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.
3) Subsequent to the passage of the SarbanesOxley Act of 2002, the auditing of public
companies became the responsibility of the newly created American Institute of CPAs (
4) Accurate financial statements are the responsibility of companys external
accountants.
5) As a general rule, private employers conducting an internal investigation are required
to give Miranda warnings.
6) Following the money and tracing the money are identical activities and may have
legal ramifications on amounts available for recovery.
7) The source documents that support the electronic data systems do not need to be
pre-numbered and used in sequence.
8) Although auditors rely heavily on documentation that supports transactions generated
in the normal course of business; they typically do not often search public records.
9) Because employers do not have the right to place employees in a custodial setting, an
employee has limited Fifth Amendment rights.
10) If expenditures are capitalized as assets and not recognized during the current
period, income will be understated.
11) Which of the following is NOT an example of financial statement fraud:
a.Managing the reserves in order to smooth earnings
b.Accruing an expense in the current period when it should be recognized in the
following period
c.Filling an order, billing the customer for the order, and then shipping it to a company
owned warehouse
d.Both a and b
12) If a taxpayer suddenly stops filing his income tax returns, this is evidence of:
a.Fraud
b.An affirmative indicator
c.Predication of fraud
d.None of the above
13) When pushed into a corner, a subject or witness will often react to the stress created
by deception. Some signs of stress that may accompany deception include all EXCEPT:
A.Evasive answers to questions
B.An unwillingness to suspect anyone of committing the act under examination
C.Maintaining eye contact with the interviewer
D.Hostility toward the interviewer
14) What is the accepted definition of evidence:
a.Anything submitted to the court during trial
b.Anything admitted to the trial
c.Anything admitted during testimony
d.None of the above
15) The software product Analysts Notebook I2 would be classified as:
A.Data analysis and extraction software
B.Case management software
C.Electronic spreadsheet
D.Data presentation software
16) A common complaint among those who investigate fraud is that:
A.the adversarial relationship between plaintiffs and fraud examiners resulted in weak
cases
B.job rotation policies often result in perpetrators being moved to new positions of
responsibility before being exposed
C.companies often conceal the cost of fraud as other business expenses
D.organizations and law enforcement do not do enough to punish fraud and other
white-collar offenses
17) Which of the following is a red flag that fraudulent expense reporting is occurring:
a.Receipt numbers for the same establishment that are consecutive even though they
occur over a period of time
b.Expense amounts ending in 0
c.Expense amounts consistently under the threshold for requiring a receipt
d.All of the above
18) In searching for breakdowns of internal controls by collusion and fraud, auditors:
A.should check all journal entries made on holidays, weekends, and late at night
B.should discuss with employees any journal entry which has been made to reduce
liabilities or increase owners equity
C.should verify all journal entries and values associated with consolidations which
resulted for work within spreadsheets
D.should obtain an understanding of the internal control processes regarding journal
entries and other adjustments
19) The characteristics of a predator fraudster are:
a.Poorly educated
b.Divorced
c.Member of a minority group
d.None of the above
20) A pass through scheme requires:
a.The availability of an accomplice at a legitimate vendor
b.The ability to add vendors to the vendor master file
c.The ability to change purchase order prices after approval
d.All of the above
21) In February 2005, the American Institute of Certified Public Accountants (
A.channel stuffing
B.recording fictitious business transactions and events or altering the timing of
recognition of legitimate transactions
C.recording and reversing biased reserves through unjustifiable estimates and
judgments
D.changing the records and terms of significant or unusual transactions
22) Select five actions most likely to be associated with forensic sociology.
1>The legal issue of competency and whether a defendant was sane at the time the
crime occurred.
2>The profiling of offenders.
3>Unlawful discrimination.
4>When treating mentally ill offenders.
5>Spousal abuse.
6>Consulting with attorneys when picking a jury.
7>Emphasizes the relationship between the standards of validity and reliability and the
rules of evidence.
8>Pornography.
9>Analyzing a criminals mind and intent.
10>How to improve interrogation methods.
11>Toxic torts.
12>How to evaluate eyewitness testimony.
13>Help design effective correctional facilities.
14>Can help us to understand who commits fraud and why.
