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1) The Certified Information Security Manager (CISM) is unique in the information security credential marketplace because it is designed specifically and exclusively for individuals who have experience managing an information security program. 2) The fraud examiner categorizes schemes in three […]

1) How does the perception of detection impact fraud deterrence? 2) An employee who would probably not be involved in skimming would be: I.The president of the company J.The cashier K.The accounts receivable manager L.The petty cash clerk Answer: A […]

1) The Forensic and Valuation Services (FVS) Center is part of the American Institute of Certified Public Accountants. 2) What are the considerations related to forecasting income and cash flows? Answer: At a minimum, data should be considered in the […]

1) Employees who perceive that they will be caught engaging in occupational fraud and abuse are less likely to commit it. 2) The essence of criminal and civil litigation is controlled confrontation: both sides get the opportunity to present the […]

1) What are the two categories of data mining and knowledge discovery software? 2) Ghost employees are employees that physically exist but are not on the payroll records. Answer: F 3) What are the various categories and calculations used in […]

1) Corruption schemes are broken down into four classifications: bribery, illegal gratuities, economic extortion and larceny. 2) The SarbanesOxley Act of 2002 was signed into law on July 30, 2002 to address corporate governance and accountability as well as public […]

1) Perhaps the biggest key to preventing skimming of any kind is to maintain a viable oversight presence at any point where cash enters an organization. 2) Rationalizations provide a morally unjustifiable reason for the targets actions. Answer: False 3) […]

1) Cressey called embezzlers temptation violators. 2) Three ethical principles provide a framework for ethical decision making. What are they? Briefly summarize their assumptions. Answer: The three ethical principles that provide a framework for ethical decision making include: (1) the […]

1) A written affidavit given by a witness is classified as testimony. 2) What is the role of research in the fraud examination and financial forensics professions? Answer: Research drives professional innovation. Practitioners in the field implement the products of […]

1) A murderer is condemned to death. He has to choose between three rooms. The first is full of raging fires, the second is full of assassins with loaded guns, and the third is full of lions that havent eaten […]

1) ________ can have a significant negative impact on award calculation amounts in personal injury and wrongful death over time. U.Deflation V.Inflation W.The payback period X.The accounting rate of return 2) Provide an example of the following: Types of evidence […]

1) Larceny of receivable is generally not concealed through which method? I.Force balancing J.Reversing entries K.Destruction of records L.Including phone checks in the bank deposits 2) For purposes of defining occupational fraud and abuse, employees include only top or middle […]

1) What is the discovery process and how does it work? 2) Evidence is defined as all that is admitted to the court. Answer: F 3) Some of the methods that can be used to develop estimates of lost sales […]

1) A(n) ________ is considered by most professionals to be the cornerstone of an employee reporting program. M.hotline N.audit O.conflict of interest policy P.external review 2) The SarbanesOxley Act (SOX) of 2002 is aimed at accounting staffs, auditing firms, corporate […]

1) List five assertions of management in respect to financial statements. 2) Line employees are the principle perpetrators in approximately 39 percent of schemes, yielding company losses of approximately $150,000. Answer: F 3) Which of the following is NOT a […]

1) Conspiracy is a means of prosecuting the individuals involved in illegal organized activity. 2) As a general rule, private employers conducting an internal investigation are not required to give: E.Miranda warnings F.Evidence to defense counsel G.Equal opportunity to all […]

1) The Fraud Triangle consists of: motive, opportunity, and rationalization. 2) In what types of cases may a forensic accountant serve as an expert witness? Answer: Although consultants are not expected to testify, it is common for the attorney to […]

1) Lifestyle audits, conducted by the IRS, are a means of determining tax evasion. 2) All of the following methods indicate how people commit financial statement fraud EXCEPT: Q.Bribe the SEC to accept fraudulent financial statements R.Playing the accounting system […]

1) Cyber-crime involves the use of cell phones. 2) What approaches are used by investigators to obtain documents? Answer: Generally, investigators can obtain documents using three approaches: Voluntary consent Subpoena Search warrant 3) Organizations refers to unions, the mafia, as […]

