There are typically more civil fraud convictions than criminal fraud convictions because
criminal cases can require more effort on the part of the government due to the higher
burden of proof that the government must bear in criminal cases (beyond a reasonable
doubt).
When seeking an admission to a fraud, the interviewer will often make a direct
accusation if the interviewer is almost certain the subject has committed the offense.
Divorce fraud is very similar to bankruptcy fraud in that in both divorce and in
bankruptcy a court may divide up the assets of some estate.
In bankruptcy or divorce, the involved party’s recent federal tax returns should be
carefully examined with respect to Investment interest expense deductions. Such
deductions suggest the existence of a margin-based brokerage account.
Questioned documents are documents that are contested because their authorship or
authenticity (or both) is not established.
The typical penalty for committing bankruptcy fraud crimes has a maximum of 5 years
in prison or a maximum fine of $250,000, or both, per offense.
The United States Sentencing Commission bases its guidelines for sentencing upon the
Guidelines Manual.
Internal Auditors are individuals from outside CPA firms that come into your business
to perform an audit.
Accountants, enrolled agents, tax preparers, and attorneys are those who practice tax in
various capacities.
The “how” of a fraud investigation are the conditions surrounding the fraud.
Crimes committed by executives of corporations are often referred to as Blue Collar
Crimes.
Forensic Accountants are crime-scene technicians or investigators who specialize in
finding, collecting, and preserving physical evidence at crime scenes.
The La Cosa Nostra (LCN) has its roots in mid 9th century Sicily, and began about the
time that Italy became a sovereign state.
Some believe that ROC syndicates are being used the government in Moscow to
secretly continue to carry out the Cold War policies of selling arms and nuclear
technology to terrorists and enemies of the United States.
Corrective controls are merely special types of controls that come into play once a loss
is known to exist.
The assurance authority in a business would decide who to consult for assurances on
deliverables.
The median amount of the fraud is approximately 50% of the median total assets.
Civil crimes always involve police, prosecutors and courts.
The reperformance procedure is not used often because of the time it takes to
reperform; however, it is a useful tool when highly reliable evidence is sought.
Confirmation is the receipt of evidence from third-parties of information that is (or
should be) in the financial statements.
The Fair and Accurate Credit Transaction Act of 2003 replaced the Federal Fair Credit
Reporting Act by adding laws directed towards helping consumers protect themselves
against identity theft.
Business valuators will always state their findings in a specific dollar amount and never
in a dollar value range.
Plea Bargains may only take place prior to a trial beginning.
Fraud detection is considered a secondary layer to prevention.
An auditor may want to observe the physical count of inventory.
The first 10 Amendments are the primary foundation to the United States Code.
Arbitration involves a neutral third-party who helps those involved in a dispute to
resolve their differences through structured negotiations.
The general philosophy behind SOX is to minimize financial statement fraud by
promoting strong corporate governance and organizational oversight by 6 groups,
which include management, the board of directors, the audit committee, management,
internal auditors, external auditors, and public oversight groups.
The ROC, unlike the modern day LCN, continues to kill reporters, government officials
and law enforcement personnel.
The normal approach to penetration testing is to attempt to exploit all possible
vulnerabilities.
As a general rule, preventative and detective controls cost more than corrective
controls.
Under the income approach, the value of the asset is the present value of the future
economic income associated with the asset.
Tax protestors can be divided into two groups: (1) legitimate and; (2) illegitimate.
The money flow in organizations such as the LCN is very similar to Corporations where
the money flows from the top down.
An incident report and a unified case file are the same thing.
Fraud-related losses do not accrue for those who both buy and sell their shares during
the FCIIP.
The fraud theory approach to fraud investigations is a process that posits a hypothesis
regarding a fraud scheme, tests the hypothesis with evidence, and then accepts,
modifies, or discards the hypothesis as is warranted by the evidence.
To arrest a suspect, law enforcement must have:
a.Indisputable evidence that the person is guilty.
b.A search warrant.
c.Probable cause.
d.DNA evidence.
Who has effect over the internal control of a business?
a.management.
b.board of directors.
c.key personnel within the business.
d.all of the above.
If parties sign contracts containing arbitration clauses generally waive their right:
a.To complain about the contract in the future.
b.To modify the contract.
c.To take disputes to court.
d.All of the above.
What is the best approach to data protection?
a.Firewalls.
b.Intrusion detection controls.
c.Risk Management Policies.
d.Layered Approach.
