ACC 608 Final
Once the subject has admitted to remembering the first instance, the interviewer should ___ a. say to him or her to "tell me about it" b. express some moral indignation so that the confessor knows he or she has done wrong c. remind the confessor that actions have consequences d. immediately get the confessor to sign a written statement
a
Organizational avoidance of setting unachievable or unreasonable financial goals is an example of: A. Reducing the pressure to commit financial statement fraud b. Reducing the opportunity to commit financial statement fraud c. Reducing the grounds for rationalizing financial statement fraud d. Reducing the incentives for reaching performance targets
a
The majority of conflict of interest schemes fit into one of two categories: A. Purchasing schemes and sales schemes b. Bribery and illegal gratuities c. Conflict of interest and economic extortion d Kickback and "pay it forward" schemes
a
There are three main groups of people who commit financial statement fraud. In descending order of likelihood of involvement, they are as follows: Senior management, mid- and lower-level employees, and ___________________. A. Organized criminals b. Government bureaucrats c. Directors and officers of governing boards d. Employees with purchasing authority
a
Thethat the former provides no exception for ________________________. https://www.coursehero.com/file/84868589/ch06docx/ UK Bribery Act parallels the FCPA in many aspects, however, one key difference is A. Facilitating payments (for things such as obtaining permits) b. UK citizens acting outside of the UK c. Bribery of public officials d. An unduly complex legal or banking structure
a
When conducting a fraud examination, variables such as weather data, employee headcount, production facilities, and production capacity might provide useful clues. These types of data are known as: A. Non-financial measures (NFMs) b. Dupont Expression c. Return on assets (ROA) d. Return on equity (ROE)
a
_______________ are violations of the rule that a fiduciary, agent, or employee must act in good faith, with _______________, in the best interest of the principal or employer. A. Conflict of interest schemes; full disclosure b. Purchasing schemes; clear intent c. Shell company schemes; full transparency d. Ethical lapses; proper duty of care
a
a liar will often request that the interviewer "check with his wife" or "talk to my minister" why do they say this? a. to add credibility to the false statement b. to vindicate themselves c. gain sympathy from the interviewers d. to identify co-conspirators without having to name them
a
According to a 2010 study of 347 financial statement frauds from 1998 to 2007 conducted by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), ____________________ is the group most likely to commit financial statement fraud. A. Publicly traded companies b. Privately held enterprises c. Senior management d. Organized criminals
c
There are traditionally two methods of percentage analysis of financial statements: A. Certified analysis and non certified analysis b. In-depth analysis and cursory analysis c. Vertical analysis and horizontal analysis d. Disclosure analysis and related-party transactions analysis
c
To detect conflicts of interest, organizations should concentrate on establishing ________________ to receive tips and complaints. A. A whistle-blower protections policy b. Robust internal controls c. An anonymous reporting mechanism d. A segregation of duties policy
c
A board member of a school voted in favor of the school doing a bond issue to acquire a multi-million-dollar piece of property for a future campus. It was later discovered that the board member's wife had part-ownership in the property, a fact that the board member never disclosed to the school. What kind of fraud scheme did the board member perpetrate? A. A conflict of interest scheme b. A false billing scheme c. A bid rigging scheme d. A duty of care scheme
a
A short rule of thumb that can be used to distinguish between overbilling schemes that are classified as asset misappropriations and those that are conflicts of interest: if the bill originates from a ______________ in which the fraudster has an economic or personal interest, and if the fraudster's interest in the company is undisclosed to the victim company, then the scheme is a conflict of interest. A. Real company b. Shell company c. Offshorebank d. Nonaccomplice vendor
a
Conflicts of interest are essentially different from bribery, illegal gratuities, and economic extortion cases in that a conflict of interest occurs when an employee, manager, or executive, has ________________________________. A. An undisclosed economic or personal interest in a transaction that adversely affects the organization. b. A relative with less than two degrees of consanguinity serving on the organization's board of directors. c. Materially benefited from a business transaction whose profits should have gone to his/her organization. d. An officer/director position on the board of another company with which the employing organization does business (e.g., purchasing insurance)
a
Current ratio, quick ratio, debt to equity, and return on assets are all examples of what kind of analysis: A. Ratio analysis b. Inventory turnover c. Horizontal analysis d. Analysis of nonfinancial numbers