1) A married couple goes to a movie. During the movie, the husband strangles the wife. He is able to get her body home without attracting attention. How is this possible? 2) Explain fraud examination. Answer: Fraud examination involves obtaining […]

1) Torts occur when a party has been injured, even though the parties to the suit do not have a contractual relationship. 2) Assessment questions should proceed logically from the most to the least sensitive. Answer: False 3) Subsequent to […]

1) A major difference between auditors and fraud examiners is that most auditors match documents to numbers to see whether support exists and is adequate, whereas fraud examiners determine whether the documents are real or fraudulent.. 2) Service employees that […]

1) User access to systems may identify segregation of duties issues. Review of which file(s) can detect problems? H.System user access master file I.Accounts Receivable master file J.General ledge master file K.Accounts payable master file 2) Discuss the considerations that […]

1) Collusion requires more than one person to override the system of internal controls. 2) Mischaracterized expense schemes involve payment for legitimate expenditures. Answer: T 3) The amount of damages proven under negligence may be relatively uncertain. Answer: F 4) […]

1) What is a fiduciary duty and give examples. 2) How can financial statement fraud be deterred? Answer: Following the principles of the fraud triangle, introduced in the first chapter of this book, a general approach to reducing financial statement […]

1) Norming or calibrating is the process of observing behavior before critical questions are asked, as opposed to doing so during questioning. 2) IDEA can read, display, analyze, manipulate, sample, and extract data from files obtained from many sources in […]

1) The Department of Justice defines cybercrime as any violation of civil law that involves knowledge of computer technology for its perpetration, investigation, or prosecution. 2) Fraudulent endorsement schemes commonly involve the interception of a signed check before mailing. Answer: […]

1) Changing the payees name on a check is an example of alteration. 2) In general, increasing the perception of detection may be the best way to deter employee theft, while increasing the sanctions that are imposed on occupational fraudsters […]

1) Real estate transaction records can be sources of evidence for income concealment. 2) High net worth individuals are likely to use private banks. Answer: T 3) Explain how the Patriot Act enhances RICO. Answer: The Patriot Act expands the […]

1) What is the difference between skimming and cash larceny? 2) In this scheme, an employee started his own business that would compete directly with his employer. M.Turnaround sale N.Economic extortion O.Business diversion P.Illegal gratuity Answer: C 3) Differentiate between […]

1) Another way to conceal cash larceny is to use reversing transactions, such as False voids or refunds, which cause the register tape to reconcile to the amount of cash on hand after the theft. 2) Introductory questions serve four […]

Chapter 1 Critical Thinking Q&A Anthony and Cleopatra are lying dead on the floor in a villa. Nearby on the floor is a broken bowl. There is no mark on either of their bodies and they were not poisoned. With […]

Chapter 10 Critical Thinking Q&A A married couple goes to a movie. During the movie the husband strangles the wife. He is able to get her body home without attracting attention. How is this possible? Review Questions & Answers 10-1. […]

Chapter 11 Critical Thinking Q&A Far off in the woods, there is a cabin. The cabin contains 3 people. Two are in one room; the other is alone in another room. All doors to the cabin are locked tight and […]

Chapter 12 Critical Thinking Q&A A clerk in the butcher shop is 5’ 10” tall. What does he weigh? Review Questions & Answers 12-1. What are the five major categories of fraudulent disbursements? Answer: Fraudulent disbursements include: billing schemes, check […]

Chapter 13 Critical Thinking Q&A A woman had two sons who were born on the same hour of the same day of the same year, but they were not twins. How could this be so? Answers: (1) Triplets or some […]

Chapter 14 Critical Thinking Q&A A woman shoots her husband. Then she holds him under water for over 5 minutes. Finally, she hangs him. But 5 minutes later they both go out together and enjoy a wonderful dinner together. How […]

Chapter 15 Critical Thinking Q&A How many outs are there in an inning? Review Questions & Answers 15-1. What is the purpose of practice aids in forensic and valuation services? Answer: Practice aids offer general guidance for forensic and valuation […]

Chapter 16 Critical Thinking Q&A This is an unusual paragraph. I’m curious how quickly you can find out what is so unusual about it. It looks so plain you would think nothing was wrong with it. In fact, nothing is […]

