Fraud Chaps 1-6

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es2437
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Fraud Chaps 1-6
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2014-02-25 02:58:52
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fraud 132
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exam 1 fraud
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  1. Why does fraud seem to be increasing at such an alarming rate?

    1. computers, the internet, and technology make fraud easier to commit.
    2. most frauds today are detected, whereas in the past many were not
    3. A new law requires that fraud be reported within 24 hours.
    computers, the internet, and technology make fraud easier to commit.
  2. Which of the following is not an important element of fraud.

    1. confidence
    2. deception
    3. trickery
    4. Intelligence
    Intelligence
  3. Fraud is considered to be

    1. A serious problem that continues to grow
    2. A problem that affects very few individuals
    3. A mild problem that most businesses need not worry about
    4.A problem under control
    A serious problem that continues to grow
  4. People who commit fraud are usually

    a. new employees
    b. not well groomed and have long haired and tattoos.
    c. people with strong personalities
    d. trusted individuals
    trusted individuals
  5. the use of one's occupation for personal enrichment through the deliberate misuse or misapplication of the employing organization's resources or assets' is the definition of which of the following types of fraud?

    a. employee embezzlement or occupational fraud
    b. investment scams
    c. management fraud.
    d. vendor fraud.
    employee embezzlement or occupational fraud
  6. corporate employee fraud fighters

    a. work as postal inspectors and law enforcement officials
    b. prevent, detect and investigate fraud within a company
    c. are lawyers that defend and or prosecute fraud cases
    d. none o the above
    prevent, detect and investigate fraud within a company
  7. Investment scams most often include

    a. an action by top management against employees
    b. worthless investments or assets sold to unsuspecting investors
    c. an overcharge for purchased goods
    d. nonpayment of invoices for goods purchased by customers
    worthless investments or assets sold to unsuspecting investors
  8. which of the following is not true of civil fraud

    a. usually begins when one party files a complaint
    b. the purpose is to compensate for harm done to another
    c. it must be heard by 12 jurors
    d. Only " the preponderance of the evidence" is needed for the plaintiff to be successful
    it must be heard by 12 jurors
  9. future careers in fraud will most likely be
    a. in low demand
    b. in moderate demand
    c. low paying
    d.in high demand and financially rewarding
    in high demand and financially rewarding
  10. studying fraud will help you
    a. learn evidence-gathering skills
    b. avoid high-risk and fraudulent activities
    c. learn valuable interviewing skills
    d. All of the above
    All of the above
  11. which of the following is not a reliable resource for fraud statistics
    a. FBI agencies
    b. Health agencies
    c. Insurance organization
    d. Fraud perpetrators
    Fraud perpetrators
  12. Which of the following statements is true

    a. Bank robberies are more costly than frauds
    b. fraud is often labeled the fastest growing crime
    c. FBI agencies are currently spending approximately 35% of their time on fraudulent activities
    fraud is often labeled the fastest growing crime
  13. Which of the following is not an element of fraud
    a. false representation
    b. accidental behavior
    c. damage to a victim
    d. Intentional or reckless behavior
    accidental behavior
  14. What is the best way to minimize fraud within an organization
    a. detection of fraud
    b. investigation of fraudulent behavior
    c. prevention activities
    d. research company activities
    prevention activities
  15. What is the most important element in successful fraud schemes.

    a. Promised benefits
    b confidence in the perpetrator
    c. profitable activities
    d. complexity
    confidence in the perpetrator
  16. which of the following characters is least likely to be involved in a fraud.

    a. A middle-aged person with a middle management positioned
    b. a long-haired teenager wearing leather pants
    c. a recent college graduate
    d. a senior executive who has significant stock options.
    a recent college graduate
  17. which of the following is not a fraud type

    a. direct employee embezzlement
    b. indirect employee embezzlement
    c. supervisor fraud
    d. investment scams
    supervisor fraud
  18. Which of the following is not a form of vendor fraud

    a. overcharge for purchased goods
    b. shipment of inferior goods
    c. non-shipment of goods even though payment has been made.
    d. not paying for goods purchased
    not paying for goods purchased
  19. civil law performs which of the following functions
    a. remedy for violation of private rights
    b. remedy for violations against society as a whole
    c. punishment for guilt "beyond reasonable doubt."
    d. monetary reimbursement for federal damages.
    remedy for violation of private rights
  20. fraud fighting includes what type of careers
    a. Professors
    b. lawyers
    c. CPA firms
    d. All of the above
    All of the above
  21. which of the following is not an example of employee embezzlement
    a. land conservation employees stealing equipment
    b. cashiers stealing money from the cash register
    c. angry employees vandalizing the building with spray paint
    d. salespeople overcharging for products and pocketing the excess cash.
    angry employees vandalizing the building with spray paint
  22. which of the following is not an example of vendor fraud

    a. a vendor overcharges a contracting job that it completed on time.
    b. a vendor bills for services not performed
    c. a vendor bills for goods not provided
    d. a vendor has much higher prices than it competitors
    a vendor has much higher prices than it competitors
  23. "Deceptive manipulation of financial statements" describes which kind of fraud?

