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LSU ACCT 4235 - Midterm Review
(Ch. 1-9 Quizzes) questions with
answers
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 - CORRECT ANSWERS โโB Which of the following is not a common type of fraud? A. direct employee embezzlement B. employee bribes C. executives embezzling from petty cash D. investment scams - CORRECT ANSWERS โโC Which of the following characters is least likely to be involved in a fraud? A. a middle-aged person with a middle management position B. a long-haired teenager C. a senior executive who has significant stock options D. a recent college graduate - CORRECT ANSWERS โโB
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 are required - CORRECT ANSWERS โโD Which of the following statements is true? A. All frauds that are detected by organizations are made public. B. One of the most common responses to fraud is disbelief by those around the fraud. C. Many companies choose to make their losses from fraud public rather than try to hide them. D. The only group/business that must report employee embezzlement is the federal government. - CORRECT ANSWERS โโB What is the best way to minimize fraud expense within an organization? A. effective early detection of fraud B. effective investigation of fraudulent behavior C. effective prevention of fraud D. effective research of fraud - CORRECT ANSWERS โโC What is the most important element in successful fraud schemes?
C. insurance organizations D. fraud perpetrators - CORRECT ANSWERS โโD 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 - CORRECT ANSWERS โโA Because of the ability to override internal controls, it is usually most difficult to prevent which type of fraud? A. investment scams B. fraud committed by a company president C. employee fraud D. customer fraud - CORRECT ANSWERS โโB 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 - CORRECT ANSWERS โโD
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 circumstances B. investigation C. invigilation D. predication - CORRECT ANSWERS โโD 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 - CORRECT ANSWERS โโC A method of classifying investigative approaches into 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 - CORRECT ANSWERS โโC
D. punishment of fraud perpetrators - CORRECT ANSWERS โโA A company's control environment includes: A. the tone that management establishes B. clear organization C. having an internal audit department D. all of the above - CORRECT ANSWERS โโD People will often be dishonest if they are placed in an environment of: A. strong controls B. high pressure C. high integrity D. strong accountability - CORRECT ANSWERS โโB Which of the following is not a reason identified by Deloitte as to why whistle-blowing systems fail? A. lack of anonymity B. pressure to comply C. culture D. lack of awareness - CORRECT ANSWERS โโB Not prosecuting fraud perpetrators is cost-effective both in the short run and the long run? A. true
B. false - CORRECT ANSWERS โโB Which of the following is a step that organizations should undertake while recruiting employees? A. conduct a covert investigation on the background of each candidate B. consider the candidate's word as truth to ensure a culture of trust and honesty C. require candidates to certify that all information on their resume is accurate D. verify the candidate's race, age, and religion during the interview - CORRECT ANSWERS โโC The "tone at the top" is an important element in fighting fraud. Creating a positive tone involves all of the following except: 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. promotion of a well-defined code of conduct - CORRECT ANSWERS โโA Which of these help employees deal with substance abuse (alcohol and drugs), gambling, money management, and health, family, and personal problems? A. Equal Employment Opportunity Programs B. Employee Assistance Programs
B. unexplained adjustments to receivables, payables, revenues, or expenses C. journal entries that do not balance D. journal entries without documentary support - CORRECT ANSWERS โโA Once in a while, someone commits fraud or another crimes and does not feel stress. Such peoples are referred to as: A. psychopathic B. altruistic C. philanthropic D. magnanimous - CORRECT ANSWERS โโA Which of the following statements is true? A. Most people who commit fraud use the embezzled funds to save for retirement. B. As fraud perpetrators become more confident in their fraud schemes, they usually steal and spend increasingly larger amounts. C. First-time offenders usually exhibit no psychological changes. D. Psychopaths feel guilty because they have a conscience. - CORRECT ANSWERS โโB In the three elements of fraud (theft act, concealment, conversion), who is usually in the best position to detect fraud? A. co-workers and managers B. customers
