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LSU ACCT 4235 Midterm exam with
answers
ACFE - CORRECT ANSWERS ✔✔worlds largest anti-fraud organization with approximately 80,000 members; and regularly conducts one of the most comprehensive fraud studies in the US " I Got Really Viral"
- Insurance companies
- Government agencies
- Researchers
- Victims of fraud - CORRECT ANSWERS ✔✔Four basic sources of fraud fraud - CORRECT ANSWERS ✔✔is perpetrated with the intent to cause harm or gain advantage by using confidence and trickery victim, perpetrator, or scheme - CORRECT ANSWERS ✔✔Classifications of fraud detrimental fraud - CORRECT ANSWERS ✔✔fraud taken against the organization
beneficial fraud - CORRECT ANSWERS ✔✔fraud committed on behalf of the organization occupational fraud - CORRECT ANSWERS ✔✔fraud that consists of asset missappropriation, corruptions, or fraudulent financial statements through using ones job for personal enrichment employee embezzlement - CORRECT ANSWERS ✔✔fraud where employees steal from employers by taking assets or engaging in disbursement schemes to steal cash vendor fraud - CORRECT ANSWERS ✔✔occurs when vendors obtain payments to which they are not entitled customer fraud - CORRECT ANSWERS ✔✔occurs when a customer improperly obtains cash or property from a company, or avoids a liability through deception management fraud - CORRECT ANSWERS ✔✔fraud in which the victims are shareholders or debtholders of the organization investment scams - CORRECT ANSWERS ✔✔include things such as: ponzi schemes pyramid schemes telemarketing fraud
Vices (gambling, drugs, alcohols, expensive extramarital relationships) Work Related - CORRECT ANSWERS ✔✔Examples of perceived pressures effective internal control framework - CORRECT ANSWERS ✔✔the most important step that can be taken by an organization to prevent or detect fraud COSO Framework - CORRECT ANSWERS ✔✔1. Control Environment
- Risk Assessment
- Control Activities
- Information and Communication
- Monitoring Control enviornment - CORRECT ANSWERS ✔✔includes tone at the top, communication, appropriate hiring, clear organizational structure, and an internal audit department theft act, concealment, and conversion - CORRECT ANSWERS ✔✔Three elements of fraud include accounting system - CORRECT ANSWERS ✔✔this should ensure that record transactions are valid, properly authorized, complete, properly classified, reported in the proper period, properly valued, and summarized correctly
Control Activities - CORRECT ANSWERS ✔✔policies, procedures, and rules that provide reasonable assurance that control objectives are met and risk responses are carried out (ie: segregation of duties, systems of authorities, independent checks, physical safeguards, and documents and records) low - CORRECT ANSWERS ✔✔when perceived opportunity and pressure are high rationalization is power - CORRECT ANSWERS ✔✔the probability that a person can carry out his or her own will despite resistance reward power - CORRECT ANSWERS ✔✔the ability of a fraud perpetrator to convince a potential victim that he or she will receive a certain benefit through participation in the fraud scheme coercive power - CORRECT ANSWERS ✔✔the ability of the fraud perpetrator to make an individual perceive punishment if he or she does not participate in the fraud expert power - CORRECT ANSWERS ✔✔the ability of the fraud perpetrator to influence another person because of expertise or knowledge legitimate power - CORRECT ANSWERS ✔✔the ability of fraud perpetrators to convince a potential perpetrator that he or she truly has power over him or her
Personal observation - CORRECT ANSWERS ✔✔The evidence square is made up of: Testimonial evidence - CORRECT ANSWERS ✔✔evidence that is gathered from individuals documentary evidence - CORRECT ANSWERS ✔✔evidence that is gather from paper, computers, and other written or printed sources physical evidence - CORRECT ANSWERS ✔✔evidence that includes fingerprints, tire marks, stolen property, weapons, identification numbers, stolen objects, or other tangible evidence associated with dishonest acts personal observation - CORRECT ANSWERS ✔✔evidence that is sensed (seen, heard, felt, etc.) by the investigators themselves theft act - CORRECT ANSWERS ✔✔efforts to catch the perpetrators in the embezzlement act or to gather information about the actual theft acts concealment - CORRECT ANSWERS ✔✔investigation methods involving focusing on records, documents, computer programs and serves and other places where perpetrators might try to conceal or hide their dishonest acts conversion - CORRECT ANSWERS ✔✔investigative methods involves searching for ways in which perpetrators have spent or used their stolen assets