    a. management fraud
    b. criminal fraud
    c. stock market fraud
    d. bookkeeping fraud
    management fraud
  24. which of the following is required to become a CFE
    a. an individual must commit to abide by a strict code of professional conduct and ethics
    b. be an associate member, in good standing, of the ACFE
    c. be of high moral character
    d. all of the above
    an individual must commit to abide by a strict code of professional conduct and ethics
  25. which of the following is not true regarding the ACFE?

    a. If is the largest antifraud organization in the world
    b. It as roughly 12,000 member throughout the world
    c. the entire organization is dedicated to the prevention of fraud
    d. It is the premier provider of antifraud training
    It as roughly 12,000 member throughout the world
  26. For every dollar lost from fraud a company:

    a. profit margin will decrease by 10%.
    b. net income will decrease by an equal amount.
    c. sales will have to increase by an equal amount to recover the fraud loss.
    d. profit margin will have to increase by 10% to recover the fraud loss.
    net income will decrease by an equal amount
  27. While statistics indicate that the incidence of fraud is increasing, the amount of loss per fraud incident has greatly decreased over the past two decades.
    True
    False
    False
  28. The formal definition of "fraud" includes all of the following except:
    a. a false representation.
    b. acted upon by the perpetrator.
    c. intentionally or recklessly.
    d. about a material point.
    acted upon by the perpetrator.
  29. Most fraud perpetrators:

    a. are between the ages of 18 and 25.
    b.use guns or knives to trick others out of their money.
    c. are trusted employees.
    d. All of the choices are true of fraud perpetrators.
    e. None of the choices are true of fraud perpetrators
    are trusted employees.
  30. The Association of Certified Fraud Examiners classifies fraud into which of the following categories?

    a. Ponzi schemes and corruption
    b. Robbery and fraudulent statements
    c. Ponzi schemes and asset misappropriations
    d. Corruption and fraudulent statements
    Corruption and fraudulent statements
  31. Which of the following is false regarding employee embezzlement?

    a. It can be perpetrated by vendors acting alone.
    b. It can be either direct or indirect.
    c. It can occur when an employee establishes a dummy company.
    d. It can involve bribes or kickbacks.
    It can be perpetrated by vendors acting alone.
  32. Management fraud

    a.generally involves mid-level managers.
    b. results from managers taking bribes or charging higher prices in return for kickbacks.
    c. results when managers sell worthless investments to unsuspecting investors.
    d. All of the choices are true of management fraud.
    e. None of the choices are true of management fraud.
    None of the choices are true of management fraud
  33. Financial statement frauds are the most common, but frauds against organizations are usually the most expensive.
    True              
    False
    False
  34. Civil law cases:

    a. result in jail and/or prison time for guilty perpetrators.
    b. can be heard by either a judge or a jury.
    c .to be successful, plaintiffs must prove their case "beyond a reasonable doubt."
    d. have the purpose to right a wrong.
    can be heard by either a judge or a jury.
  35. To become a Certified Fraud Examiner, a person must:

    a. meet a minimum GPA requirement on certain courses in criminal justice, psychology, and other pertinent courses.
    b. be of high moral character.
    c. be a member, or student member, of the AICPA (Association of Certified Public Accountants).
    d. have a Bachelor's degree.
    e. All of the choices are necessary to become a Certified Fraud Examiner.
    be of high moral character.
  36. Fraud perpetrators:

    a. Look like other criminals.
    b. Have profiles that look like most honest people.
    c. Are usually very young.
    d. Are none of the above.
    Have profiles that look like most honest people.
  37. Which of the following is not one of the three elements of fraud?
    a. Perceived pressure.
    b. Perceived opportunity.
    c. Rationalization.
    d. Intelligence.
    Intelligence.
  38. Which of the following is a common perceived pressure?
    a. The ability to outsmart others.
    b. Opportunity to cheat others.
    c. A financial need.
    d. The ability to “borrow” money by committing fraud.
    A financial need.
  39. If pressures and opportunities are high and personal integrity is low, the chance of fraud is:
    a. High.
    b. Medium.
    c. Low.
    d. Very low.
    High.
  40. Which of the following is not a common type of fraud pressure?
    a. Vices.
    b. Work-related pressures.
    c. Financial pressures.
    d. Pressure to outsmart peers.
    Pressure to outsmart peers.
  41. Opportunity involves:
    a. Opportunity to conceal fraud.
    b. Opportunity to avoid being punished for fraud.
    c. Opportunity to commit fraud.
    d. All of the above.
    e. None of the above.
    All of the above.
  42. Which of the following is not one of the three elements of the control system of an organization?
    a. The control environment.
    b. The accounting system.
    c. Management.
    d. Control activities or procedures.
    Management.
  43. Which of the following noncontrol factors provides opportunities for fraud?
    a. Inability to judge the quality of performance.
    b. Lack of access to information.
    c. Failure to discipline fraud perpetrators.
    d. Lack of an audit trail.
    e. all of the above
    all of the above
  44. Who generally has the highest risk of becoming a fraud victim?
    a. Businessperson.
    b. Older, less educated people.
    c. College students.
    d. None of the above.
    Older, less educated people.
  45. How frequently do most people rationalize?
    a. Often.
    b. Sometimes.
    c. Rarely.
    d. Never.
    Often.
  46. Which of the following kinds of pressure is most often associated with fraud?
    a. Work-related pressure.
    b. Financial pressure.
    c. Vice pressure.
    d. All of the above.
    Financial pressure
  47. Which of the following is not a primary control procedure?
    a. Use of documents and records to create an audit trail.
    b. Independent checks.
    c. Decreasing work-related pressure.
    d. Physical safeguards.
    Decreasing work-related pressure.
  48. It is the and of existing controls, not the of controls, that allows most frauds to be perpetrated.
    a. Existence, use, lack.
    b. Lack, ignoring, existence.
    c. Overriding, ignoring, lack.
    d. Overriding, lack, use.
    Overriding, ignoring, lack.
  49. On what element of the fraud triangle do most fraud-fighters usually focus all or most of their preventive efforts?
    a. Perceived pressure.
    b. Perceived opportunity.
    c. Perceived weak internal controls.
    d. Rationalization.
    Perceived opportunity.
  50. Which of the following is not a control activity(procedure)?
    a. System of authorizations.
    b. Appropriate hiring procedures.
    c. Independent checks.
    d. Documents and records.
    e. All of the above are control activities.
    Appropriate hiring procedures.
  51. Which of the following is not a common vice that motivates people to commit fraud?
    a. Gambling.
    b. Drugs.
    c. Expensive extramarital relationships.
    d. Alcohol.
    e. All of the above are vices that motivate people to commit fraud.
    All of the above are vices that motivate people to commit fraud.
  52. Which of the following is not a way that management can establish a good control environment?
    a. Having a clear organizational structure.
    b. Proper training.
    c. Communicating openly.
    d. Appropriate hiring procedures.
    e. All of the above are ways that management can establish a good control environment.
    All of the above are ways that management can establish a good control environment.
  53. Which of the following is not an element of most frauds?
    a. Taking the assets.
    b. Concealment.
    c. Breaking and entering.
    d. Conversion.
    Breaking and entering.
  54. Which of the following is an example of legitimate power?
    a. The offer of valuable stock options.
    b. A decision to participate in fraud based upon fear.
    c. Your boss tells you to do something.
    d. You do something because your colleague is more knowledgeable than you are in that particular subject matter.
    Your boss tells you to do something.
  55. Which of the following is an example of referent power?
    a. Fear that you may lose your job.
    b. Your friend asks you to do a special favor for him or her.
    c. The offer of a job promotion.
    d. Your teacher asks you to do an assignment.
    Your friend asks you to do a special favor for him or her.
  56. Fraud perpetrators are approximately 2 percent female, 98 percent male.
    True
    False
    False
  57. Which of the following elements is not part of the fraud triangle?
    a. Vices
    b. Pressures
    c. Opportunities
    d. Rationalizations
    Vices
  58. A perceived opportunity can take the form of an opportunity to:
    a. commit fraud.
    b. avoid punishment.
    c. conceal fraud.
    d. All of the choices are forms of opportunity. e. None of the choices are forms of opportunity.
    All of the choices are forms of opportunity
  59. Components of the COSO internal control framework discussed in the text include:
    a. the accounting function.
    b. control activities.
    c. the control environment.
    d. All of the choices are components of the COSO framework discussed in the text.
    e. None of the choices are components of the COSO framework discussed in the text.
    All of the choices are components of the COSO framework discussed in the text
  60. Factors that increase an individual's opportunity to commit fraud within an organization include:
    a. access to information.
    b. lack of an audit trail.
    c. ability to judge performance or quality.
    d. controls to prevent or detect fraud.
    e. All of the choices are factors that increase an individual's opportunity to commit fraud.
    f. None of the choices are factors that increase an individual's opportunity to commit fraud.
  61. Every fraud has three elements including all of the following, except:
    a. the theft act.
    b. the authorization.
    c. the concealment.
    d. the conversion.
    the authorization.
  62. Independent checks include
    a. mandatory vacations.
    b. passwords.
    c. segregation of duties.
    d. physical safeguards.
    mandatory vacations.
  63. As a general rule, very few people feel the need to rationalize their behaviors.