Chapter 2 Critical Thinking Q&A Why are manhole covers round? Answer: Manhole covers are round because other shaped covers can be maneuvered to fall Review Questions & Answers 2-1 According to this chapter, what employment trends are expected for professionals […]

Chapter 3 Critical Thinking Q&A The Killer Apartment Colin McFee had a Manhattan apartment to die for, an enormously spacious duplex that looked down on Park Avenue from the 18th and 19th floors. He also had a fortune worth killing […]

Chapter 4 Critical Thinking Q&A A woman came home with a bag of groceries, got the mail, and walked into the house. On the way to the kitchen, she walked through the living room. In the living room, she glanced […]

Chapter 5 Critical Thinking Q&A There are 5 different color houses, occupied by people of 5 different nationalities, who smoke 5 different cigar brands, drink 5 different types of alcohol, and have 5 different pets. The houses are lined up […]

Chapter 6 Critical Thinking Q&A A scientist has an unlimited water supply and two buckets, one holds 4 gallons and the other holds 5 gallons. By using nothing but the buckets and water, how can he accurately measure 3 gallons […]

Chapter 7 Critical Thinking Q&A A scientist has an unlimited water supply and two buckets, one holds 4 gallons and the other holds 9 gallons. By using nothing but the buckets and water, how can he accurately measure 7 gallons […]

Chapter 8 Critical Thinking Q&A Five pieces of coal, a carrot and a scarf are lying on the lawn. Nobody put them on the lawn but there is a perfectly logical reason why they should be there. What happened? How […]

Chapter 9 Critical Thinking Q&A A murderer is condemned to death. He has to choose between three rooms. The first is full of raging fires, the second is full of assassins with loaded guns, and the third is full of […]

1) An employee, having authorized access to a work computer, commits fraud while using the computer. This is an example of a computer crime. 2) Unusual behaviors such as irritability or the inability to relax are examples of analytical anomalies.. […]

1) Lexis-Nexis is a tool used to corroborate net income. 2) What are some suggested approaches for conducting interviews? Answer: The following provides some guidelines for conducting the interview or interrogation. First, the room should be set up so that […]

1) In very few cases will a company fall under the purview of more than one set of regulations or taxing authorities influences. 2) Provide an example of the following: Bank analysis method: Answer: A method of indirect income verification […]

1) Classify the following as to whether it involves authorization, recording, or custody: 1>Vouching expenses and invoices 2>Payment generation 3>Check signing 4>Check distribution 5>Purchasing 6>Adding a vendor to the master file 7>Approving a new vendor 8>Changing vendor addresses 9>Timekeeping 10>Payroll […]

1) Even though independent auditors are independent, management is still responsible for cooperation in order for them to complete their work. 2) Investment banks provide most of the banking services to high net worth individuals in the US. Answer: F […]

1) An employee intercepts a legitimate check made payable to a vendor and changes the payee name to his name. This is an example of a forged maker. 2) A pass-through scheme requires the use of a legitimate vendor. Answer: […]

1) What is meant by a conflict of interest? 2) According to Albrecht, opportunities to commit fraud may be created by individuals, or by deficient or missing internal controls. Answer: T 3) Financial statement analysis includes all of the following […]

1) Management must design, implement, and maintain internal controls and nancial reporting processes to produce timely nancial and nonnancial information that reects the underlying economics of the business. 2) The FDA can determine if an individual is living in poverty. […]

1) The fraud examiner or forensic accountant often uses public records to verify the existence of the vendor business, the vendors ownership, and the vendors address and phone number. 2) In order to prevent cash larceny at the point of […]

1) Compare and contrast Cresseys and Albrechts theories of crime causation. 2) Provide at least five examples of typical internal control weaknesses. Answer: (Answers may include weaknesses not identified here.) Typical internal control weaknesses include: 1>Lack of segregation of duties. […]

1) Predication is required before civil charges can be filed. 2) The statement is frequently made that the financial statements are not misleading and are free of material errors, irregularities, and fraud. What does this statement mean? Answer: The financial […]