a
Financial statement frauds can be broken down into five distinct categories: concealed liabilities and expenses, _______________, improper asset valuations, improper disclosures, and timing differences. A. Fictitious revenues b. Senior management fraud c. Materiality d. Inflated inventory
a
Fraud can occur when purposeful attempts are made to manipulate the ___________ concept. For example, through controlling the year-end cut-off in financial figures, many companies boost their current net income by counting revenue from the following year early, and by delaying the post of this year's expenses until the following year. A. Matching b. Periodicity c. Historical cost d. transparent disclosure
a
Given a choice between using the words theft or shortage, an interviewer should generally opt for shortage. This is because: a. words that normally put people on the defensive should be avoided b. interviewees who are innocent may feel that you are implying they are to blame c. until the facts are resolved, you don't actually know whether the shortage is attributable to theft d. it may help lull a target into a false sense of security because he may assume that the interviewer doesn't believe a theft has occurred
a
If a company changes the way it keeps its books from one year to the next, and if these changes have a material impact on the financial statements, they must be disclosed in a note. Fraud occurs when ___________ is intentionally avoided to show false profits. A. Consistency b. Net realizable value c. Relevance d. clarity
a
In a kickback scheme, the funds come directly from: A. The victim company b. A nonaccomplice vendor c. An accomplice vendor d. Employees with purchasing authority
a
In a typical interview, in what stage would the questions be asked "Is there anyone else I should speak with about the matter?" a. the close b. the nadir c. the introduction d. they body
a
In an admission-seeking interview, there comes a point at which the accused is deliberating whether or not to confess. When this occurs, the interviewer should present an altnerative question to the accused which forces him or her to make one of two choices. One alternative allows the accused a morally accepted reason for the misdeed; the other paints the accused in a negative light. Regardless of which answer the accused chooses, her or she is acknowledging guilt. This is known as a/an: a. benchmark admission b. fork-in-the-road admission c. lesser-of-two evils admission d. exculpatory admission
a
In conducting an interview, it is advisable to indicate your name and your company but not use your title. Why is this? a. the more informal the interview, the more relaxed the respondent will be b. titles can be misleading. as an example, how much authority does a company senior vice-president possess v. the company's executive vice-president? c. putting too much personally identifiable information (PII) into the public about yourself can compromise your privacy and security d. plain sounding titles such as "associate" may lead the respondent to think you don't have any real expertise or authority
a
In the course of an admission-seeking interview, you could display physical evidence of the fraud, discuss the testimony of witnesses, or discuss the accused's deceptions. All of these may be useful to: a. defuse alibis b. establish rapport c. increase fear d. appear compassionate
a
Instead of taking detailed notes during an interview, the authors advise jotting down keywords. the reason they recommend this is that: a. taking extensive notes distracts interviewers from their main responsibility to watch and listen b. taking extensive notes tends to make witnesses uncomfortable which may cause them to be less forthcoming c. taking extensive notes allows the opposing side to obtain them during discovery which may reveal your side's strategy d. taking extensive notes is impractical and will cause interviews to last unnecessarily long
a
Internal auditors for Stuff You Need for Your House, Inc., uncovered what appears to be a kickback scheme amounting to some $30,000 in over-billing by a vendor in the previous 18 months. The company has contacted you to investigate the fraud in order to identify the perpetrator(s). All things being equal, which of the following employees is likely to be involved? A. The purchasing manager b. A ghost employee c. The warehouse manager d. The head of accounts receivable
a
Inventory valuation, accounts receivable, business combinations, and long-term assets are categories that involve which kind of financial statement fraud? A. Improper asset valuation b. Revenue recognition c. Improper disclosures d. Undisclosed related-party transactions
a
Materiality, according to GAAP, is a _________________ concept. A. User-oriented b. Transparency c. Universal d. Regulatory
a
Offering, giving, receiving, or soliciting anything of value to influence an official act is the definition of: A. Bribery b. Economic extortion c. Bid rigging d. Illegal gratuity
a
by arranging interviews in order of probable culpability, the fraud examiner is in a position to ___ a. have as much information as possible by the time the prime target is interviewed b. save the time and cost of depositions until last for the most probable targets c. use lawful threats (jail, conviction, fines) for uncooperative suspects d. seek any additional grand jury indictments needed based on the evidence gathered
