1) Fraud may only be prosecuted criminally.
2) With fraudulent representations such as materially misstated financial statements and
improper tax returns, the investigator starts with the suspected perpetrator.
3) This Periodicity assumption uses the principle of dividing economic activity into
specific time intervals, such as monthly, quarterly, and annually as well as a five year
time period.
4) Skimming schemes can be subdivided based on whether they target sales or
receivables.
5) A deposition is a post-trial process by which the parties to a civil litigation are
allowed to examine the other sides fact witnesses and expert witnesses.
6) According to generally accepted accounting principles, the cash basis of accounting
should be used for financial reporting
7) Once data sectors on computer files have been overwritten, generally a computer
forensic specialist can still recover the files.
8) In order to conceal their thefts, some employees might ring a no sale or other
noncash transaction on their cash registers to mask the theft of sales.
9) Probable cause is the standard by which law enforcement may make an arrest,
conduct a personal or property search, or obtain a warrant.
10) Generally, all employment benefits are lost when an injury or permanent disability
occurs.
11) At a minimum, during the close of an interview, the interviewer will review and
summarize important aspects of the interview, clarifying when necessary and asking
any final questions about the interviewees responses.
12) The matching concept recommends but does not require that the books and records
and the resultant financial statements match revenue and expense in the proper
accounting period.
13) Why might senior management overstate or understate business performance?
14) If the victims or others with a stake in the outcome of a fraud trial are not satisfied
with the results of the criminal justice system, they may pursue their claim through the
civil justice system.
15) The general law of confessions requires that they be completely voluntary.
16) As the fraud examiner or forensic accountant moves away from witnesses and
toward those with higher levels of culpability, the interviews are likely to be friendly
and less adversarial.
17) The threat of surprise audits, especially in businesses that are currency-intensive, is
not a powerful deterrent to occupational fraud and abuse.
18) The First Amendment provides that a person cannot be compelled to provide
incriminating information against himself in a criminal case.
19) Only after suspected coconspirators have been interviewed is the person suspected
of committing the fraud confronted.
20) Which of the following is a significant conclusion based on the research of
Hollinger and Clark?
A.substantially increasing the internal security presence may reduce employee theft
B.tightening controls over property deviance may create less detrimental acts affecting
the productivity of the organization
C.special attention should be afforded to older employees, since they have lower levels
of financial authority and are more likely to steal for their retirement
D.increased management sensitivity to its employees would reduce all forms
of workplace deviance
21) Signs of pressure that would prompt an individual to commit fraud include:
a.A wealthy brother
b.Success at work
c.An change in home value
d.Both a and c
22) Which individual or group of individuals has a primary role in corporate America of
creating a system of checks and balances in an organization through its authority to hire
and monitor management and evaluate their plans and decisions and the outcomes of
their actions?
A.The board of directors
B.The president/chief executive officer
C.The personnel department
D.The shareholders through the annual shareholders meeting and voting their shares
23) Which of the following is not one of the four common elements of occupational
fraud and abuse first identified by the Association of Certified Fraud Examiners in
1996?
A.The activity costs the employing organization assets, revenues, or reserves
B.The activity violates the employees fiduciary duties to the organization
C.The activity is clandestine
D.The activity is restricted to corporate executives
24) The three legs of the fraud triangle are:
A.Opportunity, Perceived Pressure, and Rationalization
B.Opportunity, Value, and Rationalization
C.Opportunity, Perceived Pressure, and Benefit
D.Timing, Value, and Benefit
25) A colleague witnesses the defendant counting a large amount of cash. The defendant
is accused of theft. This evidence is:
a.Circumstantial and relevant
b.Circumstantial and irrelevant
c.Direct and relevant
d.None of the above
26) Which of the following would be considered a batch control for payroll?
A.A total on FICA taxes withheld
B.A total on Federal Income taxes withheld
C.A total on employee hours
D.A total on state income tax withheld
27) Ghost employees can be created by:
a.Directing employees to falsify time and attendance data
b.Failing to remove a terminated employee from the payroll
c.Padding actual employees hours worked
d.All of the above
28) The graphic 10-5 is called a(n):
A.Association matrix
B.Link chart
C.Familial chart
D.Grouping chart
29) Continued professional development will be required:
A.only by entry-level personnel concerning task-specific and organization-specific
issues
B.by entry-level and experienced staff concerning task-specific and
organization-specific issues
C.by experienced staff only concerning task-specific and organization-specific issues
D.by entry-level and experienced staff concerning only task-specific issues
30) A shell company is:
a.A fictitious company
b.Is controlled by a fraudster
c.Is used to conceal fraudulent invoices
d.All of the above
31) The ________ Amendment entitles a person to due process of law and equal
protections under the Law.