1) Using a copy of an electronic file is not allowed in court. 2) ________ value is used to describe the price of an asset, assuming that a willing buyer and willing seller can come to terms under normal market […]

1) Describe the fraud examiner/forensic accountants approach to investigations. 2) Since forensic accounting works with fact as documented by legal records the reports seldom add an adversarial nature to the engagements, and professionals can expect that their work will be […]

1) The acronym MICE signifies fraud motivations such as money, intellectualism, coercion, and ego. 2) What are some of the ways in which financial statement fraud is committed? Answer: 1>Playing the accounting system. In this approach, the fraudster uses the […]

1) Shell companies require collusion amongst employees in order to be successful. 2) Under generally accepted auditing standards (GAAS) auditors are not currently responsible for planning and performing auditing procedures to detect immaterial misstatements, regardless of whether they are caused […]

Chapter 1 Multiple Choice Answers 1. C 2. C 3. C 4. A 5. D 6. B 7. A 8. C 9. B 10. A Fraud Casebook Bernard Madoff, 70, ran an investment fund that serviced pensions, institutional investors, endowments […]

Chapter 10 Multiple Choice Answers 1. D 2. A 3. B 4. C 5. B 6. D 7. C 8. A 9. B 10. D Fraud Casebook MCI: The Fraud That WorldCom Acquired! Walter Pavlo, Jr., convicted felon, and Forbes […]

Chapter 11 Multiple Choice Answers 1. B 2. C 3. A 4. D 5. C 6. B 7. D 8. A 9. A 10. C Fraud Casebook Tyco: Extravagance to the Point of Abuse Tyco manufactures a wide variety of […]

Chapter 12 Multiple Choice Answers 1. C 2. A 3. B 4. D 5. B 6. C 7. B 8. D 9. A 10. D Fraud Casebook ADELPHIA: “DOING NOTHING BUT TRYING TO IMPROVE CONDITIONS” Adelphia, founded in 1952 by […]

Chapter 13 Multiple Choice Answers 1. D 2. A 3. C 4. D 5. D 6. B 7. C 8. C 9. A 10. B Fraud Casebook Oil for Food Oil-for Food? Oil-for-Food was a $64 billion program established by […]

Chapter 14 Multiple Choice Answers 1. C 2. D 3. A 4. D 5. A 6. B 7. C 8. B 9. A 10. A Fraud Casebook Phar-Mor: Who’s to Blame? Frontline’s “How to Steal $500 million,” asks the question, […]

Chapter 15 Multiple Choice Answers 1. B 2. C 3. A 4. C 5. B 6. A 7. D 8. A 9. D 10. B Fraud Casebook Qwest: A Failure to Disclose? Qwest is a leading provider of voice, video […]

Chapter 16 Multiple Choice Answers 1. D 2. B 3. C 4. B 5. A 6. B 7. A 8. C 9. D 10. B Fraud Casebook HealthSouth: Former CEO Scrushy Deals Blow to Corruption Clean-up In 2004, HealthSouth disclosed […]

Chapter 2 Multiple Choice Answers 1. A 2. D 3. C 4. A 5. A 6. D 7. B 8. A 9. D 10. C Fraud Casebook ZZZZ Best: The General Motors of Carpet Cleaning Barry Minkow grew up in […]

Chapter 3 Multiple Choice Answers 1. B 2. B 3. C 4. D 5. B 6. A 7. D 8. C 9. D 10. C 11. B Fraud Casebook CYTHINA COOPER: FROM WORLDCOM INTERNAL AUDIT MANAGER TO TIME “PERSON OF […]

Chapter 4 Multiple Choice Answers 1. A 2. C 3. D 4. B 5. A 6. A 7. C 8. D 9. B (It’s actually trillions!) 10. A Fraud Casebook Alphonse “Scarface” “Fat Boy” Capone On July 1, 1919, the […]

Chapter 5 Multiple Choice Answers 1. A 2. C 3. D 4. A 5. D 6. B 7. D 8. A 9. C 10. D Fraud Casebook WELCOME TO THE NEW WORLD! A-Z is well–spoken, business-savvy, discreet and is one […]

