Chapter 02
a.
Incorrect. This is a deterrent to fraudulent behavior.
b.
c.
Incorrect. This is a deterrent to fraudulent behavior.
d.
Incorrect. This is a deterrent to fraudulent behavior.
LO: 2-6
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Bloom’s: Understanding
32. Which of the following people is most likely to have opportunities to commit fraud?
Rob is a convicted bank robber who has been out of jail for 7 years and is working for a small firm whose
manager knows about Rob’s criminal background.
Jane is a recent high school graduate who loves shopping. She is on the look out for a job.
Steve was just hired by his company but he is always acting suspicious
62 year old Dave has loyally worked up his company’s corporate ladder for the past 24 years
c.
Incorrect. More controls will be in place for Steve because he is not trusted.
LO: 2-1,6 – LO: 2-1
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Bloom’s: Understanding
33. According to the study mentioned in the text, people who commit fraud are most similar to which of the following
groups?
Property offenders
College students
Convicted felons
Animal lovers
a.
Incorrect. Fraudsters are not generally property offenders.
b.
Correct. Fraudsters tend to differ only slightly from typical college students.
c.
Incorrect. Fraudsters don’t generally have criminal records.
d.
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34. The theory behind _____ is that if people know their work or activities will be monitored by others, the opportunity to
commit and conceal a fraud will be reduced.
documentation
segregation of duties
system of authorizations
independent checks
a.
b.
c.
d.
Easy
LO: 2-2
United States – BUSPROG: – Technology
Bloom’s: Understanding
35. Which of the following is usually the most expensive of all control procedures?
Documents and records
Segregation of duties
System of authorizations
Independent checks
a.
b.
c.
d.
Moderate
LO: 2-6
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Bloom’s: Remembering
36. Segregation of duties, as a control procedure, is most often used
when the task involved is complex.
when it is impossible for one person to complete a task.
when appraisals are conducted.
when cash is involved.
a.
b.
c.
Bloom’s: Remembering
37. Documents and records are an important control activity. Which of the following statements concerning this activity is
true?
They serve as excellent preventive controls.
Adequate accountability can exist even in their absence.
The entire accounting system serves as a documentary control.
They are poor detective controls.
a.
b.
c.
d.
LO: 2-6
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Bloom’s: Remembering
38. Which of the following is an example of an authorization control procedure?
Password protection
Periodic job rotation
Cash checks
Supervisor review
a.
b.
c.
d.
LO: 2-6
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Bloom’s Remembering
39. Who do criminologists compare fraudsters to in relation to repeat offenses and why?
Rapists. They repeat their crimes because they are not severely punished.
Shoplifters. They steal goods frequently and in small quantities until they are confronted.
Bank Robbers. They steal a lot of money from wealthy sources.
d.
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Chapter 02
Bank Tellers. They have access to a large amount of resources and they are perceived to be trustworthy
people.
a
a.
Correct. Fraudsters repeat offenses because they are not severely punished.
b.
c.
d.
Easy
LO: 2-1
United States – BUSPROG: – Technology
Bloom’s: Remembering
40. Studies show that in advanced countries, levels of honesty are:
Generally stable
Increasing
Decreasing
c
a.
b.
c.
Correct. Levels of honesty are decreasing.
Easy
LO: 2-1
United States – BUSPROG: – Technology
Bloom’s: Remembering
41. Every fraud is comprised of all the following elements EXCEPT:
The theft act
Concealment
Conversion
Assault
a.
Incorrect. This is an element that comprises fraud.
b.
Incorrect. This is an element that comprises fraud.
c.
Incorrect. This is an element that comprises fraud.
d.
Correct. This is not a usual element of fraud.
Moderate
LO: 2-6
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Bloom’s: Remembering
42. According to Max Weber, ______ is the probability that a person can carry out his or her own will despite resistance.
Chapter 02
power
persuasion
prejudice
potency
a
a.
b.
c.
d.
Moderate
LO: 2-8
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Bloom’s: Remembering
43. ____________ is the ability of the fraud perpetrator to make an individual perceive punishment if he or she does not
participate in the fraud.
Expert power
Coercive power
Legitimate power
Reward power
a.
b.
c.
d.
Easy
LO: 2-8
United States – BUSPROG: – Technology
Bloom’s: Remembering
44. A fraud perpetrator is able to convince a potential victim that he will receive a large bonus if he supports him in a
fraud scheme. Which type of power is the fraud perpetrator using?
Expert power
Coercive power
Legitimate power
Reward power
a.
b.
c.
d.
45. Individuals often participate in fraud because they believe that by not participating in the fraud scheme, they may lose
their job. Which type of power is at play here?
Expert power
Legitimate power
Coercive power
Reward power
a.
b.
c.
d.