a
one of the most effective techniques for stopping or interrupting a denial is ___ a. through the use of a delaying tactic b. to confront the accused about their persistence in lying c. through appearing to be confused d. to offer a moral rationalization
a
According to the ACFE's Report to the Nations, _________________________(i.e., employees, vendors, customers, and anonymous individuals) are the most common means by which occupational fraud is detected. A. Surprise audits of b. Tips from various sources c. Confessions by individuals d. Red flags observed among
b
According to the research, the average person's ability to judge deception is relatively poor. some studies have indicated that interviewers fail to identify lies as must ___ of the time a. 25% b. 50% c. 35% d. 70%
b
Among the factors associated with financial statement fraud, the most common is pressure on upper management to ______________. A. Comply with PCAOB regulations b. Show earnings c. Manage board relationships d. Increase market share
b
By regularly monitoring the prices paid for good and services as compared to market rates, which type of fraud is an organization trying to detect? A. Gouging schemes b. Kickback schemes c. Commission schemes d. Bribery schemes
b
During the admission-seeking interview, the interviewer must, at some point, make a direct accusation of the subject. which of the following accusations below would best serve this purpose? a. we have reason to believe that you... b. our examiantion has clearly established that you... c. it seems likely, based on statements from your co-workers, that you... d. you are suspected of...
b
Economic extortion is basically the flip side of a bribery scheme. A. Instead of an illegal gratuity, the payment comes with an explicit or implied threat to harm the vendor unless they capitulate to demands. b. Instead of a vendor offering a payment to an employee to influence a decision, the employee demands a payment from a vendor in order to make a decision in that vendor's favor. c. Instead of a private company, the payment comes with an explicit or implied threat to harm a government employee unless they capitulate to demands. d. Instead of cash, "rewards" such as free international vacation may be used.
b
Fraud reporting programs should emphasize at least six points: fraud, waste, and abuse occur at some level in nearly every organization; this problem cost jobs, raises, and profits; the organization actively encourages employees to come forward with information; there are no penalties for furnishing good-faith information; there is an exact method for reporting, such as a telephone number or address; and ________________. A. Incentives offered for information leading to successful prosecution of fraudsters b. Mandatory participation in regular anti-fraud training c A report of suspicious activity does not have to be made to the employee's immediate supervisor d. Adequate compensation (to deter wages in kind motivated frauds)
b
Fraud, in the going-concern context, usually results from attempts by an entity to _____________________. A. Overstate/understate its assets b. Conceal its terminal business condition c. Establish a sales value for the asset without selling it d. Conceal the existence of special-purpose entities (SPEs)
b
In the ACFE Fraud Tree, corruption schemes are broken down into four classifications. Which of the following is NOT one of the four? A. Bribery b. Bid rigging c. Economic extortion d. Conflict of interest
b
Many major financial frauds have resulted from the purposeful omission of _____________ in the financial statements. A. Periodicity b. Note disclosures c. Conflicts of interest d. Net realizable value (NRV) of assets
b
Most fraud are solo ventures - committed without the aid of an accomplice. however, the interviewer should still seek to determine whether other parties were involved. Which choice from the list below would be the best way to phrase this? a. did someone else know? b. who else knew besides you? c. give me the names, right now, of everyone who knew besides you? d. who are the other losers involved in this?
b
under which king of fraud would an examiner start with the suspected perpetrator? a. cases of collusion where a co-conspirator agrees to testify against the perpetrator b. fraudulent representation (such as tax returns and financial statements) c. almost every instance where the suspected perpetrator has a prior fraud conviction d. if surveillance footage contains "smoking gun" evidence against the perpetrator
b
Not every false billing scheme is categorized as a conflict of interest. For a scheme to be classified as a conflict of interest: A. The relationship with the vendor company has to be disclosed in advance unless the cost of goods are cheaper. b. The employee (or a friend or relative of the employee) must have some ownership or employment interest in the vendor that submits the invoice. c. The employer has an undisclosed conflict of interest in one or more a shell companies. d. The fraudster's intent is unlawful in a conflict of interest scheme, whereas in a false billing scheme, they are merely unethical.