    True
    False
    False
  64. Types of power include all of the following except:
    a. coercive power.
    b. possessive power.
    c. expert power.
    d. referent power.
    possessive power.
  65. Which of the following statements is false regarding power?
    a. The less susceptible a victim is to the various types of power the less effective the perpetrator has to be for recruitment to occur.
    b. The different types of power influence our actions every day.
    c. Research has shown that perceived power, rather than actual power, affects the desired outcome in any given situation.
    d. All of the choices are true regarding power.
    The less susceptible a victim is to the various types of power the less effective the perpetrator has to be for recruitment to occur.
  66. The most effective way to reduce losses fromfraud is:
    a. Detecting fraud early.
    b. Implementing proactive fraud detection programs.
    c. Preventing fraud from occurring.
    d. Severely punishing fraud perpetrators.
    Preventing fraud from occurring
  67. To successfully prevent fraud, an organization must:
    a. Identify internal control weaknesses.
    b. Explicitly consider fraud risks.
    c. Take proactive steps to create the right kind of environment.
    d. All of the above.
    All of the above.
  68. The best way for management to model appropriate behavior is to:
    a. Enforce a strict code of ethics.
    b. Set an example of appropriate behavior.
    c. Train employees about appropriate behavior.
    d. Make employees read and sign a code of conduct
    Set an example of appropriate behavior.
  69. Which of the following is not a proactive way for a company to eliminate fraud opportunities?
    a. Severely punishing fraud perpetrators.
    b. Assessing risks.
    c. Implementing appropriate preventive and detective controls.
    d. Creating widespread monitoring of employees.
    Severely punishing fraud perpetrators.
  70. Most frauds start small and:
    a. If not detected, continue to get larger.
    b. Usually decrease in amount.
    c. Remain steady and consistent.
    d. None of the above.
    If not detected, continue to get larger.
  71. It is most difficult to prevent which type of fraud?
    a. Investment scams.
    b. Fraud committed by a company president.
    c. Employee fraud.
    d. Customer fraud.
    Fraud committed by a company president.
  72. Which of the following refers to the circumstances, taken as a whole, that would lead a reasonable prudent professional to believe fraud has occurred, is occurring, or will occur?
    a. Evidential circumstance.
    b. Investigation.
    c. Service of process.
    d. Predication.
    Predication
  73. An investigative approach that includes testimonial evidence, documentary evidence, physical evidence, and personal observations is referred to as the:
    a. Investigative square of evidence.
    b. Investigation square.
    c. Evidence square.
    d. Fraud triangle plus.
    Evidence square.
  74. Usually, for everyone involved—especially victims—the investigation of fraud is very:
    a. Pleasant and relaxing.
    b. Educational.
    c. Exciting.
    d. Traumatic and difficult.
    Traumatic and difficult.
  75. To prevent fraud from reoccurring, most organizations and other fraud victims should:
    a. Take no legal action.
    b. Pursue civil remedies.
    c. Pursue criminal remedies.
    d. Pursue either civil or criminal action
    Pursue either civil or criminal action
  76. All of the following are ways to create a culture of honesty and high ethics except:
    a. Creating a positive work environment.
    b. Hiring the right kind of employees.
    c. Having top management model appropriate behavior.
    d. Eliminating opportunities for fraud.
    Eliminating opportunities for fraud.
  77. The tone at the top when related to fraud usually refers to management’s attitude about: a. Office parties.
    b. Fraud prosecution.
    c. Employee absenteeism.
    d. How it models and labels appropriatebehavior.
    How it models and labels
  78. Research shows that fraud occurs less frequently when employees feel:
    a. Abused by management.
    b. Threatened.
    c. Challenged with unreasonable performance goals.
    d. Ownership in the organization.
    Ownership in the organization.
  79. Opportunities to commit fraud can be eliminated by identifying sources of fraud, by implementing controls, and through independent checks. One other effective way of eliminating opportunities is:
    a. Teaching employees to monitor and report fraud.
    b. Terminating and punishing employees who commit fraud.
    c. Failing to terminate or punish employees who commit fraud.
    d. Identifying indicators of fraud or red flags.
    Teaching employees to monitor and report fraud
  80. Drawbacks to establishing a hotline for employees to report fraud include all of the following except:
    a. Expense.
    b. Many incidents reported are hoaxes motivated by grudges.
    c. Fraud symptoms reported are caused by non-fraud factors.
    d. This method for finding fraud is outdated.
    This method for finding fraud is outdated
  81. “Predication of fraud” is defined as:
    a. Reasonable belief that fraud has occurred.
    b. Irrefutable evidence that fraud has been
    committed.
    c. Motivation for committing fraud.
    d. Punishment of fraud perpetrators
    Reasonable belief that fraud has occurred.
  82. Which of the four types of evidence includes interrogation and honesty testing?
    a. Testimonial.
    b. Documentary.
    c. Physical.
    d. Personal observation.
    Testimonial.
  83. The three elements of fraud are:
    a. Theft act, rationalization, and opportunity.
    b. Pressure, opportunity, and conversion.
    c. Theft act, concealment, and conversion.
    d. Theft act, pressure, and opportunity
    Theft act, concealment, and conversion.
  84. Most often, victims of fraud do not take legal action against perpetrators. This is because legal action can be:
    a. Unproductive.
    b. Embarrassing.
    c. Expensive.
    d. All of the above.
    All of the above.
  85. Arguments for taking legal action against perpetrators of fraud include:
    a. Huge cash settlements from prosecuting fraud are an excellent source of revenue.
    b. Legal action usually results in positive publicity for the company.
    c. Prosecution keeps lawyers busy.
    d. Prosecution discourages reoccurrence of fraud.
    Prosecution discourages reoccurrence of fraud.
  86. Factors that are usually associated with high levels of employee fraud include all of the following except:
    a. Negative feedback and lack of recognition of job performance.
    b. Perceived inequalities in an organization.
    c. Long and difficult hours shared equally by everyone in the organization.
    d. High turnover and absenteeism.
    Long and difficult hours shared equally by everyone in the organization.
  87. Which of the following is true regarding the Sarbanes-Oxley Act of 2002:
    a. Companies with revenues exceeding $10million must have a whistle-blower system in place.
    b. Public companies must have a whistle-blower system in place.
    c. Public companies with revenues exceeding$10 million must have a whistle-blower system in place.
    d. All companies must have a whistle-blower system in place.
    All companies must have a whistle-blower system in place.
  88. The most cost-effective way to reduce fraud is to:
    a. prevent fraud
    b .investigate fraud.
    c. prosecute fraud.
    d. conceal fraud.
    prevent fraud
  89. Research has shown that people will lie for all of the following reasons except:
    a. they have learned to lie through negative modeling.
    b. they have a habit of lying.
    c. they feel if they lie they won't get what they want.
    d. they fear punishment or adverse consequences.
    they feel if they lie they won't get what they want.
  90. Creating a culture of honesty and high ethics includes all of the following except:
    a. having internal and external auditors who provide independent checks on performance.
    b. communicating expectations throughout the organization.
    c. hiring the right kind of employees.
    d. making sure top management models appropriate behavior.
    e. All of the choices are ways of creating a culture of honesty and high ethics.
    having internal and external auditors who provide independent checks on performance.
  91. Research shows that more than 75 percent of people are categorized as people who are almost always honest.
    True              
    False
    False
  92. All of the following are factors that have been associated with high levels of fraud except:
    a. participative management.
    b. high turnover.
    c. poor training and promotion opportunities.
    d. unreasonable budget expectations
    participative management.
  93. Research shows that most frauds are discovered by:
    a. external auditors.
    b. perpetrators.
    c. audit committee members.
    d. employees and managers
    employees and managers
  94. Recently, major proactive fraud detection developments have occurred and include all of the following except:
    a. installing hotlines or whistleblower systems.
    b. mining various databases looking for unusual trends or relationships.
    c. developing and maintaining an effective policy for handling fraud.
    d. All of the choices are recent major proactive fraud detection developments.
    developing and maintaining an effective policy for handling fraud.
  95. Fraud investigations should only occur when fraud predication exists.
    True              
    False
    True
  96. The fraud element triangle includes which of the following elements?
    a. Concealment
    b. Invigilation
    c. Covert operations
    d. Pressure
    Concealment
  97. Criminal action is more common when frauds involve other organizations.
    True              
    False
    False
  98. People will often be dishonest if they are placed inan environment of:
    a. Poor controls.
    b. High pressure.
    c. Low integrity.
    d. Loose accountability.
    e. All of the above.
    All of the above.
  99. Which of the following factors contribute to creatinga corporate culture of honesty and openness?
    a. Hiring honest people.
    b. Performing criminal background checks.
    c. Not having an open-door policy.
    d. Having a well-understood and respected code of ethics.
    e. Both a and d.
    f. All of the above.
    Hiring honest people. and Having a well-understood and respected code of ethics
  100. Which of the following personnel and operating policies contribute to high-fraud environments?
    a. Management by crisis.
    b. Rigid rules.
    c. High employee lifestyle expectations.
    d. Poor promotion opportunities.
    e. All of the above.
    All of the above.
  101. The single most effective tool in preventing and detecting fraud is usually:
    a. Monitoring employees.
    b. Having a good system of internal controls. c. Having a well-written company code of ethics.
    d. Following strict hiring procedures.
    Having a good system of internal controls.
  102. A company’s control environment includes:
    a. The tone that management establishes toward what is honest and acceptable behavior.
    b. Corporate hiring practices.
    c. Having an internal audit department.
    d. All of the above.
    All of the above.
  103. Which of the following factors generally results in a high-fraud environment?
    a. Hiring honest people.
    b. Providing an EAP.
    c. Autocratic management.
    d. Both a and b.
    Autocratic management.
  104. Which of the following aspects of fraud usually results in the largest savings?
    a. Fraud prevention.
    b. Fraud detection.
    c. Fraud investigation.
    d. It is impossible to tell.
    Fraud prevention.
  105. Which of the following is usually the most effective tool in preventing and detecting fraud?