Chapter 6 Multiple Choice Answers 1. C 2. A 3. B 4. C 5. A 6. D 7. A 8. A 9. C 10. D Fraud Casebook Enron: The Fall of “America’s Most Innovative Company” CEO Jeffrey K. Skilling: “’there […]

Chapter 7 Multiple Choice Answers 1. D 2. B 3. A 4. C 5. B 6. C 7. D 8. A 9. B 10. D Fraud Casebook The Satyam Scandal: When Riding a Tiger, How Does One Get Off Without […]

Chapter 8 Multiple Choice Answers 1. B 2. D 3. C 4. A 5. B 6. B 7. B 8. D 9. A 10. A Fraud Casebook Bristol-Myers Squibb – Stuffing the Channels In February 2002, Bristol-Myers Squibb initiated an […]

Chapter 9 Multiple Choice Answers 1. B 2. A 3. B 4. D 5. C 6. D 7. D 8. A 9. C 10. D Fraud Casebook Aldrich Ames – Missing the Clues Aldrich Ames was convicted in 1994 of […]

1) What is the difference between fact witnesses and expert witnesses? 2) An operating style that shows excessive risk-taking to strengthen the balance sheet, for example, is generally a red flag for fraud. Answer: T 3) List the four major […]

1) A company should develop a system of internal controls that provides absolute assurance that assets are protected and financial statements are fairly presented. 2) Output controls address how to monitor waste and how to identify who is responsible for […]

1) Kickback schemes involve the vendor as an accomplice. 2) The dichotomy of fraud is it cannot occur without trust, but commerce can occur without trust. Answer: F 3) Generally, in order to pursue a claim for legal damages successfully, […]

1) What is the role of the external auditor in the financial reporting process? 2) Reviewing cash receipts before, during, and after an individuals employment is a form of invigilation. Answer: T 3) Collusion is almost impossible to detect because […]

1) Fraud may only be prosecuted criminally. 2) With fraudulent representations such as materially misstated financial statements and improper tax returns, the investigator starts with the suspected perpetrator. Answer: True 3) This Periodicity assumption uses the principle of dividing economic […]

1) Computer crime and computer fraud are synonyms. 2) Common tipsters for fraud are employees, co-workers, managers, and outside colleagues who interact with the fraudster daily, weekly, or monthly. Answer: T 3) Much of the recent legislative and regulatory changes […]

1) How do e-discovery rules have an impact on the storage of e-mail and other electronic files? 2) The amount of loss in commercial damages may be affected by all EXCEPT: U.The general economy V.The conditions of the industry W.The […]

1) Which is NOT a measure to reduce the opportunity to commit financial statement fraud? Q.Maintain accurate and complete internal accounting records R.Maintain a security guard at each company location S.Divide important functions among employees, sharing control of one area […]

1) If a check is made payable to cash, detection of the fraudster is made more difficult. 2) The element of proximate cause for negligence means the plaintiff must establish that damages resulted from the defendants breach of duty. Answer: […]

1) Risk assessment is a critical aspect of good corporate governance and the same concept is applicable in an information technology environment. 2) What are some of the verbal clues to deception? Answer: Changes in speech patterns. Repetition of the […]

1) What are the primary responsibilities of management? 2) In order to obtain the funds to make bribery payments, employees usually divert company money into ________, a non-company account from which bribes can be made. M.Petty cash N.An overseas account […]

1) A computer audit test for detecting cash larceny where employees have high dollar differences between the cash count and sales register tape would include: I.Summarize by employee the difference between the cash receipt report and the sales register system […]

1) Corporate governance is the set of processes, customs, and policies that affect the way an organization is directed. 2) When an employee skims money off-book sales of merchandise, the theft can be detected by comparing the register tape to […]

1) Which of the following is not a typical corruption scheme: M.Economic extortion N.Expropriation O.Bribery P.Conflicts of interest 2) All instances of misconduct in the workplace amount to fraud. Answer: F 3) Explain the fraud triangle and M.I.C.E. and compare […]

1) List three proactive computer audit steps for detecting skimming (from page 304 306). 2) What remedies are available through the civil and criminal justice systems? Answer: There are three major forms of negotiated remedies in civil procedures: out-of-court settlements, […]