C. owners D. vendors - CORRECT ANSWERS โโA Which of the following is not a fraud symptom related to an internal control weakness? A. proper authorization B. lack of independent checks C. inadequate accounting system D. lack of physical safeguards - CORRECT ANSWERS โโA Which element is not a common element of fraud? A. concealment B. coercion C. conversion D. theft act - CORRECT ANSWERS โโB Analytical fraud symptoms are the least effective way to detect fraud. A. true B. false - CORRECT ANSWERS โโB 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. key ratios are compared from one period to the next - CORRECT ANSWERS โโB When deciding which detection methods to use, it is important to: A. determine the advantages and disadvantages of each approach B. identify the costs involved C. determine which method will meet the client's objectives D. all of the answer choices are correct - CORRECT ANSWERS โโD If a search reveals that an employee and a vendor have the same telephone number, this result may indicate that: A. vendors are overcharging for goods purchased B. employees may be establishing dummy vendors C. contractors are billing at the wrong rates D. a vendor is receiving kickbacks or other favors - CORRECT ANSWERS โโB An advantage of using ODBC to import data into a data warehouse is that: A. ODBC does not require the use of corporate database server B. ODBC compresses data when stored on a CD or DVD C. ODBC automatically retrieves column names and types from the database D. ODBC keeps the investigator from dealing with difficult SQL language - CORRECT ANSWERS โโC
Which of the following statements is true regarding Benford's Law: A. is usually unsuccessful as a fraud detection tool B. predicts that the first digit of random number sets will begin with a 1 more often than 2, a 2 more often than a 3, and so on C. applies to personal ID numbers D. is not useful because human generated numbers usually do not match Benford's Law - CORRECT ANSWERS โโB The most obvious disadvantage of the data-driven approach is: A. databases are very large and often cannot be analyzed using analysis packages B. high cost C. the decrease in employee morale D. low cost - CORRECT ANSWERS โโB Which of the following statements is true about the characteristics of real- time analysis? A. with real-time analysis in place, there is no need for continual improvement and updating of indicators B. it is a distinct technique because it specifically analyzes each transaction for correctness rather than for fraud C. it does not allow real-time modifications and deletion of less-effective indicators D. if indicators are hard-coded into the system, they quickly become outdated or circumvented - CORRECT ANSWERS โโD
B. search warrant C. voluntary consent D. all of the answer choices are correct - CORRECT ANSWERS โโD Which of the following is not included in a vulnerability chart? A. explanations of the fraud triangle in relation to suspects of fraud B. breakdowns in key internal controls that may have created fraud opportunities C. internal controls that a company plans to institute in the future D. theft act investigation methods - CORRECT ANSWERS โโC What can a fraud examiner conclude if one or more instances of fraud are found in a sample taken from a population? A. there is a slight risk that fraud exists in the population B. the population contains fraud C. the sample may not have been randomly selected, and thus no conclusions can be drawn D. the sample is most likely not representative of the population as a whole
- CORRECT ANSWERS โโB When conducting interviews during an investigation, which of the following words should usually be avoided? A. audit B. inquiry C. record examination
D. investigation - CORRECT ANSWERS โโD Discovery sampling: A. is a type of variables sampling B. is one of the more difficult statistical sampling methods to understand C. is never used in conducting a fraud examination D. deals with the probability of discovering at least one error in a given sample size if the population error is a certain percentage - CORRECT ANSWERS โโD Which of the following methods of gathering documents is based primarily on luck? A. documents discovered during audits B. hard-to-get private documents that are subpoenaed C. documents discovered through searching public records D. documents provided by tipsters - CORRECT ANSWERS โโD In a fraud investigation, documents: A. usually contain extremely valuable information B. are rarely used in court C. are not reliable sources of information D. are only valuable in obtaining a confession - CORRECT ANSWERS โโA
B. fulfill an inner desire to commit fraud C. improve their lifestyle D. achieve a higher self-esteem - CORRECT ANSWERS โโC Investigations of perpetrators' net worth and lifestyles help investigators know what class of society the perpetrators are from. A. True B. False - CORRECT ANSWERS โโB Evidence gathered from public records can be useful in: A. identifying with the suspect B. obtaining a confession C. making the suspect feel at ease D. none of the above - CORRECT ANSWERS โโB Counties and other local agencies that contain records are usually not very useful in fraud investigation. A. True B. False - CORRECT ANSWERS โโB Conversion investigations focus on how suspects: A. had opportunities to steal B. had motives to commit fraud C. spent stolen money
D. committed the actual theft - CORRECT ANSWERS โโC Several publicly available databases provide information that can be helpful in investigations. A. True B. False - CORRECT ANSWERS โโA Which of the following is a possible use of conversion-based investigation techniques? A. searching public records to trace purchases of assets and payments of liabilities B. attempting to located previous spouses' bank account records C. locating significant amounts of money held by related parties D. all of the answers should be considered - CORRECT ANSWERS โโD Perpetrators usually save what they steal. A. True B. False - CORRECT ANSWERS โโB The Gramm-Leach-Bliley Act allows: A. banks to sell customer information B. financial institutions to share information C. customers to "opt out" and ask that their information not be shared D. all of the answers are allowed - CORRECT ANSWERS โโD
