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 sale, organizations should enforce
separation of duties in the cash receipts process and make sure there are independent
checks over the receipting and recording of incoming cash.
3) Most company ethics policies forbid employees from accepting unreported gifts from
vendors.
4) Fraud examination, forensic accounting, and litigation support activities can expose
the traditional accountant to more risk than consulting engagements and, possibly, to
more liability than traditional auditors.
5) The first goal of the opposing attorney during cross examination is to destroy the
experts credibility, if possible.
6) Interviews are normally conducted under oath, so they carry the same weight as
testimony and are invaluable tools used by the fraud examiner and forensic accountant
for gathering information.
7) Validation controls detest input errors by flagging those transactions that fall within
accepted ranges.
8) An activity that can enhance the ability to recover deleted files is the Defrag
command.
9) Preparing link charts is a way to represent the associations, linkages, and other
important relationship graphically.
10) Once illegal money has been combined with money from legitimate sources, one
can no longer follow the money; the money cant be traced.
11) Valuation engagements are created to value a business, business ownership interest,
security, or intangible asset.
12) Interrogations, or admission-seeking interviews, are reserved for obtaining
confessions from those believed to be culpable for the acts under examination.
13) The SarbanesOxley Act mandates that each member of a companys audit committee
must be a member of its board of directors and must otherwise be independent.
14) The simple act of turning on a confiscated computer, digital camera, cell phone,
PDA, etc. may make all the evidence on that digital device inadmissible in a courtroom.
15) Fictitious or fabricated revenue schemes involve the recording of sales of goods or
services that did not occur
16) The transfer of funds obtained illegally from a US bank to another US bank is an
example of:
a.Reiniating
b.Layering
c.Placement
d.None of the above
17) Which of the following would prevent a ghost employee scheme:
a.Separation of payroll and personnel functions
b.Separation of timekeeping and payroll functions
c.Separation of timekeeping and supervisor functions
d.None of the above
18) To be proactive, the audit committee should ensure that:
1>Audit committee members have knowledge, education, awareness, and sophistication
concerning the various fraudulent management override and collusive schemes that
may be perpetrated by management.
2>Only the external audit group needs have knowledge, education, awareness, and
sophistication concerning the various fraudulent management override and collusive
schemes that may be perpetrated by management.
3>The audit committee has reviewed the comprehensive fraud risk assessment provided
by management and also considers how collusive fraud and management override
schemes are mitigated and detected.
4>The audit committee periodically participates in continuing education programs that
can prepare its members to appraise managements fraud risk assessment.
5>The audit committee identifies who has the specific responsibility for the collusive
and management override fraud risk assessment process: its members, the internal audit
group, or the independent audit group?
6>The audit committee is interacting with personnel beyond executive management and
asking the tough questions of knowledgeable employees, financial managers, internal
auditors, and external auditors.
7>The audit committee has a protocol for acting on proven unethical and potentially
fraudulent conduct.
Select the answer which is most correct.
A.1, 2, 3, and 5
B.1, 3, 4, and 6
C.3, 4, 6, and 7
D.4, 5, 6, and 7
19) The ______ Amendment provides that a person cannot be compelled to provide
incriminating information against himself or herself in a criminal case.
A.Fifth
B.Fourth
C.Sixth
D.Fourteenth
20) The long-term success of any professional endeavor is derived from several
sources. In proper order they are:
A.Education, practice, and research
B.Identify the problem, research, education, and practice
C.Education, practice, and research
D.Research, practice, and education
21) The control environment also excludes:
Y.Integrity and ethical values
Z.A passive board of directors and audit committee
AA.Periodic assessment of the organizational structure
BB.Human resource policies and practices that facilitate a good control environment
22) Cyberforensics would generally not involve:
A.capture and preservation
B.Identification and extraction
C.operating system identification
D.documentation and case preparation related to digital data
23) The lead audit or coordinating partner and reviewing partner of the registered
accounting firm must rotate off of the audit every ________ years.
A. Five
B.Ten
C.Two
D.When the PCAOB mandates it.