b
One issue that arises in interviews is the use of checklists and prewritten questionnaires. The main benefit of these is that the interviewer will be well prepared and less likely to miss an important inquiry. However, checklists can ___ a. be subpoenaed by opposing counsel which may give it information it didn't have b. create tunnel vision and distract the interviewer from looking for signs of deception c. cause the interviewer to lose credibility with the witness because they make the interviewer look like they don't know what they're doing d. inadvertently divulge to a witness critical information known to the interviewer
b
Persuasive evidence of an arrangement does not exist, delivery has not occurred or services have not been rendered, the seller's price to the buyer is not fixed or determined, or collectability is not reasonably assured are all examples of common problems associated with which type of financial statement fraud? A. Liabilities/expense omissions b. Premature revenue recognition c. Improper disclosures d. off balance sheet special-purpose entities
b
Stewart was an iconic CEO with a $32-million-a-year salary until he was convicted of embezzlement. An internal auditor was the first to notice a red flag on a balance sheet ratio. What did she notice? A. A decrease in the company's debt to equity ratio b. A decrease in the company's current ratio c. An increase in the company's quick ratio d. An increase in the company's profit margin ratio
b
The term financial statement includes almost any financial data presentation prepared according to ____________________ or another __________________. A. The CEO's reasonable interpretation; officer within the company b. Generally accepted accounting principles; comprehensive basis of accounting c. A professional auditor's opinion; legitimate source of accounting expertise d. SEC rulings; regulatory body such as the PCAOB
b
There are at least six positive steps that organizations can employ to increase the perception of detection: employee education, proactive fraud policies, a higher stance, increased use of analytical review, surprise audits where feasible, and _____________. A. Anti-fraud messaging (such as posters) displayed throughout the organization b. Adequate reporting programs c. Foster a climate of trust d. Prosecute offenders
b
You are a fraud examiner investigating the theft of a company's automotive parts inventory. after reviewing documents and interviewing witnesses, you have narrowed the list of probable perpetrators to three warehouse workers who appear to have colluded with each other: a forklift operator, a shift leader, and a loader. All 3 have high school diplomas and earn about 15% more than minimum wage (except for the shift leader, who earns a little more). You decide to interview the forklift driver first (on the belief that the shift leader and the loader are the probable the primary targets). As you talk, you use the terms collusion, defalcation, and predication. which of the following statements is most applicable? a. you should use technical terms and language whenever possible as a power dynamic to persuade witnesses into cooperating with you b. you should avoid technical terms and language because they may confuse the interviewee c. you should use technical terms and language frequently, especially with people not trained in accounting or forensics because it may prompt them to confess sooner because they tend to assume you know what you are doing d. you should avoid technical terms and language because it may cause the interviewee to want to play "one-upmanship" games with you
b
You are conducting an admission-seeking interview of a suspected embezzler. At some point during the interview, you might say something like "I totally get it. You were under such financial pressure at home, you just didn't see any other way out. That's a pretty common feeling, if you ask me, especially in this day and age where we're expected to do so much at work with so few resources." What are you attempting to do by saying this to the target? a. make yourself feel less conflicted about being confrontational b. gain the confession without reducing the legal responsibility for the act c. establish a firm moral boundary in the target's mind between right and wrong d. make yourself seem more human to a jury if the case goes to trial
b
___ is an essential element in all criminal and civil actions involving fraud a. motive b. intent c. conversion d. ego/entitlement
b
___ is the process of observing behavior before critical questions are asked, as opposed to doing so during questioning a. indexing b. norming c. reflective feedback d. posturing
b
___ is the systematic questioning of a person who has knowledge of events, people, evidence, and other details surrounding a fraud or forensic accounting issue a. interrogating b. interviewing c. canvassing d. structured dialoguing
b
_______________ must take the lead in establishing, implementing, and maintaining a formal fraud risk management program. A. Corporate shareholders b. Board and management c. Regulatory agencies such as the PCAOB and SEC d. Internal auditors
b
________________ is defined as the use of deliberate misstatements or omission of amounts or disclosures of financial statements to deceive financial statement users, particularly investors and creditors. A. "Earnings management" b. Financial statement fraud c. Defalcation d. Irrelevancy
b
