Home > Flashcards > Print Preview
The flashcards below were created by user
on FreezingBlue Flashcards. What would you like to do?
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.
Which of the following is not an important element of fraud.
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
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
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
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
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
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
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
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
which of the following is not a reliable resource for fraud statistics
a. FBI agencies
b. Health agencies
c. Insurance organization
d. Fraud perpetrators
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
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
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
What is the most important element in successful fraud schemes.
a. Promised benefits
b confidence in the perpetrator
c. profitable activities
confidence in the perpetrator
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
which of the following is not a fraud type
a. direct employee embezzlement
b. indirect employee embezzlement
c. supervisor fraud
d. investment scams
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
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
fraud fighting includes what type of careers
c. CPA firms
d. All of the above
All of the above
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
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
"Deceptive manipulation of financial statements" describes which kind of fraud?
a. management fraud
b. criminal fraud
c. stock market fraud
d. bookkeeping fraud
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
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
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
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.
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.
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.
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
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.
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
Financial statement frauds are the most common, but frauds against organizations are usually the most expensive.
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.
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.
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.
Which of the following is not one of the three elements of fraud?
a. Perceived pressure.
b. Perceived opportunity.
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.
If pressures and opportunities are high and personal integrity is low, the chance of fraud is:
d. Very low.
Which of the following is not a common type of fraud pressure?
b. Work-related pressures.
c. Financial pressures.
d. Pressure to outsmart peers.
Pressure to outsmart peers.
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.
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.
d. Control activities or procedures.
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
Who generally has the highest risk of becoming a fraud victim?
b. Older, less educated people.
c. College students.
d. None of the above.
Older, less educated people.
How frequently do most people rationalize?
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.
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.
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.
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.
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.
Which of the following is not a common vice that motivates people to commit fraud?
c. Expensive extramarital relationships.
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.
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.
Which of the following is not an element of most frauds?
a. Taking the assets.
c. Breaking and entering.
Breaking and entering.
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.
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.
Fraud perpetrators are approximately 2 percent female, 98 percent male.
Which of the following elements is not part of the fraud triangle?
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
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
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.
Every fraud has three elements including all of the following, except:
a. the theft act.
b. the authorization.
c. the concealment.
d. the conversion.
Independent checks include
a. mandatory vacations.
c. segregation of duties.
d. physical safeguards.
As a general rule, very few people feel the need to rationalize their behaviors.
Types of power include all of the following except:
a. coercive power.
b. possessive power.
c. expert power.
d. referent power.
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.
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
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.
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.
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.
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.
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.
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.
c. Service of process.
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.
Usually, for everyone involved—especially victims—the investigation of fraud is very:
a. Pleasant and relaxing.
d. Traumatic and difficult.
Traumatic and difficult.
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
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.
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
Research shows that fraud occurs less frequently when employees feel:
a. Abused by management.
c. Challenged with unreasonable performance goals.
d. Ownership in the organization.
Ownership in the organization.
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
Drawbacks to establishing a hotline for employees to report fraud include all of the following except:
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
“Predication of fraud” is defined as:
a. Reasonable belief that fraud has occurred.
b. Irrefutable evidence that fraud has been
c. Motivation for committing fraud.
d. Punishment of fraud perpetrators
Reasonable belief that fraud has occurred.
Which of the four types of evidence includes interrogation and honesty testing?
d. Personal observation.
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.
Most often, victims of fraud do not take legal action against perpetrators. This is because legal action can be:
d. All of the above.
All of the above.
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.
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.
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.
The most cost-effective way to reduce fraud is to:
a. prevent fraud
b .investigate fraud.
c. prosecute fraud.
d. conceal fraud.
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.
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.
Research shows that more than 75 percent of people are categorized as people who are almost always honest.
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
Research shows that most frauds are discovered by:
a. external auditors.
c. audit committee members.
d. employees and managers
employees and managers
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.
Fraud investigations should only occur when fraud predication exists.
The fraud element triangle includes which of the following elements?
c. Covert operations
Criminal action is more common when frauds involve other organizations.