Predication - CORRECT ANSWERS ✔✔fraud investigation should occur when what exists
- creating a culture of honesty, openness, and assistance
- eliminating fraud opportuntities - CORRECT ANSWERS ✔✔Two main elements of fraud prevention Employee assistance program (EAP) - CORRECT ANSWERS ✔✔helps employees deal with personal pressures (ie: substance abuse, gambling, money management, health, family, and personal problems) preventative control activities - CORRECT ANSWERS ✔✔type of control activity that include segregation of duties, system of authorizations, and physical safeguards detective control activites - CORRECT ANSWERS ✔✔type of control activity that includes independent checks and documents/records The current model - CORRECT ANSWERS ✔✔Fraud incident, investigation, action, resolution symptoms of fraud - CORRECT ANSWERS ✔✔1. Accounting anomalies
- Internal control weaknesses
- Analytical anomalies
programming language that allows one to request information from a customer database data analysis software - CORRECT ANSWERS ✔✔software package widely used by auditors and investigators for data analysis statistical analysis softwares - CORRECT ANSWERS ✔✔component of data analysis which involves collecting and scrutinizing every data sample in a set of items from which samples can be drawn Open Database Connectivity (ODBC) - CORRECT ANSWERS ✔✔Standard method of querying data from corporate relational databases which can retrieve data in real time, allows use of powerful SQL language, allows repeated pulls for iterative analysis, and retrieves metadata like column types and relationships directly statistical z-score - CORRECT ANSWERS ✔✔converts data to a standard scale and distribution, regardless of the amounts are variances in the data (Value - Mean) / Standard Deviation - CORRECT ANSWERS ✔✔Z score formula Stratification - CORRECT ANSWERS ✔✔splitting of complex data sets into groupings
summarization - CORRECT ANSWERS ✔✔is an extension of stratification by running one or more calculation on the substables to produce a single record representing each subtable Time-Trend Analysis - CORRECT ANSWERS ✔✔Used to see how the firm's performance is changing through time fuzzy matching - CORRECT ANSWERS ✔✔A technique that allows for searches to be performed that will find matches between some text and entries in a database that are less than 100% identical. soundex - CORRECT ANSWERS ✔✔a phonetic-based indexing system that is easily incorporated into computer software for searching surnames that sound alike but are spelled differently n-grams - CORRECT ANSWERS ✔✔A technique that compares runs of letters in two values to get a match score from 0 to 100 percent real time analysis - CORRECT ANSWERS ✔✔distinct technique because it specifically analyzes each transaction for fraud rather than accuracy Matosas matrix - CORRECT ANSWERS ✔✔lists one record per contract for which vendors bid
- Comparing account balances in the statements from one period to the next
Invigilation - CORRECT ANSWERS ✔✔an observation technique that involves observing a suspect's behavior before, during, and after an announced investigation vulnerability chart - CORRECT ANSWERS ✔✔A tool that coordinates the assets that were taken, individuals who had theft opportunities, investigation methods, concealment and conversion possibilities, symptoms observed, pressures, rationalizations, and key controls that had to be compromised. Theft Act Investigation - CORRECT ANSWERS ✔✔activities that directly investigate the fraud act Surveillance and covert Operations - CORRECT ANSWERS ✔✔are theft investigation technique that rely on the senses, hearing and seeing; means watching and recording the physical facts, acts, movements (can be stationary or fixed point, moving or tailing, or electronic surveillance) undercover investigation - CORRECT ANSWERS ✔✔only should be used when large scale collusive fraud, other investigative methods fail, and law enforcement authorities are informed when appropriate evidence has been accumulated computed based queries - CORRECT ANSWERS ✔✔the best way to obtain documentary evidence is through