_________________ is a process by which several bidders conspire together to split up contracts and ensure that each gets a certain amount of work. A. Bid phishing b. Bid pooling c. Bid peaking d. Bid conspiring
b
____________________ are a form of fictitious revenue scheme in which a sale is booked even though some terms have not been completed and the rights and risks of ownership have not passed to the purchaser. A. Off balance sheet liabilities b. Sales with conditions c. Material omissions d. Undisclosed speculative revenue recognition (SAB 104)
b
An example of ______________ in accounting is the use of the _______________ rule as it relates to inventory valuation. That simply means that if a company paid one dollar for a widget and at a later date the price fell fifty cents, the lower of those two prices should be carried on the balance sheet; the resulting price fall should then be recorded on the income statement. If a company's financial statements violate the ____________ constraint, they could be fraudulent. a. Transparency; "matching;" transparency b. Periodicity; "smoothing earnings;" periodicity c. Conservatism; "lower of cost or market"; conservatism d. Materiality; "net present value;" materiality
c
As with any interview, there are three general approaches to obtaining the verbal confession: chronologically, by transaction, or by: a. association b. display of physical evidence c. event d. official documentation
c
Because any examination of a kickback scheme will likely necessitate a review of the corrupt vendor's books, all contracts with supplies should contain a _____________ clause. A. "right to independent counsel" b. "right to terminate without cause" c. "right to audit" d. "right to be reimbursed for kickbacks"
c
Bribery schemes generally fall into two broad categories: A. Governmental acts and commercial decisions b. Conflict of interest and self-dealing schemes C. Kickbacks and bid-rigging schemes d. Bribery and corruption schemes
c
Engaging in "small talk" for a few minutes at the beginning of an interview is: a. not advisable because it's not on-point where the purpose of the interview is concerned b. not advisable because most people see it for what it is: a banal social custom c. advisable because it can be a means of breaking the ice and establishing a flow of communication d. advisable because you want to extend the interview for as long as possible in an attempt to breakdown the witness
c
Financial statements are the responsibility of company ____________. A. Bookkeepers b. Shareholders c. Management d. External auditors
c
Illegal gratuities are similar to bribery schemes except there is not necessarily: A. A code of ethics violation for most companies and government employees b. Economic extortion c. Intent to influence a particular business decision d. A cash payment
c
In any antifraud effort, we must always keep in mind that _________________ will deter occupational fraud; we must attack the problem _________________. A. Nothing can ultimately; from a psychological point of view b. Fostering trust in employees; with a presumption of goodwill c. No one factor; on several fronts d. It is people who will ultimately; through anti-fraud training and internal controls
c
In the fraud examination and forensic accounting professions, nothing is more important to the successful resolution of a cash than the ability to conduct through interviews of ___ and integration of ___ a. subjects and targets; witnesses b. employees and board members; fraudsters c. witnesses; subjects and targets d. fraudsters; felons
c
Liability omissions, subsequent events, management fraud, related-party transactions, and accounting changes are all associated with which type of financial statement fraud? A. Timing differences b. Revenue recognition c. Improper disclosures d. Channel stuffing
c
One of the challenges of detecting financial statement fraud is that: A. Auditors tend to over-analyze even relevant NFMs b. The financial statements of publicly traded companies are insufficiently regulated c. Either the CEO or the CFO was involved in 89% of financial statement frauds studied (implying an override in traditional internal controls) d. Employees within the accounting department can commit immaterial frauds
c
Payments to offshore bank accounts in cash or by wire; undocumented business entertainment expenses; unusual payments for commissions, loans, temporary employees and directors' fees are red flags associated with possible: A. Shell company schemes B. Bid rigging c. FCPA violations d. Economic extortion
c
Rather than being confrontational in interviews, constantly seek agreement from the accused. No matter what the accused has supposedly done, do not express shock, outrage, or condemnation. this posture is recommended because a. only trained experts in a controlled environment should risk provoking a suspect b. it limits the interviewer's liability to formal charges of harassment c. the goal is to remain in control while still appearing compassionate and understanding d. the evidence in the case may ultimately point elsewhere
c
Regardless of whom we interview, and about what, there are 5 general types of questions we can ask: introductory, informational, assessment, closing, and ___ a. probative b. relational c. admission-seeking d. confirmation
c