Before releasing the report to the client, the investigator shoud:
a.Have their legal counsel review it.
b.Have the fraudster review it.
c.Have a professional liability insurer review it.
d.Have a District Attorney review it.
Under Benford’s Law:
a.All numbers should occur as each other.
b.1 should appear more than 2 and 3 should appear more than 4.
c. 9 should appear more than 8 and 7 should appear more than 6..
d. Vendor total amounts of sales by invoice should contain the same frequency of
numbers as Customer totals.
Who makes rules effecting the auditing profession?
a.Public Company Accounting Oversight Board.
b.Governmental Standards Accounting Board.
c.Financial Accounting Standards Board.
d.All of the above.
If evidence is tangible, it is said to be _______ evidence.
a. Documented
b. Heresy
c. Physical
d. Forged
If an employee is determined to have been under pressure to commit the crime, had the
opportunity to commit the crime and has complete rationalization for committing the
crime, then the employee is caught in a(n):
a.Evidentiary motion.
b.Sworn statement.
c.Fraud triangle.
d.Fruit of the poisonous tree.
A combination of mediation and arbitration is called:
a. arb-med
b.med-arb
c. arbi-medi
d.juxtaposition
The objectives of fraud detection include:
a.Detect fraud.
b.Prevent fraud.
c.Comply with SOX.
d.Both A and B.
Whose responsibility is it to help assure that the audit trail is generated?
a.External auditor.
b.CEO.
c.CFO.
d.Internal auditor.
Total Fraud Costs (TFC) =
a.Personnel Costs + Auditing Costs + Potential Losses .
b.Prevention Costs + Detection Costs + Correction Costs + Losses.
c.Auditing Costs – Losses.
d.Prosecution Costs + Detection Costs + Correction Costs.
The traditional means for resolving disputes are:
a. All-out wars.
b. Friendly negotiations
c. Moderated negotiations
d. Both A and B
What is an example of demonstrative evidence?
a.Handwriting.
b.Audio/video recordings.
c.Items physically carried into the court room.
d.Charts and graphs.
A tip hotline should include:
a.The Securities and Exchange Commission’s toll free number.
b.A hotline disclosure policy to protect the tipster as well as the accused.
c.Caller ID so the receiving agency can call the tipster back.
d.A minimum of three language options.
Application controls ensure:
a.accuracy.
b.integrity.
c.security.
d.all of the above.
Who is exempt from the Currency Transactions Report that banks must file?
a.Businesses incorporated in that state.
b.Non-profit organizations.
c.Individuals.
d.Businesses that routinely make such large cash deposits.
Insider trading is defined as:
a.The intentional act of manipulating financial statements in order to gain larger raises
or bonuses.
b.Intentionally giving customers the wrong change and taking the excess at the end of
the shift.
c.Ordering excess inventory and then taking it home when it arrives.
d.Knowing information prior to the general public and buying or selling company stock
to protect personal gains.
The “what” of a fraud scheme is:
a. The possible locations of the fraud.
b. The general functional area or position.
c. The conditions present to commit the fraud.
d.The classification of the fraud.
Which of the following events have made the Forensic Accounting industry more
popular recently?
a.Corporate Scandals.
b.Sarbanes-Oxley Act of 2002.
c.Crime Dramas on Television.
d.Both a and b.
Which of the following is a preventative control?
a.Taking periodic inventory.
b.Leaving recently arrived inventory in a customer area prior to accepting it.
c.Periodically checking customer balances versus account write-offs.
d.Keeping inventory in a locked room that only a shift leader has the keys for.
Why is program alteration so difficult to detect?
a.It leaves no audit trail.
b.It is only detectable if manual calculations are done to check each transaction..
c.Auditors are typically not trained to notice program alterations.
d.All of the above.
Which of the following is not a payroll tax?
a.FICA.
b.OASDI.
c.Self-Employment.
d.Use.
The “why” of a fraud scheme is:
a. A disgruntled employee.
b. An employee with a gambling addiction.
c. A person living beyond their means.
d. All of the above
What does ISO 27002 focus on?
a.Financial security.
b.Fraud prevention.
c.Internal control development.
d.Information security.
Pressure/incentive typically relates to:
a.Situations in which an employee has an unmet substantial financial need.
b.Opportunity, as without opportunity fraud can become possible.
c.The employee fabricating an internal moral excuse for the fraud.
d.Mafia or blackmail situations.