    a. Discouraging collusion between employees and customers or vendors.
    b. Effective investigations of fraud symptoms. c. Having a good system of internal controls. d. Creating an expectation of punishment in the company.
    Having a good system of internal controls
  106. Which of the following is the typical fraud model that describes most firms?
    a. Fraud incident, assessing risk, investigation, reporting.
    b. Fraud incident, investigation, action, resolution.
    c. Assessing risk, fraud incident, investigation, resolution.
    d. Assessing risk, investigation,
    Fraud incident, investigation, action, resolution
  107. The “tone at the top” is an important element infighting fraud which involves:
    a. Doing a good job of integrity risk assessment.
    b. Having a positive organization where effective fraud teaching and training is conducted.
    c. Setting a proper example or modeling appropriate management behavior.
    d. Both b and c.
    Setting a proper example or modeling appropriate management behavior.
  108. Which of the following is not a recognized method of eliminating fraud opportunities?
    a. Having good internal controls.
    b. Monitoring employees.
    c. Creating an expectation of punishment.
    d. Engendering employee goodwill by having lax rules.
    Engendering employee goodwill by having lax rules.
  109. Which of the following is not a reason identified by Deloitte why whistle-blowing systems fail?
    a. Lack of anonymity.
    b. Pressure to comply.
    c. Culture.
    d. Lack of awareness.
    Pressure to comply.
  110. Alerting vendors and contractors to company policies often results in:
    a. Loss of interest in the organization by vendors.
    b. Discovery of current frauds and the prevention of future frauds.
    c. Strained vendor/purchaser relationships.
    d. Heightened incidence of recurrent reverse vendor fraud.
    Discovery of current frauds and the prevention of future frauds
  111. Major factors used by companies in creating a culture of openness, honesty, and assistance include:
    a. whistleblower hotlines.
    b. fraud awareness training.
    c. accounting and/or analytical anomalies.
    d. not performing criminal background checks.
    fraud awareness training
  112. Recommended practices for hiring and retaining honest employees include:
    a. having the applicant certify that all information on their resume is accurate.
    b. conducting interviews at on off-site, neutral location.
    c. having each company who has previously hired the applicant sign a "hold harmless agreement."
    d. All of the choices are recommended practices for hiring and retaining honest employees
    having the applicant certify that all information on their resume is accurate.
  113. The SEC requires public companies to:
    a. create and distribute a code of conduct to all employees.
    b. have each employee read and sign the code of conduct at least quarterly, or more frequently.
    c. create and distribute a code of conduct to all suppliers and contractors.
    d. All of the choices are required by the SEC for public companies.
    create and distribute a code of conduct to all employees.
  114. Personnel and operating conditions that appear to contribute to a high-fraud work environment include:
    a. recognition for job performance.
    b. expense accounts for travel and entertainment.
    c. proactive management.
    d. All of the choices are conditions that appear to contribute to a high-fraud work environment.
    e. None of the choices are conditions that appear to contribute to a high-fraud work environment.
    None of the choices are conditions that appear to contribute to a high-fraud work environment
  115. Formal employee assistance programs:
    a. tend to increase the incidence of fraud in organizations.
    b. help employees gain access to promotions.
    c. help employees deal with personal and unshareable pressures.
    d. generally are considered to provide an ROI (return on investment) in excess of 10%.
    e. All of the choices are true of employee assistance programs.
    help employees deal with personal and unshareable pressures.
  116. A good system of internal controls:
    a. depends on the competency of the people enforcing it.
    b.can never, by itself, provide absolute assurance that all fraud will be prevented.
    c. needs to be monitored and tested to ensure its accuracy.
    d. All of the choices are true of a good system of internal controls.
    All of the choices are true of a good system of internal controls.
  117. When fraud is committed, it is often due to the overriding of existing controls, rather than the lack of controls.
    True              
    False
    True
  118. Frauds involving collusion:
    a. represent approximately 70 percent of all frauds committed.
    b. are generally easier to detect because they involve more than one person.
    c. generally involve the largest dollar amounts of loss.
    d. All of the choices are true of frauds involving collusion.
    generally involve the largest dollar amounts of loss
  119. 9Which of the following are elements of an effective whistle-blowing system?
    I. Anonymity
    II. Independence
    III. Audit trail
    IV. Accessibility
    a. I and IV only
    b. I, II, and IV
    c. I, II, and III
    d. I, II, III, and IV
    I, II, and IV
  120. The current model that most organizations typically use for dealing with fraud is:
    a. investigation, fraud incident, resolution, action.
    b. fraud incident, action, investigation, resolution.
    c. investigation, action, fraud incident, resolution.
    d. fraud incident, investigation, action, resolution.
    fraud incident, investigation, action, resolution.
  121. Symptoms of fraud include all of the following except:
    a) analytical anomalies
    b)extravagant lifestyle.
    c)unusual behavior.
    d)Internal Controls
    Internal Controls
  122. Embezzlers frequently:

    I. steal liabilities.
    II. conceal their frauds by manipulating dividend or stock accounts
    a.I only
    b.II only
    c.Neither I nor II
    d.Both I and II
    c) Neither I or II
  123. Journal entry fraud symptoms include:
    A.adjustments to receivables and payables.
    B.All of the choices represent journal entry fraud symptoms.
    C.journal entries without documentary support.
    D.journal entries made by the accounting manager.
    C. journal entries without documentary support
    (this multiple choice question has been scrambled)
  124. A ledger:
    a.is a "book of accounts."b.will have total assets equal to total liabilities and equity once revenue and expense accounts have been closed.
    c.summarizes all transactions related to specific accounts.
    d.All of the choices are true of the ledger.
    e.None of the choices are true of the ledger, but are true of master (control) accounts.
    d. All of the choices are true of the ledger
  125. Small business owners should always:I. open the bank statement and reconcile the bank account.II. pay everything in cash.III. sign every check personally.
    A.II and III only
    B.I and II only
    C.I and III only
    D.I, II, and III
    C.I and III only
    (this multiple choice question has been scrambled)
  126. Fraud perpetrators most often use their embezzled funds to save for retirement.
    a)True
    b)False
    b)False
  127. Unusual behaviors often exhibited by fraud perpetrators include:
    A.belligerence in stating opinions.
    B.high levels of relaxation.
    C.high levels of eye contact
    low levels of drinking and smoking
    C. high levels of eye contact
    (this multiple choice question has been scrambled)
  128. Psychopaths and sociopaths feel extreme guilt and stress when they've committed a fraud.
    a) True
    b) False
    False
  129. The elements of fraud include all of the following except:
    A.stress.
    B.conversion.
    C.theft act.
    D.concealment.
    A. Stress
    (this multiple choice question has been scrambled)
  130. People hesitate to come forward with knowledge of fraud due to all of the following except:
    A.fear of reprisal for being a whistle-blower.
    B.perception that squealing is wrong.
    C.organizations make it too easy to come forward through the whistle-blower system.
    D.intimidation by the perpetrator.
    C. organizations make it too easy to come forward through the whistle-blower system.
    (this multiple choice question has been scrambled)
  131. Data-driven fraud detection:
    A.is considered a "hypothesis-testing" approach.
    B.is reactive in nature.
    C.begins when a tip is received or a symptom is discovered.
    D.applies sampling-based techniques to large data sets.
    A. is considered a "hypothesis-testing" approach
    (this multiple choice question has been scrambled)
  132. Arrange the steps in the data-driven approach in the correct order:I. Investigate symptoms.II. Catalog possible fraud symptoms.III. Analyze results.IV. Understand the business.V. Identify possible frauds that could exist.VI. Use technology to gather data about symptoms.
    A.I, II, III, IV, V, VI
    B.IV, V, II, VI, III, I
    C.IV, V, VI, II, III, I
    D.V, IV, I, II, VI, III
    B.IV, V, II, VI, III, I
    (this multiple choice question has been scrambled)
  133. Audit Command Language (ACL):
    I. is an open source data analysis toolkit which utilizes "detectlets" to discover specific indicators.
    II. has been adopted by most major accounting firms as a platform for data analysis.
    A.I and II
    B.I only
    C.II only
    D.Neither I nor II
    C. II only
    (this multiple choice question has been scrambled)
  134. Open Database Connectivity (ODBC) does all of the following except:
    A.applies Benford's Law directly to all retrieved data.
    B.retrieve data in real time.
    C.retrieves metadata like column types and relationships directly.
    D.allows repeated pulls for iterative analysis.
    A.applies Benford's Law directly to all retrieved data.
    (this multiple choice question has been scrambled)
  135. Benford's Law:
    a.applies to assigned, generated, or naturally-occurring numbers.
    b.predicts
    that the first digits of each group of numbers in a set of random
    numbers will conform to the predicted distribution pattern.
    c.states that each digit ("1" or "2" or "3") will occur in the first position approximately 10% of the time.
    d.All of the choices are true regarding Benford's Law.
    b.predicts that the first digits of each group of numbers in a set of random numbers will conform to the predicted distribution pattern.
  136. Identifying cases that do not match the norm is a technique called:
    A.stratification.
    B.Benford's Law.
    C.identification of outliers.
    D.summarization.
    C.identification of outliers.
    (this multiple choice question has been scrambled)
  137. A statistical z-score:
    A.is a summarization technique that produces a single number describing each graph in a regular data table.
    B.All of the choices are true of statistical z-scores.
    C.converts data to a standard scale and distribution.
    D.is effective only on normal distributions (bell curves).
    C.converts data to a standard scale and distribution.
    (this multiple choice question has been scrambled)
  138. N-grams" is:
    A.a technique that splits complex data sets into case-specific tables.
    B.a method used to analyze digits in invoices, reported hours, and costs.
    C.a technique which compares runs of letters in two values to get a match score from 0 to 100 percent.
    D.a method used to identify outliers.
    C.a technique which compares runs of letters in two values to get a match score from 0 to 100 percent.
    (this multiple choice question has been scrambled)