Senior managers and business owners may "cook the books" for any of several reasons: to conceal true business performance, to preserve personal status/control, and to __________________________. A. Deceive stockholders b. Comply with PCAOB-mandated income targets c. Maintain personal income/wealthJ. d. Get revenge on the organization (e.g., wages in kind)
c
Shell company schemes are classified as: A. Economic extortion b. Undisclosed relationship schemes c. False billing schemes d. Conflict of interest schemes
c
The key difference between bribery and commercial bribery is that in cases of commercial corruption: A. Something of value is offered to influence to a government agent in order to influence a business decision b. Something of value is offered to reward a transaction rather than influence it c. Something of value is offered to influence a business decision rather than an official act of government d. Something of value is offered to reward a government decision rather than to influence it
c
The majority of conflict schemes are ___________ schemes, and the most common of these is the _____________ scheme. A. Billing; extortion b. Undisclosed; purchasing c. Purchasing; billing d. Sales; gratuities
c
The majority of conflict schemes are: A. Not necessarily tied to an economic interest b Undisclosed c. Purchasing schemes d. Sales schemes
c
The premise of the ____________________ is that the activity of a business enterprise should be kept separate and distinct from its owners and other business entities. A. Monetary unit b. Going concern c. Economic entity assumption d. Periodicity principle
c
Using data spanning 2002-2013 from the ACFE Report to the Nations on Occupational Fraud and Abuse, and made available through the Institute for Fraud Prevention (IFP), the authors examined private company FRF cases in comparison to those at public companies and found several key differences. These included the observation that a stronger antifraud environment in public companies appears to lead public company FRF perpetrators to use ____________ perhaps to make the fraud less obvious, rather than other fraud schemes such as fictitious revenues. A. Off balance sheet liabilities b. Bribery and illegal gratuities c. Timing differences d. Classifying expenditures as assets
c
When it is time to obtain a signed statement from the confessor, which approach is best? a. the interviewer should have the confessor draft the statement, preferably in his or her own handwriting b. the interviewer should suggest that the confessor's legal counsel draft a statement c. the interviewer should prepare the statement for the confessor to sign d. the interviewer should have the confessor dictate the statement to him or her for signature
c
You are a fraud examiner who has been hired to investigate a potential embezzlement case. In which order should you go about gathering the evidence? a. document analysis, neutral third-party witnesses, co-conspirator(s), corroborative witnesses, target b. target, co-conspirator(s), corroborative witnesses, document analysis, neutral third-party witnesses c. document analysis, neutral third-party witnesses, corroborative witnesses, co-conspirators, target d. target, co-conspirator(s), corroborative witnesses, neutral third-party witnesses, document analysis
c
___ generally involves the questioning of a suspect, target, or uncooperative witness to obtain evidence, to obtain an admission of guilt or complicity in an act, or to give the interviewee an opportunity to volunteer facts and circumstances that may eliminate them as a suspect or target of the examination a. interviewing b. examination c. interrogation d. instigation
c
_____________________ in the quality and reliability of financial statements, caused by alleged fraudulent activities, is the most damaging and costly effect of financial statement fraud. A. Increased instances since 2000 of material misrepresentations b. Worldwide decline in market capitalization can be observed c. Loss of public confidence d. Increased regulatory compliance costs
c
admission-seeking questions are reserved specifically for individuals whose culpability is reasonably certain. Such questions have at least 3 purposes: (1) to distinguish the innocent from the culpable, (2) to obtain a valid confession, and (3) ___ a. to identify potential co-conspirators or other matters salient to the investigation b. to establish a rapport with the subject and make them feel relaxed c. to obtain from the confessor a written statement acknowledging the facts d. to establish the credibility of the respondent
c
giving vague or evasive answers to questions, avoiding eye contact with the interviewer, casting guilt to others in general but not specifically, and being indignant may be signs of ___ a. the interviewer having failed to adequately prepare b. a pathological liar c. stress that may accompany deception d. a confessor who is almost ready to admit their guilt
c
Because of the nature of the psychology of confessions, most confessors will lie about one or more aspects of the offense, even though confirming overall guilt. When this happens during the verbal confession, the interviewer should ___ a. offer a moral rationalization for the lie but make sure the confessor knows that you know he lied b. firmly but politely debunk the confessor's lie with the evidence c. gently confront the confessor while remaining a compassionate as possible d. make a mental note of the discrepancy and proceed as if the falsehood had been accepted as truthful
