The effects of potentially bad financial statements being used by business stakeholders
is called risk and is the fundamental reason why audits are performed.
Tip and fraud hotlines only help catch fraud.
Interviewing skills are of paramount importance for the forensic accountant.
There are many ways for a forensic accountant to become involved in a
financial-crimes investigation, such as in the capacity of in-house accountant, as an
external auditor, or as an outside consultant.
Standard of value is defined as value that is relevant to a particular entity or individual.
Changes in behavior can signal underlying problems that are bothering the person.
These are referred to as person related symptoms of fraud.
Some Information security assurances involve organizations such as Local, state,
national and international governments and organizations, Organizational policy makers
(e.g., for policies relating to security, personnel, procurement, and marketing) and End
users (including consumer and business users).
Audit work is primarily concerned with cash reconciliation.
Over 90% of bankruptcy cases involve fraud.
Errors are always an indication of intentional fraud.
The only way with withholding of goodnews/badnews hurts investors is if corporate
management sells some of their own shares.
Instead of firing an employee, an employer may provide them with excellent references
to obtain a new job.
Chapter 13 bankruptcy is less desirable for the debtor, since it requires debt repayment
from the debtor’s future income.
The investigator should write the report in such a ways so as to avoid litigation.
The last major revision of the internal revenue code was done by congress in 1986.
It’s not uncommon for European groups of individuals with terrorist ties to publicly
preach jihad and openly commit themselves to suicide attacks, while the authorities can
only stand by and watch.
The general methods for financial statement fraud involve improper accounting
treatment such as leaving liabilities off the balance sheet.
Governmental agencies never use forensic accountants.
Most Muslims in Europe subscribe to radical Islamic fundamentalism, and many of
those who do support the idea of the Islamic state subscribe to violence.
Internal control is very much process oriented.
Investigation methods used to detect financial statement fraud are similar to those used
to audit financial statements.
Kickbacks are when inside information is given to one bidder so they can have a leg up
on the bidding process.
The principle of predication dictates that there must be a reasonable justification for
each step in the evidence collection process.
The United States Sentencing Commission relieved judges of all guidelines for
sentencing corporations because of the Savings and Loan failures of the 1980’s.
Process control means that the process produces results that are consistent and
according to plans.
Software assets include data and information of all types, including for example, data
files, accounting information, plans and strategies, policies, intellectual property,
documentation, user manuals, training manuals, policies and procedures.
Threats are systems-related individuals or events that can result in losses to the
organization.
Vendor fraud may include balance billing, short shipments or fraudulent cost-plus
billing.
The fraud investigation engagement process is a series of steps that begins at the time of
the investigator’s first contact with the case and ends with a conviction or plea bargin.
A fired employee who is denied unemployment compensation can typically demand an
administrative hearing.
All courts treat all scientific data the same.
An unqualified report means that the auditor who is doing the report feels unqualified to
make any sound judgments about the company.
In some cases, a fraud investigation report may trigger mandatory reporting of the fraud
to a government agency.
One of the mandated standards within Title I of SOX is that auditors must retain their
working papers for a minimum of five years.
Chemical analysis is performed by means of infrared, fluorescence, and
spectro-chromatography to establish the difference between inks appearing on the same
paper in handwriting analysis.
Predication dictates that there must be a reasonable justification for each step in the
evidence collection process.
Financial statement fraud is always discovered through missing documents.
Due to the Sarbanes-Oxley Act of 2002, CEO’s no longer have to sign their financial
statements.
According to FBI reports, the LCN and its associates remains actively engaged in drug
trafficking, murder, assault, gambling, extortion, loan-sharking, labor racketeering,
money laundering, arson, gasoline bootlegging, infiltration of legitimate businesses,
stock market manipulation, and various other illegal frauds and schemes.
Despite the use of SAS 99, not all fraud is detected.
The board that is similar to the FASB but provides rules for governmental entities is
called:
a.Securities and Exchange commission.
b.House Ethics committee.
c.Governmental Accounting Standards Board.
d.Governmental Board for Accounting Reporting.
When dealing with the issue of asset concealment in divorce cases, the forensic
accountant must keep in mind that:
a.one or both parties will always be trying to conceal assets from the other party.
b.lawyers from either party may be employing the forensic accountant in order to drain
marital assets.
c.assets may be accidentally concealed as some individuals are not good at financial
record keeping.
d.All of the above.
If the employer doesn’t reconcile sales and collections for the cash box at the end of
each shift, then the cashier may be free to steal from the cash box without restraint. This
is an example of:
a.advanced sales skimming.
b.robbing the till.
c.short-change sales.
d.cash stolen in transmission.