LO: 2-8
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Bloom’s: Remembering
46. Wilma participates in a fraud scheme by executing some derivative trades because she believed that a senior analyst
knew more about complex derivative transactions than she did. These transactions were fraudulent in nature. Which type
of power was employed to deceive Wilma?
Expert power
Referent power
Coercive power
Reward power
a.
b.
c.
d.
LO: 2-8
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Bloom’s: Remembering
47. _____ is the ability of the perpetrator to relate to the potential co-conspirator.
Expert power
Legitimate power
LO: 2-8
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Bloom’s: Remembering
Chapter 02
Referent power
Reward power
a.
b.
c.
d.
LO: 2-8
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Bloom’s: Remembering
48. Many individuals, when persuaded by a trusted friend to participate in fraud, will rationalize the actions as being
justifiable. Which type of power is being employed in such situations?
Referent power
Legitimate power
Coercive power
Reward power
a.
b.
c.
d.
LO: 2-8
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Bloom’s: Remembering
49. Which of the following is NOT a perceived pressure that can lead to employee fraud?
experiencing high medical bills because of illness in family
frustration with a co-worker
anticipated actual financial reports that are below published expectations
a challenge to beat the system
a.
This is an example of employee fraud.
b.
This is an example of employee fraud.
c.
This is an example of financial statement fraud.
d.
This is an example of employee fraud.
LO: 2-3
50. Which of the following is true regarding the fraud triangle?
The three elements of the fraud triangle are inter-active.
Rationalization for the fraud act is thought of after the fraud has been committed.
The perceived ability to conceal the fraud act concerns the rationalization side of the fraud triangle.
A financial pressure to commit fraud is the strongest pressure of the three fraud triangle elements.
a
a.
b.
c.
Incorrect as concealment is a part of perceived opportunity.
d.
Moderate
LO: 2-3
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Bloom’s: Understanding
51. Some researchers have added a fourth element to the fraud triangle making it a fraud diamond. What is that element?
propensity toward illegal acts
lack of self-respect
greed
capability
a.
b.
c.
d.
Easy
LO: 2-3
United States – BUSPROG: – Technology
Bloom’s: Remembering
52. Which of the following is a true statement regarding the fraud scale depicted in the text?
The greater the perceived opportunity to commit fraud, the less rationalization is takes to commit fraud.
The more dishonest a person is, the higher the need to rationalize the fraud act.
When the financial pressure increases, even low perceived opportunity is sufficient to commit fraud.
As the ‘need’ to gamble increases, rationalization to commit fraud becomes easier.
a
a.
b.
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Bloom’s: Remembering
53. Studies reveal that honesty levels in advaned countries are decreasing. What do these findings indicate for the future
regarding fraud?
Rationalizations will become more sophisticated.
Pressures to commit fraud will increase.
Less perceived opportunity will have to be present.
Honesty tests in the workplace will increase.
a.
Incorrect, the need to rationalize will be lower.
b.
Incorrect, the pressures to commit fraud will not necessarily increase.
d.
Incorrect, this may or may not be the case.
LO: 2-4
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Bloom’s: Remembering
54. Which of the following is an example of a vice pressure?
expensive extramarital relationship(s).
an extravagant life-style.
needing to appear successful.
being offered a bribe.
a.
b.
Incorrect, this is a financial pressure.
c.
Incorrect, this is not a vice pressure.
d.
Incorrect, this is not a vice pressure.
LO: 2-5
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Bloom’s: Remembering
55. Which of the following is NOT a work-related pressure?
LO: 2-4
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Bloom’s: Understanding
Chapter 02
fear of losing one’s job
wanting to appear successful
getting overlooked for a promotion
insufficient/little recognition for work performance
a.
b.
Incorrect, this is a work pressure.
c.
Incorrect, this is a work pressure.
d.
Incorrect, this is a work pressure.
LO: 2-5
United States – BUSPROG: – Technology
Bloom’s: Remembering
56. Which of the following about rationalization is NOT true?
Rationalization is a form of self-justification.
Rationalization is a way to lie to one’s self.
People who rationalize feel they are basically honest people.
Rationalizing is unnecessary when there are multiple opportunities present to commit fraud.
a.
Incorrect, as it is a true statement.
b.
Incorrect, as it is a true statement.
c.
Incorrect, as it is a true statement.
d.
Correct, rationalization is still a part of the decision to commit fraud.
LO: 2-7
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Bloom’s: Remembering
57. Which of the following statements is false?
Half-truths are often a part of rationalization.
The bigger the fraud act, the more believable the rationalization.
Many fraud perpetrators believe their rationalizations to be true.
Perceived rationalizations are a part of the fraud triangle.
a.
Correct statement
b.
False statement
c.
Correct statement
d.