d
Bob was CFO for a chain of Lucky Clucky chicken franchises owned by Tim. By virtue of Bob's position as CFO, he knew that Tim was planning to open another store in a particular location. Bob hurriedly created a shell company using his wife's maiden name as the beneficial owner and then purchased the location. The shell company then resold the property to Tim's company a few weeks later for a greasy little profit of $172,000. What kind of purchasing scheme did Bob commit? A. A business diversion scheme. B None. It's a free market. C. A resource diversion scheme. d. A turnaround sale
d
Financial statement fraud schemes are most often perpetrated against _________________ financial statements by management. A. Publicly traded companies that are required to prepare b. PCAOB regulations pertaining to c. GAAP requirements for preparation of d Potential users of
d
Generally speaking, revenue is recognized when it is realized or realizable and _____________. A. Recorded b. Received c. Invoiced d. Earned
d
In FRF, senior management may ____________ business performance to meet certain objectives. A. Destroy accounting records that reflect b. Frame another employee as a fraudster to conceal their own c. Delay the production of financial reports that show actual D. Overstate or understate
d
Interviewers need to have complete command of the facts, events, dates, other relevant details, especially in potentially adversarial interviews, in order to ___ a. appear to not be caught off guard by previously unknown information b. present a professional image that establishes the authority of the interviewer c. focus on more granular details that would likely be known only by the subject or target d. deflate attempts at misdirection and deception by the subject or target
d
Many antifraud professionals, forensic accountants, and attorneys will suggest that the outcome of an interview or interrogation may be determined before the first question is asked. What is the underlying belief to this axiom? a. if you position yourself as an expert, witnesses will generally be reluctant to lie b. professional experience trumps attempts at concealment in most fraud c. eyewitness testimony is reasonably reliable d. preparation is the primary key to success
d
Ted is Director of External Affairs for a large pharmaceutical company. Part of his responsibilities include coordinating the company's national lobbying efforts in order to create more favorable business conditions for the operations of its six regional distribution centers. If Ted decides to create a slush fund with company money in order to provide bribes and gratuities for legislators and others, which way would he most likely use to generate the necessary money for the slush fund? A. Use cash from falsified travel and entertainment expenses b. Divert funds from nonaccomplice vendors engaged in overbilling schemes c. Approve the formation of an offshore shell company through an entity such as Mossack Fonseca D. Divert funds to lobbyists through invoices for "consulting fees," "referral fees," "commissions," or the like
d
The deterrence of occupational fraud and abuse begins in the _______________. A. Classroom b. Implementation of sound internal controls c. Hiring process d. The employee's mind
d
There are few hard-and-fast rules in interviewing, but one of them is: a. seek continuous agreement b. get a commitment for assistance c. ask non-sensitive questions d. question only one person at a time
d
There are three general ways in which fraudulent financial statements can be generated: playing the accounting system, beating the accounting system, and ____________________. A. Inverting the accounting system (i.e., intentionally reversing debits and credits) b. Claiming to have no knowledge of fraudulent transactions in the accounting system c. Coercing employees who control the accounting system d. Going outside the accounting system
d
Which of the following categories of harm resulting from fraudulent financial statements was NOT presented in the text? A. It jeopardizes the integrity and objectivity of the auditing profession. b. It makes the capital markets less efficient. c. It results in huge litigation costs. d. It increases taxpayer costs for corrections as a result of white collar convictions.
d
Which of the following red flags was NOT listed in the text as being associated with fictitious revenues? A. Rapid growth or unusual profitability b. Recurring negative cash flows from operations c. Significant, unusual, or highly complex transactions, especially those to period end d. Intentional omissions of disclosures regarding accounting principles and policies
d
_____________________ schemes involve the recording of sales of goods or services that did not occur. A. Bribery and corruption b. Matching c. Disclosure d. Fictitious or fabricated revenue
d
generally, truthful behavior includes direct answers that give the impression that the itnerviewee has nothing to hide, spontaneous answers that indicate that the interviewee has nothing to think about, a perception by the interviewee of attentiveness and interest in the interview outcomes, an orientation toward the interviewer, and ___ a. increased or decreased use of illustrators in speech during threatening questions b. being overly friendly and polite c. appearing outwardly unconcerned d. behavioral consistency between verbal and nonverbal cues
d