Double Jeopardy is when:
a.You can be tried for the same crime in both Federal and State courts.
b.You cannot be tried in the same court for the same crime once the trial begins.
c.You cannot be tried for the same crime in the same court if the judge dismisses the
case.
d.All of the above are true.
The Institute of Internal Auditors (IIA) publishes what?
a.FASB Statements.
b.GAAP.
c.SIAS.
d.SAIS.
Why is risk in financial misstatements too important not to recognize?
a.Because the employees need good information to ask for appropriate raises from.
b.So suppliers will know how much to charge for future deliveries.
c.Due to SEC regulations.
d.Users of the financial statements will be harmed if they are not correct.
If a taxpayer is to be charged with committing tax fraud, the taxpayer must have
committed a(n):
a.Affirmative indicator and have violated the law willingly.
b.Affirmative act and have violated the law either willingly or unwillingly.
c.Affirmative act or indicator and have violated the law willingly.
d.Affirmative act and have violated the law willingly.
What is a search warrant?
a.A tool used to allow a forensic accountant to talk to a suspect.
b.Part of the industry analysis that allows a forensic accountant to obtain financial
statement from other businesses in the same industry to make comparative analysis.
c.It is similar to a arrest warrant, only more vague because the suspect is not
specifically named.
d.A written order that allows a specified place to be searched and specified items to be
seized.
The four transaction cycles Financial Supply Chain Management, Procurement and
Inbound/Outbound Logistics, Product Manufacturing and Deployment and Sales and
Service are a part of:
a.the principles of internal control.
b.the SAP modules.
c.the Just in Time inventory model.
d.total quality management.
The incident report contains:
a. All evidence that will need to be turned over to the defense during discovery.
b. Detailed working papers to prove the fraud.
c. The initial information used to justify the investigation.
d. A bench warrant for the accused.
Which of the following is NOT a method to be used in a fraud investigation?
a. Covert surveillance of employees at home
b. Reviews of documents
c. Interviews with employees
d.Surreptitious surveillance of employees
What should the interviewer never do?
a. Act angry
b. Be indifferent
c. Act friendly
d. Be angry
What are some examples of specific services that Accountants can provide in ADR
cases?
a.In corporate acquisitions, evaluating for the seller the buyer’s notice of objection to
the closing balance sheet.
b.Suggesting mediation or arbitration procedures, or ADR administrators, to clients.
c.Identifying, locating, and evaluating documents and information relevant to
evaluating disputed issues.
d.All of the above.
How could Information security assurance (ISA) be implemented at your businesses or
college?
Recovery through litigation means:
a. The corporation must pay the legal costs of the accused.
b. Both the plaintiff and defendant must pay a court fee for the proceedings.
c. The court may require the accused to pay if found guilty.
d. If found not guilty, the defendant may require legal fees be paid by the plaintiff.
What are some rationalizations for people to commit fraud or steal from a company?
a.antisocial personality disorder.
b.dissocial personality disorder.
c.pressure to conform to a corporate environment.
d.all of the above.
Projected free cash flow available to equity (FCFE), is defined as the amount of cash
available to shareholders after:
a.All liabilities are paid.
b.All assets are liquidated.
c.All expenses, reinvestment, and debt and preferred dividend payments.
d.All of the above.
If a businesses assets are going to be valuated at a high synergistic possibility, then it is
assumed:
a.That they are going to be broken into pieces and sold separately outside the business.
b.They are going to be sold as a group outside the business.
c.They are going to be sold at their salvage value.
d.They are going to be sold as a group inside of the businesses.
How might a forensic accountant notice a program alteration?
a.By reviewing the programming knowledge of each employee.
b.By matching source code from the manufacturer to the program installed at the
company.
c.Through interrogation of employees.
d.Through a program change log.
In order for a hotline to be sufficient, it should be combined with:
a.An ethics code.
b.Proper monitoring.
c. The right tone from the top of the company.
d.All of the above.
How does Internal Auditing help an organization?
a.It reduced the cost of external auditors having to spend as many billable hours during
the audit because the internal auditor does most of the work.
b.It helps and organization by providing more credibility to the pubic so they will gain
additional investors.
c.It brings the organization into compliance with several Federal and State mandated
programs.
d.It helps an organization accomplish its objectives by bringing a systematic,
disciplined approach to evaluate and improve the effectiveness of risk management,
control, and governance processes.
The Arbitrage Pricing Theory is commonly implemented with models that use things
like:
a.Inflation rates.
b.Overall business default rates.
c.Interest rates.
d.All of the above.
