Forensic Accounting and Fraud Examination Week 2 Quiz Answers

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Forensic Accounting and Fraud Examination Week 2 Quiz Answers

Week 2 Quiz Answers

Question 1)
The most distinguishing difference between an accidental fraudster and a predator is which of the following:

• there are few differences: accidental fraudsters, like predators, are horrible people.
• both have high personal debt, live beyond their means, or have drug or alcohol problems.
• the predator seeks out opportunity to commit fraud.
• predators steal larger amounts than accidental fraudsters.

Question 2)
A fraudulent act can be demonstrated by:

• Establishing that the employee concealed the act.
• Showing that there were multiple incidents of the same act.
• Destroying of evidentiary documents that describe the act.
• All of the above.

Question 3)
Conversion can be shown to have occurred by:

• Tracing the money to the defendant’s care
• Tracing the money to the defendant’s department
• Tracing the money to the defendant’s bank account
• All of the above

Question 4)
Large fraud perpetrators are more likely to use the money for all of the following except:

• to purchase new homes.
• to pay for expensive vacations.
• to support extramarital affairs.
• to pay taxes.

Question 5)
Capability as an attribute of fraudsters is most closely associated with which of the following

• Technical competency
• Intelligence, position, ego, and the ability to deal well with stress
• Investigative proficiency
• Thinking critically

Question 6)
From an investigatory perspective, the shortcoming of the fraud triangle is as follows:

• The fraud triangle doesn’t help the investigator understand the motivations of the fraudster.
• The fraud triangle doesn’t help the investigator understand why the fraudster committed fraud.
• Pressure and rationalization are generally not observable.
• The fraud triangle is as important to an investigation as any other tool

Question 7)
Which of the following is true concerning the fraud scale developed by Albrecht?

• Situational pressures are not important when integrity is examined in the fraud scale.
• The fraud diamond and its addition of capability, was based on criticism of both the fraud triangle and fraud scale.
• Personal integrity was added, and rationalization was deleted from the fraud triangle.
• None of the other answers are the components of the fraud scale.

Question 8)
Fraud deterrence begins:

• with the employer’s internal controls.
• in the employee’s mind.
• with the fraud examination.
• with regulatory and legal actions such as PCAOB Auditing Standard No. 5, AICPA Statement
• on Auditing Standards (SAS) No. 99, and the Sarbanes–Oxley Act.

Question 9)
Which of the following is correct with regard to internal controls.

• The fraud triangle inherently assumes no internal controls
• The fraud scale inherently assumes no internal controls
• The triangle of fraud action inherently assumes no internal controls
• Segregation of duties is most likely the most important internal control

Question 10)
Three of the various objectives of an internal control program are:

• fraud prevention, fraud deterrence, and fraud mitigation.
• fraud prevention, fraud deterrence, and fraud detection.
• fraud deterrence, fraud detection, and fraud prosecution.
• fraud elimination, fraud deterrence, and fraud mitigation.

Question 1)
One major difference between fraud and a mistake is:

• Concealment
• Cover-up
• The act
• Conversion (benefit to the perpetrator)

Question 2)
Which of the following is NOT an attribute of the “predatory” fraud triangle.

• Opportunity
• Arrogance
• Criminal mindset
• Rationalization

Question 4)
The Fraud Diamond has which of the following attributes added to the Fraud Triangle

• Integrity
• Conversion
• Capability
• Concealment

Question 5)
The Triangle of Fraud Action has which of the following attributes added to the Fraud Triangle

• Integrity
• Concealment
• Opportunity
• Capability

Question 6)
Albrecht developed the fraud scale, which includes the following components:

• situational pressures, perceived opportunity, and personal integrity.
• high personal debt, living beyond one’s means, drug or alcohol problems.
• situational pressures, personal integrity, and criminal record.
• None of the above are the components for the fraud scale.

Question 7)
Which of the following is true of the Dorminey et al “meta-model”

• Fraud prevention, deterrence and detection attempt to form a barrier between would the “would-be” fraudster and the execution of the fraud.
• The triangle of fraud action including the act, concealment and conversion do NOT play a role in the meta-model
• The fraud triangle including the pressure, opportunity and rationalization do NOT play a role in the meta-model
• Fraud prevention, deterrence and detection do NOT play a role in the meta-model

Question 8)
Why are preventative controls preferred (if cost effective )?