  139. All of the following are reasons why using financial statement ratios is
    easier than analyzing the financial statement numbers themselves,
    except:
    A.All of the choices are true of ratios.
    B.any unexpected changes in ratios that do not make sense are attributable to fraud.
    C.ratios involve small, easily understood numbers that are sensitive to changes in key variables.
    D.benchmarks for most ratios are well known.
    B.any unexpected changes in ratios that do not make sense are attributable to fraud.
    (this multiple choice question has been scrambled)
  140. When using vertical analysis to analyze the income statement, all amounts are converted to a percentage of:
    A.gross margin.
    B.gross sales.
    C.total assets.
    D.net income.
    B.gross sales.
    (this multiple choice question has been scrambled)
  141. Which of the following is true regarding fraud?
    a. It is easily identified.
    b. It is seldom observed.
    c. When a fraud occurs, there is no questionwhether or not a crime has been committed.
    d. Many witnesses are usually available whenfraud occurs.
    It is seldom observed
  142. Which of the following is not a fraud symptom related to source documents?
    a. Duplicate payments.
    b. Missing documents.
    c. A tip from an employee.
    d. Photocopied documents.
    A tip from an employee.
  143. Which of the following is a fraud symptom related to an internal control weakness?
    a. Lack of proper authorization.
    b. Lack of independent checks.
    c. Inadequate accounting system.
    d. Lack of physical safeguards.
    e. All of the above.
    Lack of physical safeguards.
  144. In the three elements of fraud (theft act, concealment, conversion), who is usually in the best position to detect the fraud?
    a. Coworkers and managers.
    b. Customers.
    c. Owners.
    d. Vendors.
    Coworkers and managers.
  145. When a person commits a crime:
    a. He or she usually becomes engulfed by emotions of fear and guilt.
    b. He or she will experience no changes in behavior.
    c. He or she usually becomes friendly and nice.
    d. He or she experiences a lower stress level.
    He or she usually becomes engulfed by emotions of fear and guilt.
  146. Most people who commit fraud:
    a. Use the embezzled funds to build a savings account..
    b. Give the embezzled funds to charity.
    c. Experience no change in their lifestyle.
    d. Use the embezzled
    Use the embezzled
  147. Which of the following is not a reason people are hesitant to come forward with knowledge or suspicions of fraud?
    a. They often think that squealing on someone is wrong.
    b. They fear reprisal for being a whistle-blower.
    c. It is usually impossible to know for sure that a fraud is taking place.
    d. People who report fraud are often rewarded monetarily.
    People who report fraud are often rewarded monetarily.
  148. Which of the following is not one of the categories of employee fraud symptoms?
    a. Accounting anomalies.
    b. Analytical anomalies.
    c. Tips and complaints.
    d. Firm structure.
    Firm structure.
  149. Embezzlement of assets reduces the left side of the accounting equation. To conceal the theft, the embezzler must find a way to reduce the right side of the accounting equation. A perpetrator would most likely reduce the right side of the equation by:
    a. Reducing accounts payable.
    b. Paying dividends.
    c. Increasing expenses.
    d. Altering stock accounts.
    Increasing expenses.
  150. Which of the following is not a fraud symptom related to journal entries?
    a. Unexplained adjustments to receivables, payables, revenues, or expenses.
    b. Journal entries that do not balance.
    c. Journal entries without documentary support.
    d. Journal entries made near the beginning of accounting periods.
    Journal entries made near the beginning of accounting periods.
  151. Which of the following is not a common internal control fraud symptom or problem?
    a. Lack of segregation of duties.
    b. Unexplained adjustments to receivables, payables, revenues, or expenses.
    c. Lack of independent checks.
    d. Overriding of existing controls.
    Unexplained adjustments to receivables, payables, revenues, or expenses.
  152. Once in a while, someone commits fraud or another crime and does not feel stress. Such people are referred to as:
    a. Psychopathic.
    b. Altruistic.
    c. Philanthropic.
    d. Magnanimous.
    Psychopathic.
  153. Fraud is usually detected by recognizing and pursuing:
    a. Synonyms.
    b. Symptoms.
    c. Equity.
    d. Legends.
    Symptoms.
  154. A letter is most likely to be fraudulent if:
    a. It is signed by only one person.
    b. It is addressed to an individual, rather than a department.
    c. It is a photocopy of an original letter.
    d. It is written on outdated company letterhead.
    It is a photocopy of an original letter.
  155. If a perpetrator has stolen assets, which of the following is the easiest method for concealing the theft?
    a. Reduce liabilities (such as payables).
    b. Manipulate dividend or stock accounts.
    c. Increase other assets (such as receivables).
    d. Increase expenses.
    Increase expenses.
  156. Which of the following is a common fraud symptom relating to ledgers?
    a. A ledger that does not balance.
    b. A ledger that balances too perfectly.
    c. Master account balances that do not equal the sum of the individual customer or vendor balances.
    d. Both a and c.
    A ledger that does not balance. & Master account balances that do not equal the sum of the individual customer or vendor balances.
  157. Which element is not a common element of fraud?
    a. Concealment.
    b. Coercion.
    c. Conversion.
    d. Theft act.
    e. None of the above.
    Coercion.

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