Some areas of disputes that commonly involve forensic accountants are:
a.Financial and economic damages.
b.Government grants and contracts.
c.Intellectual property and technology assets.
d.All of the above
What are some other items that are acceptable to be billed as part of the investigation?
a. All of the below are acceptable.
b. Meals
c. Travel
d.Phone charges
In the absence of any pre-established protocols within a company, a fraud examiner
must:
a. Find case precedence from a previous fraud of similar scope and use their protocols.
b. Work with law enforcement to establish protocols.
c. Develop a set of protocols prior to the specific investigation they are working on.
d. All of the above
Level 5 of the fair value hierarchy estimates:
a.Market values based on quoted prices for a similar asset, with adjustments made for
differences between the subject asset and the similar asset.
b.Market values based on mathematical models that use directly-related market
variables as indicators of market value.
c.Market values based on mathematical models that use indirectly-related market
variables as indicators of market value.
d.Market values based on mathematical models that use internal business inputs as
indicators of market value.
Which of the following is NOT a legal issue to consider prior to a fraud investigation?
a. Rights of workers or other suspects under investigation.
b. The possibility of conducting the investigation under attorney-client privilege.
c. Possible illegal activities by the corporation itself.
d.Rights of investigating employers.
Which of the following types of assets require protection according to the ISO
standards?
a.Human Resource.
b.Information Assets.
c.Software Assets.
d.All of the above.
The mission of the Criminal Investigation Division is to:
a.Encourage voluntary taxpayer compliance with the tax laws and to foster public
confidence by means of effective enforcement of criminal statutes that apply to tax
administration and financial crimes.
b.Encourage voluntary taxpayer compliance with the tax laws and foster a sense of
confidence that the IRS will detect and severely punish those who do not comply with
its tax administration.
c.Seek all law violators and ensure that their taxes, penalties and jail time are served to
the fullest extent.
d.Seek all public information available on taxpayers in order to determine which ones
are not in full compliance with IRC code.
DNA comparisons are generally considered:
a.100% reliable.
b.Not as reliable as fingerprints.
c.Only as reliable as the crime lab that processes them.
d.Reliable, but still subject to error.
One of the biggest lessons learned by studying cases of financial statement fraud is that:
a.Management will always have the power of greed behind them.
b.Only fools believe in fraudulent financial statements.
c.Auditors can only certify financial statements if they are paid off.
d.People who are making money from fraudulent financial statements want to believe in
them.
What is one of the criteria to becoming a made man?
a.Donate a large amount of money to a charity.
b.Recruit at least 4 other men to become soldiers in the organizations.
c.Carry out a hit.
d.All of the above.
Describe what is contained in a complete court case.
Compare and contrast the usage of internal versus external auditors.
Compare and contrast Trusted Product Evaluation Program (TPEP) and the Trust
Technology Assessment Program (TTAP).
What is business valuation?
a.A discipline that deals with the appraisal of various types of financial assets.
b.An art form that uses part industry data and part defendable logic to determine a
businesses value.
c.Idiosyncratic factors that uniquely affect the risk of a single business.
d.A strict set of formula prescribed by the IRS for determining the value of a business.
Why would an investigator inverview the prime suspect last in the interview process?
When Nortel announced that it was taking $18.4 billion in charges for restructuring
costs, bad customer debts, and obsolete inventory, it was taking a(n):
a.Big bath.
b.One time write down.
c.Section 179 allowance.
d.All of the above.
Even if a case does not go to court, a forensic accountant might be called upon to assist
during what two types of situations (define both)?
What are the two primary roles a forensic accountants play in forensic matters?
a.Valuator and estimator.
b.Mediator and arbitrator.
c.Expert consultants and expert witnesses.
d.Rented judge and rented jury.
Explain how fraud detection relates to enterprise risk management.
Which IRC mandates that persons obligated to assess, collect and remit taxes to the IRS
must do so?
a.IRC 7202.
b.IRC 179.
c.IRC 7206.
d.IRC 7100.
Describe that the World Islamic Front Statement is:
Discuss various reasons subjects offer to avoid being interviewed and responses to these
reasons
Which of the following is not a component of risk?
a.Acceptable Detection Risk.
b.Audit Risk.
c.Inherent Risk.
d.Control Risk.
What is the general philosophy of SOX for preventing financial statement fraud?
How is Information Security Assurance achieved?
Why might parties in an ADR actually prefer litigation in a courtroom?
a.Legal precedents can prevent future disputes or set legal standards for resolving future
disputes.
b.Many companies would prefer not to air their problems in public courtrooms.
c.Litigation often embitters the participants, but in many cases ADR mediation can
actually help build business relationships.
d.All of the above.
Explain why there is a demand for auditing.
What are some of the improper practices that are involved in payroll fraud?