Possible objectives of a fraud investigation might include:
a. All of these
b. Make an example of a fraudster
c. Minimize any embarrassing disclosures in the press
d. Punish the fraudster
When considering valuation, there are only two premise that can be considered. They
are:
a.Bankruptcy and going concern.
b.Bankruptcy and liquidation.
c.Liquidation and going concern.
d.Market value and book value.
The evidence collection process begins with:
a. Routine observations of accounting processes.
b. Interviews with those furthest away from the fraud.
c. A review of the physical and document evidence.
d.Wherever the investigator feels is most important.
Inventories and other physical assets should be:
a.received and counted by the department which initially ordered it.
b.placed in service as soon as received to maximize profit.
c.received in a central receiving department before being routed to their destination.
d.reconciled and paid for prior to being routed to their destination.
What is the Locard Exchange Principle?
a.It takes at least two people to commit a crime.
b.Every contact leaves a trace.
c.Forensic scientists must share data to solve a crime.
d.Some evidence will be lost when transferring it from the scene to the lab.
Which of the following tests sets specific requirements for a technique or theory to be
called scientific?
a.Litness.
b.Credential.
c.Frye.
d.Daubert.
ISO 27002 has a specific topic of Asset Management. Which of the following is
considered an Asset that needs to be safeguarded within a corporation?
a.Vehicles.
b.Office Furniture.
c.Information.
d.All of the above.
Over 130 countries have signed what agreement to enforce commercial arbitration
awards from other countries?
a.European Union Agreement.
b.New York Agreement.
c.United Nations Agreement.
d.World Court Agreement.
What are the three elements of the fraud triangle? Describe each.
Which of the following best describes and Active Threat?
a.A flood destroying the Accounts Payable files.
b.A hacker destroying the Accounts Payable files.
c.A fire destroys the Accounts Payable files.
d.A computer malfunction destroying the Accounts Payable files.
Which of the following is not a type of test that an auditor might perform?
a.Tests of Controls.
b.Tests of Principles.
c.Substantive tests of transactions.
d.Substantive tests of balances.
Describe the steps in setting up an in-house alternative dispute resolution program.
Which of the following is not a concern of Title V, Analyst Conflicts Of Interest?
a.Prevents securities research analysts from being supervised by persons who are
involved in investment banking activities.
b.Limits the investment bankers’ ability to pre-approve research reports.
c.Limits the number of hours an analyst can spend on any one evaluation
d.Protects research analysts who write negative reports from retaliation by their
employers.
What is the model for the relationship of the four components of risk?
a.ADR = IR/(AAR x CR).
b.ADR = AAR/(IR x CR).
c.AAR = ADR x IR / CR.
d.IR = AAR/ADR x CR.
In regards to SOX and COSO; ISO 27002 and COBIT, what do the do for each other?
a.Conflict each other on many topics.
b.Compliment each other on many topics.
c.Cover areas that the other is weak upon.
d.Make each other obsolete.
Compare and contrast historical and replacement costs.
Which of the following is NOT a way to become a Certified Fraud Specialist (CFS)?
a.Successfully completing a multipart examination that covers the detection, deterrence,
investigation, and prosecution of white-collar crime.
b.A bachelor’s degree in business or ten years of accounting-related experience and pass
the two parts of the Certified Fraud Specialist examination.
c.Completing the ACFS Academy core courses and taking an examination at the end of
each course.
d.Being grandfathered in by means of submitting information on the experience and
education.
Which professional sport has typically used labor interest arbitration?
a. National Hockey League
b. National Football League
c.Major League Baseball
d. World Cup Soccer
What is a controlled delivery?
a.When individuals control when their personal information is delivered to creditors.
b.When law enforcement catches thieves doing something like receiving mail or
withdrawing banks funds using a stolen identity.
c.When individuals control when their mail is delivered to their mailboxes to prevent
mail theft.
d.The act of delivering controlled amounts of personal information to thieves that think
its legitimate.
Which vendor fraud principle leads to $1,000 toilet seats?
a.short shipments.
b.balance billing.
c.cost-plus billing.
d.substandard goods.
What are some possible strategies for Risk Management/Treatment?
How can management effect the control environment of a company?
Who developed Trusted Product Evaluation Program (TPEP)?
a.NASA.
b.NSA.
c.CIA.
d.FBI.
Forensic accounting can be broken into how many categories?
a. Two: Investigative and Litigation.
b. Two: Internal and External.
c. Three: Investigative, External, Preventative.
d. Three: Internal, Litigation, Certified.
How does the numbers game work and what is its status today?
What are the four major components of terrorists cells (describe in detail).