• They almost always discover the cash that is missing.
• They help recover the losses that can be anticipated
• They keep losses from occurring.

Question 9)
Large frauds are typically associated with all of the following except:

• Lack of segregation of duties and responsibilities.
• Placing undeserved trust in key employees.
• Operating on a crisis basis
• Working with management to set realistic goals

Question 1)
One of the main findings of Donald Cressey is the following observation.

• Cressey found that for a large number of people, they commit fraud because they have a financial need
• Cressey created the fraud triangle
• Cressey found both integrity and rationalization problems in fraudsters but concluded that rationalization was the greater weakness.
• Cressey concluded that opportunity such as weak internal controls led normally law-abiding persons to commit fraud acts.

Question 3)
Which of the following is/are applicable to the “Predator”, but not the “Accidental” fraudster? Select all that apply.

• Pressure
• Rationalization
• Arrogance
• Criminal Mindset

Question 4)
Signs that an individual is a predator fraudster include:

• Frequent job turnover caused by boredom.
• All of the other answers are correct.
• Takes advantage of sudden opportunity.
• Repeat offenses.

Question 5)
Overall, management must design, implement, and maintain:

• an internal controls program to protect entity assets, liabilities, and owners’ equity.
• internal controls to support effective and efficiency of operations, reliability of reporting, and compliance with laws and regulations.
• an automated accounting system that implements each component of U.S. GAAP accounting principles.
• All of the choices are correct.

Question 6)
Which of the following is correct with respect to the Triangle of Fraud Action.

• Triangle of Fraud Action represents specific actions that must be performed by an individual to perpetrate the fraud.
• Triangle of Fraud Action supports the investigation but does not represent control points where the fraud or potential fraud may be prevented, detected, or remediated.
• The Triangle of Fraud Action is less valuable to the investigator than the Fraud Triangle because proof of intent is required.
• The Triangle of Fraud Action replaces the Fraud Triangle.

Question 9)
When describing the characteristics of a crime, the Triangle of Fraud Action contains which of the following components?

• The Act
• Rationalization
• Conversion
• Financial Pressure

Question 10)
Segregation of duties, the most common internal control, is best described as which type of control?

• opportunity control.
• deterrence.
• preventative control.
• detection control.

Question 2)
With regard to the length of an employee’s time with an organization, which of the following statements is correct. Most occupational fraud by employees takes place:

• in the first year of work at the organization.
• after the first year of work at the organization.
• in the last years of work at the organization, just before retirement.
• after ten or more years of work at the organization, because they have the most authority and access to company funds such as bank accounts.

Question 3)
Which of the following is one possible attribute that often determines a predatory fraudster

• With the organization 10 or more years before the fraud
• Are getting a divorce from their spouse and need the money to pay lawyer fees
• Have prior fraud activities in past employment
• Their arrogance minimizes their need to conceal their fraud act

Question 1)
Which of the following statements is correct with respect to the fraud triangle.

• The fraud triangle reflects the basis for “accidental” and “predatory” fraud acts.
• Bernard Madoff used the fraud triangle to justify his multi-billion dollar fraud to the judge and jury
• The fraud triangle was derived from white collar crimes of all types
• The fraud triangle does not explain all categories of fraud perpetrators.

Question 6)
Based on a number of theories, people obey laws for all of the following reasons except:

• The fear of punishment.
• The desire for rewards.
• In order to act in a just and moral manner according to society’s standards.
• Due to a duty to act

Question 7)
From the statements below select the most correct.

• Prevention and deterrence are typically more costly than attempting to remediate a fraud that has already occurred.
• Fraud deterrence refers to creating environments in which people are prohibited from committing fraud.
• Fraud detection refers to the process of preventing and discovering the presence of fraud.
• Prevention and deterrence are typically more cost beneficial than attempting to remediate a fraud that has already occurred.

Question 8)
To improve the effectiveness of the fraud triangle, Wolfe and Hermanson suggests which characteristic as an addition to the fraud triangle?

• Capability
• Capacity to steal
• Integrity
• Ego or entitlement.

Question 10)
Which of the following is NOT one of the four basic functions that should be considered when separating duties related to a business event?

• Reporting the event
• Safeguarding the resulting asset
• Executing the event
• Recording the event
• Authorizing the event

Question 10)
Intent is usually demonstrated by showing which of the following?

• The act
• The concealment
• The cover-up
• All of the other answers are correct