A.Fifth
B.Fourth
C.Sixth
D.Fourteenth
32) How do you detect a ghost employee:
a.Have someone other than the supervisor distribute paychecks
b.Have paychecks automatically deposited
c.Trace timecards to actual employees
d.Both a and c
33) Which of the following is an example of financial statement fraud:
a.The sales manager records as a sale shipments of goods on January 1, 20X1, the day
after year-end
b.The financial controller capitalizes a large amount of expenses that should have been
included on the income statement
c.The CEO insists that current year bonuses be deferred to the next fiscal year for
payment
d.Both a and b
34) The expert witness can also present a negative impression through:
Y.Illustrations and analogies
Z.Confidence
AA.Hesitation when answering questions
BB.Concise organizations
35) Which society was established in 1973 to establish a strict code of professional
standards for members engaged in the examination of financial institutions?
A.National Association of Certified Valuation Analysts
B.Association of Certified Fraud Examiners
C.Financial Forensics Institute
D.Society of Financial Examiners
36) Select the incorrect sentence continuation. Professionals with financial forensic and
fraud examination skills may also work at federal government agencies such as the
Government Accountability Office (GAO). This work:
A.may also be very political
B.can have a significant impact on the public good
C.will not work with the creation of budgets
D.is subject to bureaucratic obstruction
37) The acronym M.I.C.E. as typical motivations of fraud perpetrators stands for:
A.Money, Ideology, Coercion, and Environment
B.Money, Ideology, Coercion, and Ego
C.Motive, Ideology, Coercion, and Ego
D.Money, Image, Capability, and Environment
38) In order to prove invigilation, an attorney must:
a.Show cause
b.Show intent
c.Show a pattern of loss during the defendants tenure
d.Show concealment
39) Legal privileges are protections against certain types of testimony. Which of the
following is not a legal privilege?
A.Attorneyclient privilege
B.Librarian-patron privilege
C.Attorney work-product privilege
D.Physicianpatient privilege
40) According to the ACFE, owners and executives are involved in only about:
A.23 percent of frauds and steal approximately $834,000
B.40 percent of frauds and steal approximately $834,000
C.64 percent of frauds and steal approximately $834,000
D.93 percent of frauds and steal approximately $834,000
41) Which of the following statements is not a major financial statement?
A.Income Statement
B.Balance Sheet
C.Statement of Cash Flows
D.Sales Budget
42) Which is considered the lowest threshold for ethical decision making?
A.A professional code of ethics of an accounting organization
B.Codes of conduct or directives about what is best for society
C.The law
D.Codes of conduct guided by trust in the underlying values that guide society
43) As part of legal and regulatory oversight to prevent misconduct, including fraud,
professionals are checking for compliance and doing risk analysis for:
A.the Sarbanes-Oxley Act of 2002 (SOX Act)
B.environmental
C.health and safety (OSHA) issues
D.All of the above are correct
44) M/CMost data extraction and analysis tools can:
A.retrieve, sort, and filter data
B.extract, and analyze data from accounting databases
C.identify gaps, duplicates, missing information, and statistical anomalies
D.All of the above are correct answers
45) The term white collar crime was coined by:
A.Donald Cressey
B.Steve Albrecht
C.The Association for Certified Fraud Examiners
D.Edwin Sutherland
46) Earnings management may:
A.increase current period net income
B.decrease current period net income
C.may involve consuming prior period reserves for current period performance
D.All of the choices are correct
47) Collusion can occur:
a.Only at high levels in the organization
b.At low levels in the organization if a high level employee is involved
c.At all levels of the organization
d.Only at middle levels of the organization
48) The audit committee is:
A.independent of the board of directors
B.is a subcommittee of the board of directors
C.is responsible for reviewing the effectiveness of internal controls
D.Both B and C are correct answers
49) Intent:
a.Need not be proved directly
b.Must be proved
c.Must be proved with evidence
d.Both b and c
50) Including a supervisors expenses on his employees expense report is one way of
committing expense fraud.
51) Clothing store employees typically get significant (30 50%) employee discounts on
store purchases for personal clothing purchases. How can management audit employee
discounts to insure the clothing discounts are not given to friends and family?
I.Compare adjustments to inventory to the void transactions of the employee
J.Extract sales with over 30& discount and summarize by employee
K.Summarize user access for the sales and inventory systems
L.Extract invoices with partial payments
52) What is the best proactive computer test to detect skimming where an employee
with low sales may be a suspect?
I.Summarize the top ten receivables accounts
J.Summarize sales by locations
K.Summarize net sales by employee, and list the lowest ten employees
L.Summarize by employee discounts
53) One-time transactions of large values should be scrutinized to ensure they have an
appropriate underlying business rationale because generally such transactions will be
fraudulent.
54) Which of the following is a concern in determining incremental costs?
U.Allocated costs
V.Accounting estimates
W.Time value of money
X.All of the above
55) Which internal control procedure is most effective in preventing skimming?
I.Video cameras
J.Segregation of duties
K.Good records
L.Cash accounts