A.2, 5, 7, 8, and 11
B.2, 3, 6, 10, and 9
C.1, 4, 6, 9, and 10
D.3, 5, 7, 8, and 12
23) Journal entries of concern include:
A.entries made by accounting personnel
B.entries made by members of senior management
C.routine accrual entries prepared at year-end
D.All of the choices are correct
24) In Jones and Laughlin vs. Pfeifer, the Supreme Court allowed an option for
projection earnings and the appropriate discount rate:
A.Case-by-case method
B.Below market discount method
C.Total-offset method
D.All of the above
25) The USA PATRIOT (Uniting and Strengthening America by Providing Appropriate
Tools Required to Intercept and Obstruct Terrorism)Act is focused on:
A.blue-collar crime, money laundering, and terrorist financing
B.white-collar crime, money laundering, and aggressive terrorist acts
C.white-collar crime, money laundering, and terrorist financing
D.white-collar crime, identity theft, and terrorist financing
26) As a result of events such as the passing of the Sarbanes-Oxley Act of 2002 (SOX
Act) and the Emergency Economic Stabilization Act of 2008 (EESA) professionals
practicing in the traditional areas of tax, audit, management, information systems,
government, not-for-profit, external (independent), and internal audit are expected to
have a greater understanding of fraud and financial forensics.
27) The assertions of management related to financial statements include all of the these
EXCEPT:
A.The existence of assets and transactions
B.The completeness of the transactions
C.Proper disclosure of all rights and obligations
D.Assurance of future profitability
28) An example of an indirect method of income determination is:
a.Bank analysis method
b.Net worth method
c.Title companies
d.All of the above
29) The second step to develop an approach to fraud detection is to:
A.develop an understanding of the control environment
B.develop a system of internal controls
C.define the authority of the audit committee
D.identify the members of internal audit and the audit committee
30) Which of the following is not considered CAATTs (Computer-Aided Audit Tools
and Techniques) software:
A.Microsoft Dynamics GP
B.IDEA
C.ACL
D.Picalo
31) Which of the following is an example of collusion:
a.A supervisor puts his meal expense on a subordinates expense account so the
supervisor can approve it
b.A manager approves a price override after pleas from the salesperson
c.A vice-president overrides a subordinates denial of expense reimbursement
d.All of the above
32) Which of the following is an example of churning:
a.An investor who frequently trades for his account
b.An advisor who reinvests dividend and interest payments regularly for a client
c.An advisor who executes frequent trades to take advantage of market movements
d.An advisor who executes frequent trades to generate income for himself
33) Match each description with its correct term
a. invigilation
b. validity
c. evidence
d. predication
e. indirect evidence
Descriptions:
1>The pattern of behavior of a suspected fraudster prior to, during, and after the suspect
is involved with an event.
2>The totality of circumstances that would lead a reasonable, professionally
trained, and prudent individual to believe that a fraud has occurred, is occurring, or is
about to occur.
3>Anything legally admitted at trial that is relevant to the case.
4>Corroboration of testimony, then consistency of data
5>Use of bank records, internet information, lifestyle information, e.g. not direct
information concerning income/cash receipts to determine amount of income hidden
34) RICO typically addresses which of the following activities?
A.environmental issues
B.workplace issues such as lost wages, disability, and wrongful death
C.costs and lost profits associated with construction delays
D.money laundering
35) White-collar criminals are losing their fear of the Federal Bureau of Investigation
(FBI) primarily because:
A.the agencys job has shifted its entire terrorism issues
B.the agency has lost much of its brain trust to the private sector
C.the economic woes of the country have nothing to do with white-collar crime
D.All of the above are correct responses
36) Digital evidence would not include:
A.voicemails
B.bank statements
C.DVDs
D.XM/Sirius radio players
37) Cresseys classic fraud triangle helps explain the nature of all occupational
offenders.
38) ________ schemes involve the submission of invoices for goods and services that
are either overpriced or completely fictitious.
M.Conflicts of interest
N.Economic extortion
O.Kickback
P.Illegal gratuities
39) Current ratio is computed by:
Q.Current liabilities / current assets
R.Current assets / current liabilities
S.Total assets / total liabilities
T.Total liabilities / total assets
40) What techniques are generally used to conceal a receivables skimming scheme?
41) Define four different measures of value used by a forensic accountant.
42) What are the five types of interview and interrogation questions?
43) What types of company assets are typically misused?
44) Which of the following is NOT a red flag associated with improper disclosures?
Q.A strong, independent audit committee
R.Domination of management by a single person or small group
S.Rapid growth or unusual profitability, especially compared to other companies in the
same industry
T.Significant related-party transactions not in the ordinary course of business
45) Provide an example of the following:
Data mining software