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 primary purposes: providing an introduction,
establishing a rapport, between you and the subject, establishing the theme of the
interview, and observing the subjects reactions.
3) Force balancing is one of the least dangerous receivables skimming schemes. In this
technique the perpetrator is in charge of collecting payments.
4) The conservatism constraint requires that, when there is any doubt, one should avoid
understating assets and income.
5) Management has an obligation to disclose to the shareholders fraud committed by
officers, executives, and others in positions of trust.
6) Most cash larceny occurs at the point of sale.
7) Remediation is characterized as the steps necessary to clean up the mess after a fraud
or financial crime has been discovered and investigated, and the results of the
investigation have been reported.
8) Death by a thousand cuts involves stealing cash one thousand dollars at a time.
9) If a misstatement on financial statements is so significant that reasonable, prudent
users of the financial statements would make a different decision than they would if
they had been given correct information, then the misstatement is material and requires
correction.
10) The Twentieth Amendment entitles a person to due process of law and equal
protections under the Law.
11) A conflict of interest occurs when an employee, manager, or executive has an
economic or personal interest in a transaction that adversely affects the organization.
12) Taking extensive notes does not distract interviewers from their main responsibility
to watch and listen.
13) Lapping is the crediting of one account through the abstraction of money from
another account.
14) Trend analysis on aging of customer accounts cant be used to highlight a skimming
scheme.
15) During the admission-seeking interview, you should not make a direct accusation of
the subject.
16) Misuse of company assets, like personal use of automobiles and company office
supplies is not considered inappropriate by most companies.
17) Which of the following methods is used to make detection of persons responsible
for money laundering more difficult:
a.The use of electronic bank transfers
b.The use of cashiers checks
c.The use of commercial checks
d.All of the above
18) Variables from Albrechts study of red flag variables pertaining to occupational fraud
fell into which of the following two categories?
A.perpetrator characteristics and organizational environment
B.socioeconomic group and education
C.motivation characteristics and education
D.attitudes and habits
19) The fraud examiner or forensic accountant should understand that the opposing
lawyer will
Y.Learn your field
Z.Agree with your conclusions
AA.Know your report
BB.Know your resume
20) Which principle of ethical problems was championed by John Stuart Mills?
A.The Generalization Principle
B.The Utilitarian Principle
C.The Imperative Principle
D.The Responsibility Principle
21) The Sarbanes-Oxley Act of 2002, in particular section 404:
A.ensures that customers receive accurate and timely invoices
B.ensures that vendors are paid accurately
C.puts considerable emphasis on the system of internal controls
D.All of the choices are correct
22) SAS No. 99 lists several steps in considering the risk of fraud in a financial
statement audit. All of the following are correctly stated except:
A.Auditors must brainstorm with the key personnel of both the internal and independent
audit teams to plan a strategy to detect fraud
B.Auditors must evaluate the audit evidence throughout the audit and respond to any
identified misstatements
C.Auditors must determine the types of fraud risks that exist
D.Auditors are required to report all fraud to an appropriate level of management
23) The Sarbanes-Oxley Act of 2002 (SOX Act) and the Emergency Economic
Stabilization Act of 2008 (EESA) both are focused on external controls and auditing
practices.
24) There has been a great deal of concern about the issue of corporate governance and
accountability of publicly traded companies because of:
A.internal audit failures such as those associated with Enron, Crazy Eddie, and
WorldCom
B.board of director involvement in the external audit process
C.financial statement fraud
D.None of the above are correct answers
25) The most common anti-fraud measure used by respondents to the ACFEs National
Fraud Survey was:
A.the external audit of financial statements
B.a formal code of conduct
C.surprise audits
D.job rotation/mandatory vacation policies
26) The pending lawsuits in the notes to the financial statements of 10-Ks of most
corporations are most likely all of the following except:
A.anti-trust actions
B.intellectual property infringements
C.tax claims
D.RICO activities
27) The two primary functions of financial forensics are:
A.litigation advisory services and investigative services
B.litigation advisory services and expert witness services
C.post event auditing services and investigative services
D.post event auditing services and expert witness services
28) Select the most correct statement from those below regarding the legal standards for
negligence.
A.Breacha determination that the defendant failed to use ordinary or reasonable care in
the exercise of that duty
B.Reasonablenessa determination that the defendant failed to use ordinary or reasonable
care in the exercise of that duty
C.Breachan actual connection between the defendants breach of duty and the plaintiffs
harm can be established
D.Cause in Fact the defendant must have been the proximate cause or contributed to the
injury to the plaintiff
29) The ________ Rule makes an opinion admissible only if that opinion has general
acceptance in the scientific community.
Y.Frye
Z.Daubert
AA.Campbell
BB.Brislin
30) The general framework for viewing IT risks and controls include all the following
EXCEPT
A.IT Operations
B.Systems Maintenance
C.Human Resource Management
D.Electric Commerce
31) Which computer audit step could catch a False shipment scheme?