documents and electronic records - CORRECT ANSWERS ✔✔what is the backbone of concealment investigation Subpoena, search warrant, and voluntary consent - CORRECT ANSWERS ✔✔Three ways to obtain documentary evidence documentary examination - CORRECT ANSWERS ✔✔specialized form of investigation that applies forensic chemistry, microscopy, light and photography in marking determinations about documents documentary experts - CORRECT ANSWERS ✔✔can determine whether a document was written by the person whose signature it bears, has been forged or has been altered by additions, deletions, obliterations, erasures, or photocopying discovery sampling - CORRECT ANSWERS ✔✔statistically based method of analyzing a subset of transaction from a larger pool allowing the investigator to decide on an acceptable risk level for sampling; should only be used when full population analysis using a computer is not possible sampling risk - CORRECT ANSWERS ✔✔The possibility that the sample drawn is not representative of the population and that, as a result, the auditor reaches an incorrect conclusion about the reliability of the control, the account balance, or class of transactions based on the sample. federal, state, or local - CORRECT ANSWERS ✔✔Governmental sources of information include
Secret Service (federal) - CORRECT ANSWERS ✔✔part of the Department of Homeland Security and is responsible for protecting the president of the US and other federal dignitaries US Postal Services (Federal) - CORRECT ANSWERS ✔✔quasi governmental organization that is responsible for US mail and for protecting citizens from loss through mail Postal investigators (federal) - CORRECT ANSWERS ✔✔handle major fraud cases involving the use of mail and they work for the prosecution of offenders who violate postal laws Central Intelligene Agency (Federeal) - CORRECT ANSWERS ✔✔accountable to the president and investigates security matters outside the US Social SEcurity Administration (federal) - CORRECT ANSWERS ✔✔helpful to identify the areas where a perpetrator was residing when a SSN was issued State Attorney General - CORRECT ANSWERS ✔✔enforces state, civil and criminal laws in cooperation with local law enforcement agencies State Prisions - CORRECT ANSWERS ✔✔maintains records on individuals who have been incarcerated in state prison system as well as individuals who are on probation or parole
Secretary of State - CORRECT ANSWERS ✔✔maintains all types of records relating to business and uniform commercial code filings Department of motor vehicles - CORRECT ANSWERS ✔✔enable you to access a person's driving history, address, convictions for traffic violations, name, date of birth, address of birth, and photograph Department of Vital Statistics - CORRECT ANSWERS ✔✔maintains birth records Department of Business Regulation - CORRECT ANSWERS ✔✔maintains licensing information about various professionals County Clerk (local) - CORRECT ANSWERS ✔✔maintains numerous records on local citizens including voter registration records and marital licenses County Land Office and Tax Assessor Office (Local) - CORRECT ANSWERS ✔✔contain real estate records for land located in the county County Sheriff and Other Officers (Local) - CORRECT ANSWERS ✔✔offices such as that of the city policy, the county constable, probation officers, and bail bondsmen contain information about criminal charges, indictment statement, pretrial information report, conviction statements, and probation information
- Income - funds from known sources - CORRECT ANSWERS ✔✔Formula for:
- Net worth
- Net Worth Increase
- Income
- Funds from unknown sources friendly, neutral, hostile - CORRECT ANSWERS ✔✔Three types of interviews denial → anger → rationalization → depression → acceptance - CORRECT ANSWERS ✔✔Reaction to crisis interviews - CORRECT ANSWERS ✔✔- Use short questions, confined to one topics
- Ask questions that require narrative answers
- Require witnesses to give the factual basis for any conclusions they state
- Prevent witnesses from wandering aimlessly
- Don't let witnesses lead you away from topic
- Concentrate more on the anwer than the question you plan to ask next
- Clearly understand each answer before you continue
- Maintain full control
- Point out some but not all of the circumstantial evidence
- Introductory
- Informational
- Assessment
- Closing
- Admission seeking - CORRECT ANSWERS ✔✔5 types of interview questions Inhibitors of Communication - CORRECT ANSWERS ✔✔socio- psychological barrier that impedes the flow of relevant information by making respondents unable or unwilling to provide information Facilitators of Communication - CORRECT ANSWERS ✔✔socio- psychological forces that make conversations, including interviews, easier to accomplish informal questions - CORRECT ANSWERS ✔✔non confrontational, nonthreatening, and used for information gathering purposes Include open questions, closed questions, leading questions, double negative questions, complex questions, attitude questions controlled answer technique - CORRECT ANSWERS ✔✔used to stimulate a desired answer or impression free narratives - CORRECT ANSWERS ✔✔orderly, continuous account of event or incident, given with or without prompting