24) Which of the following is an example of an effective logging technique used in the
organization of evidence:
a.Bates numbering
b.Organized by defendant
c.Organized by name
d.Both a and b
25) RICO:
a.Addresses the illegal activities in organizations that mix both legitimate and illegal
activities
b.Addresses only organizations formed to sponsor terror groups
c.Addresses civil as well as criminal issues
d.All of the above
26) Auditing is responsible for:
A.litigation support and redemption
B.risk assessment and internal controls
C.risk assessment and calculation of damages
D.business valuation and risk assessment
27) An interview that is conducted in order to obtain a confession is called:
a.A confession
b.An interrogation
c.Cross-examination
d.None of the above
28) Which government agency handles export and import licenses:
a.Commerce department
b.Department of the Treasury
c.Department of State
d.None of the above
29) The conversion of illegal funds to assets is which step in the money laundering
process:
a.Layering
b.Placement
c.Reinitiation
d.None of the above
30) Which of the following is a method used to detect forgery:
a.Examination of facsimile plates
b.Determining document age
c.Presence of coffee stains
d.Presence of folds and staples
31) Large frauds are typically associated with all of the following except:
A.Lack of segregation of duties and responsibilities
B.Placing undeserved trust in key employees
C.Operating on a crisis basis
D.Working with management to set realistic goals
32) Presenting a positive appearance can bolster credibility. Aspects of a positive
appearance EXCLUDE:
Y.Body language, including attentiveness and sitting up straight
Z.Eye contact
AA.Business attire
BB.Abrupt or argumentative responses
33) Three of the various objectives of an internal control program are:
A.fraud prevention, fraud deterrence, and fraud mitigation
B.fraud prevention, fraud deterrence, and fraud detection
C.fraud deterrence, fraud detection, and fraud prosecution
D.fraud elimination, fraud deterrence, and fraud mitigation
34) According to Mr. Sam E. Antar (former Crazy Eddie CFO and a convicted felon),
A.internal audit committees are adequately independent but need better training
B.a board of directors has an appropriate level of education and curiosity but needs
better training for their posting
C.external auditors have adequate training but need continued professional education
for their task
D.while legal and acceptable, stock compensation and stock ownership by board
members may be inappropriate to the boards tasks and responsibilities
35) Financial statement fraud often involves:
a.A high level financial executive
b.Large dollar amounts
c.The collusion of two or more employees
d.All of the above
36) Brenda is the new company CFO and she wants to prevent a shell company scheme.
She should implement which of the following controls:
a.Separation of duties between accounts payable and the treasurer
b.Separation of duties between purchasing and the controller
c.Separation of duties between purchasing and accounting
d.None of the above
37) Members of the PCAOB are appointed by the:
A.
B.SEC
C.FASB
D.IASB
38) While a fraud examiners objective is to determine whether fraud has occurred and
who is likely responsible, the financial forensics investigators objective is to:
A.calculate financial impact based on formulaic assumptions
B.determine whether the allegations are reasonable based on the financial evidence and,
if so, the financial impact of the allegations
C.Gather the required financial and nonfinancial evidence to examine the allegations
independently and determine their financial impact
D.attempt to gather sufficient evidence to support or refute the allegation and related
damages
39) Collusion involves:
a.Two or more individuals working together to override internal control
b.Negating the effect of separation of duties
c.At least one high level employee
d.Both a and b
40) The functions of data extraction and analysis software tools includes all EXCEPT:
A.Compliance verification
B.Input into inventory system
C.Duplicate searches
D.Correlation analysis
41) Which of the following is not a responsibility of the PCAOB?
A.Registering public accounting firms that audit publicly traded companies
B.Inspecting registered public accounting firms
C.Converging GAAP standards with IFRS standards
D.Enforcing compliance with the SarbanesOxley Act
42) Data can be altered by:
a.Changing numbers on a check; e.g. making a 3 an 8
b.Destroying supporting detail
c.Making copies and submitting them as the original
d.All of the above
43) One common way to divert sales proceeds to yourself is by:
a.Opening a store for business before official starting time
b.Giving discounts for damaged merchandise without management approval
c.Diverting inventory to another store
d.All of the above
44) The most frequently reported method of uncovering occupational fraud was:
A.by accident
B.through internal audits
C.tips
D.through internal controls
45) In order for a pay and return scheme to work, vendors must be an accomplice.
46) Why is it advisable to obtain a written confession from the subject of an
investigation?
47) Provide an example of the following:
Direct evidence
48) There are many accreditations mentioned in the chapter. Why are such
accreditations considered important?
49) Explain the difference between mail and wire fraud. Which do you think might
be easier to detect? Why?
50) Rationalization must occur before the act of abuse or fraud.
51) Obtaining documents dating prior to a suspected fraud is a form of invigilation.