A.Shipping documents with no associated sales order
B.Shipping documents with an associated sales order
C.Shipping documents that have been independently approved by management
D.Receipts in the receiving system that do not agree to the payables invoice
32) How would an investigator detect off-shore bank account made by a drug dealer:
a.Through testimony of company personnel
b.By tracing money transfers out of the country
c.Through testimony of neighbors
d.Through suspicion of ill-gotten gains
33) The basic accounting flow consists of the following events in what sequence?
1>Post to general ledger
2>Business transactions occur
3>Financial statements are prepared
4>Journal entries are recorded
A.2, 4, 1, 3
B.2, 4, 3, 1
C.4, 2, 3, 1
D.4, 3, 1, 2
34) Financial statement fraud consists of:
a.Recognizing revenues not yet earned
b.Inappropriate entries to reserve accounts
c.Capitalizing expenses when inappropriate
d.All of the above
35) This accreditation has been approved by the U.S. Department of Defense (DoD) for
information management.
A.Information Systems Audit and Control Association (ISACA)
B.Certified Information Security Manager (CISM)
C.Certified Information Systems Analyst (CISA)
D.Each of the above is accredited by the U.S. Department of Defense
36) The primary reason predator fraudsters continue to commit fraud is:
a.They are never caught
b.They resign before being caught
c.They are not prosecuted to avoid unfavorable publicity for their employer
d.All of the above
37) The separation of which tasks is needed to prevent ghost employees:
a.Timekeeping and the supervisor
b.Paycheck distribution and the supervisor
c.Timekeeping and payroll
d.Both a and b
38) Based on a number of theories, people obey laws for all of the following reasons
except:
A.The fear of punishment
B.The desire for rewards
C.In order to act in a just and moral manner according to societys standards.
D.Due to a duty to act
39) From the statements below select the most correct.
A.Prevention and deterrence are typically more costly than attempting to remediate a
fraud that has already occurred
B.Fraud deterrence refers to creating environments in which people are prohibited from
committing fraud
C.Fraud detection refers to the process of preventing and discovering the presence of
fraud
D.Prevention and deterrence are typically more cost beneficial than attempting to
remediate a fraud that has already occurred
40) An information technology (IT) audit consists of all EXCEPT
A.planning
B.tests of controls
C.substantive tests
D.qualitative tests
41) Good corporate governance fosters:
A.Establishing a positive work environment by implementing programs and initiatives
to enhance employee morale
B.Hiring and promoting employees who meet the high ethical standards of the entity
C.Disciplining those employees who fail to follow the code of conduct
D.All of the above
42) Rerouting a check from its intended delivery location is an example of:
a.Fraudulent maker
b.Fraudulent endorser
c.Fraudulent payee
d.None of the above
43) In September 2004, the Committee of Sponsoring Organizations (COSO) of the
Treadway Commission released their _______ framework, recognized by the SEC as
the critical methodology for SarbanesOxley.
A.ERM
B.IFRS
C.XBRL
D.XML
44) Non-verbal cues for deception include all EXCEPT:
A.Calmness
B.Hands over the mouth
C.Crossing the arms
D.Fleeing positions
45) Information systems:
A.as a mechanism for fraud prevention, deterrence, and detection cannot be overstated
B.usually provide weak evidence trails due to their digital nature
C.can be used to reconstruct actual data flow of considerable value to the fraud
specialist
D.generate small amounts of red flags, each of which requires further investigation
46) Similarities between organized crime and terrorist organizations are:
a.Both use coercion as their main tool
b.Both use violence
c.Both seek ways to hide their illegal activities
d.All of the above
47) Counterfeiting of documents can be performed by:
a.Using a color copier
b.Using a facsimile signature
c.Using a typewriter
d.Both a and c
48) Two separate defendants are charged with conspiring to commit fraud. Each has
chosen to be tried separately. In the first trial evidence is admitted that demonstrates the
defendant attempted to conceal her act of stealing cash. At the second trial, the
prosecuting attorney can:
a.Admit the same evidence
b.Refer to the evidence used at the first trial
c.Draw a link between the first trial and the second trial
d.None of the above
49) Internal Revenue Service (IRS) agents are involved in all of the taxation actions
listed except:
A.excise tax
B.sales tax
C.personal income tax
D.corporate income tax
50) Some of the typical forensic and litigation advisory services are:
A.costs and lost profits resulting from business interruptions
B.assets and business valuations
C.anti-trust actions
D.All of the above
51) The fraud examiner or forensic accountant can easily identify the assumptions that
he/she has made while thinking out of the box.
52) What is meant by corporate governance and why is it important?
53) ISACA has become a pace-setting global organization for information governance,
control, security, and information systems (IS) professionals.
54) A check issued to an employee for duplicate expense receipts is not a fraudulent
disbursement since it involves legitimate documentation.
55) In order to begin in information phase of the interview, you must first make a
transition out of the introductory phase. Which method is NOT commonly used during
this phase?
E.Begin with background questions
F.Observe verbal and nonverbal behavior
G.Ask leading (closed) questions
H.Approach sensitive questions carefully
56) Why are introductory questions so important to an interviews success?
57) Earnings management below a threshold value may be judged immaterial.