to procurement. Budget variance (Option D) may not detect payroll fraud. Exam 3 emphasizes HR authorization controls. Option A is correct.

The Chief Financial Officers (CFO) Act of 1990 established CFO positions in major federal agencies and required preparation and audit of financial statements. The Budget Control Act (Option B) dealt with deficit limits. GPRA (Option C) requires performance planning and reporting. The Antideficiency Act (Option D) restricts overspending. Exam 1 stresses legislative foundations of federal financial management. Option A is correct.

Fiduciary funds use accrual accounting with an economic resources focus, reporting all assets/liabilities. Cash (Option A) is not GAAP. Modified accrual (Option C) applies to governmental funds. Budgetary basis (Option D) is for compliance. Exam 2 highlights fiduciary reporting. Option B is correct.

Performance audits, per GAO Yellow Book, examine efficiency, effectiveness, and economy. Compliance audits (Option B) test adherence to rules. Financial audits (Option C) test fair presentation. Attestation engagements (Option D) are narrower assurance engagements. Exam 3 stresses performance audits as vital for accountability. Option A is correct.

Fraud risk assessment identifies vulnerabilities that could allow fraud in operations, reporting, or compliance. Testing controls (Option C) and ensuring error-free statements (Option A) are outcomes but not the main purpose. OMB Circular A-123 (Option D) is a federal internal control policy, not the definition. Exam 3 emphasizes proactive fraud risk management. Option B is correct.