What are the primary ways to detect fraud?

The correct answer highlights several key methods employed in fraud detection. "By chance, employee reporting, and examining transaction records" encapsulates a multifaceted approach that is essential in identifying fraudulent activities.

Detecting fraud by chance refers to the fortunate discovery of irregularities or anomalies during routine operations or audits. This can happen when an auditor or manager comes across unusual patterns or discrepancies that raise suspicions. However, relying solely on chance is insufficient as a comprehensive detection strategy.

Employee reporting is a critical component, as insiders often have the best perspectives on operational challenges and can notice suspicious behavior that might go unnoticed by others. Organizations typically encourage a culture of transparency and provide anonymous reporting mechanisms to facilitate this process. When employees are motivated to report unethical behavior, it can lead to timely detection and intervention.

Examining transaction records is another fundamental aspect of fraud detection. This involves a systematic review of financial transactions through audits, reconciliations, and analytical procedures to identify unusual patterns, irregularities, or red flags that could indicate fraudulent activity.

In contrast, the other options do not provide a sound or effective basis for detecting fraud. For instance, detecting fraud by chance alone or solely through document examination does not encompass the proactive and systemic measures necessary to uncover financial misconduct. Gossip and