AIS Chapter 5

5-3.5 A rationalization allows a person to convince him or herself that his or her actions are not illegal or dishonest. There are several different types of rationalizations: (Check all that apply.) a)A lack of personal integrity that makes what a person wants more important than acting honestly b)A mental defect that makes a person think that they own the item that they took c)An attitude, such as "the rules do not apply to me" d)A justification, such as "I am underpaid, so they owe it to me"

a)A lack of personal integrity that makes what a person wants more important than acting honestly c)An attitude, such as "the rules do not apply to me" d)A justification, such as "I am underpaid, so they owe it to me"

5.3 Fraud is gaining an unfair advantage over another person. Legally, for an act to be fraudulent there must be: a)An intent to deceive. b) An exchange of monetary consideration. c)All of these are correct. d)Unfairness.

a)An intent to deceive.

5-3.2 For most first-time fraud perpetrators, three conditions are present when fraud occurs. These include: (Check all that apply.) a)An opportunity b)A rationalization that allows a perpetrator to justify the illegal behavior c)A criminal mindset d)A pressure, incentive, or motivation e)The inability to distinguish between right and wrong

a)An opportunity b)A rationalization that allows a perpetrator to justify the illegal behavior d)A pressure, incentive, or motivation

5-4.1 Computer systems are particularly vulnerable to fraud for the following reasons: (Check all that apply.) a)Computer programs need to be illegally modified only once, in order for them to operate improperly for as long as they are in use. b)Perpetrators who break into corporate databases can steal or destroy massive amounts of data in very little time, often leaving little evidence. c)Most employees and suppliers with access to a computer system will eventually perpetrate a computer fraud, irrespective of the strength of the Internal controls. d)Few companies design controls into their computer systems. e)It is difficult to control physical access to each electronic device that accesses a network.

a)Computer programs need to be illegally modified only once, in order for them to operate improperly for as long as they are in use. b)Perpetrators who break into corporate databases can steal or destroy massive amounts of data in very little time, often leaving little evidence. e)It is difficult to control physical access to each electronic device that accesses a network.

5-3.3 Which of the following classification of pressures motivate people to perpetrate employee fraud? (Check all that apply.) a)Emotional pressures b)Industry pressures and conditions c)Financial pressures d)Lifestyle pressures e)Management characteristics and pressures

a)Emotional pressures c)Financial pressures d)Lifestyle pressures

5-3.1 Which of the following statements are true about fraud perpetrators? (Check all that apply.) a)Researchers found few psychological and demographic differences between white-collar criminals and the public. b)Most first-time, unprosecuted fraud perpetrators never commit another fraud. c)Most white-collar criminals have a previous criminal record; and they were honest and respected members of their community. d)Researchers found significant psychological and demographic differences between violent and white-collar criminals.

a)Researchers found few psychological and demographic differences between white-collar criminals and the public. d)Researchers found significant psychological and demographic differences between violent and white-collar criminals.

5-2.4 Which of the following statements are true with respect to asset misappropriation? (Check all that apply.) a)Since few perpetrators voluntarily stop their frauds, there are no small frauds—only large ones that are detected early. b)The sheer magnitude of some frauds leads to their detection. c)Few misappropriation frauds are self-perpetuating; that is, they do not require the perpetrator to continue the fraud scheme to avoid detection. d)A significant contributor to most misappropriations is the absence of internal controls and/or the failure to enforce existing internal controls. e)Rarely do fraud perpetrators adopt a more lavish lifestyle that requires even greater amounts of money.

a)Since few perpetrators voluntarily stop their frauds, there are no small frauds—only large ones that are detected early. b)The sheer magnitude of some frauds leads to their detection. d)A significant contributor to most misappropriations is the absence of internal controls and/or the failure to enforce existing internal controls.

5.9 Organizations can make fraud less likely to occur by requiring annual employee a)vacation. b)promotion. c)training. d)retreat.

a)vacation.

5-2.1 Legally, for an act to be fraudulent there must be: (Check all that apply.) a)An intent to do bodily harm to the victim b)A material fact that induces a person to act c)A false statement, representation, or disclosure d)A justifiable reliance, where a person relies on a misrepresentation to take an action e)An injury or loss suffered by the perpetrator

b)A material fact that induces a person to act c)A false statement, representation, or disclosure d)A justifiable reliance, where a person relies on a misrepresentation to take an action

5.6 Which of the following is an example of how a fraud perpetrator would rationalize his actions? a)Sense of dissatisfaction against the company. b)Belief that no one is going to be harmed. c)There is a lack of internal control in the organization. d)The need to have additional funds to pay for a gambling addiction.

b)Belief that no one is going to be harmed.

5-3.4 Opportunity is the condition or situation that allows a perpetrator to: (Check all that apply.) a)Control those who may know of his or her actions b)Convert the theft into a personal gain c)Commit the fraud d)Conceal the fraud e)Convince the perpetrator that he or she will not be caught

b)Convert the theft into a personal gain c)Commit the fraud d)Conceal the fraud

5-4.5 A hacker was able to break into the system that transmitted the daily transactions of a retail store to the company's central office. Every night for several weeks he copied the transaction data that included customer names, credit card numbers, and other confidential data. Hundreds of thousands of customers were affected. This is an example of what type of fraud? a)Processor fraud b)Data fraud c)Output fraud d)Input fraud e)Computer instruction fraud

b)Data fraud

5.1 Misappropriation of assets is an example of what type of accounting information threat? a)Unintentional acts. b)Intentional acts. c)Software errors and equipment malfunctions. d)Natural and political disasters.

b)Intentional acts.

5-2.5 Which of the following statements are true with respect to fraudulent financial reporting? (Check all that apply.) a)The ACFE found that fraudulent financial reporting is as much as 17 times more likely than asset misappropriation. b)Management falsifies financial statements in order to deceive investors and creditors, increase a company's stock price, meet cash flow needs, or hide company losses and problems. c)Auditors and management are just as concerned with misappropriations as they are with fraudulent financial reporting. d)Frequent "cook the books" schemes involve fictitiously inflating revenues, recognizing revenues before they are earned, delaying expenses to a later period, overstating inventories, and concealing liabilitie

b)Management falsifies financial statements in order to deceive investors and creditors, increase a company's stock price, meet cash flow needs, or hide company losses and problems. d)Frequent "cook the books" schemes involve fictitiously inflating revenues, recognizing revenues before they are earned, delaying expenses to a later period, overstating inventories, and concealing liabilitie

5-4.3 Employees at a large brokerage house used their employer's computer system to run a large and lucrative side business that their employer knew nothing about. This is an example of what type of fraud? a)Computer instruction fraud b)Processor fraud c)Data fraud d)Input fraud e)Output fraud

b)Processor fraud

5-1.4 Power outages and fluctuations can result in which type of threat? a)Intentional acts b)Software errors and equipment failures c)Natural and political disasters d)Unintentional acts

b)Software errors and equipment failures

5-4.2 A programmer at a large bank inserted code into the company's computer system that told the computer to not only ignore any overdrafts on his accounts, but to not charge his accounts any late or service fees. This is an example of what type of fraud? a)Processor fraud b)Output fraud c)Computer instruction fraud d)Data fraud e)Input fraud

c)Computer instruction fraud

5-1.1 The text mentions four different AIS threats. Which type of threat is sabotage? a)Unintentional acts b)Software errors and equipment failures c)Intentional acts d)Natural and political disasters

c)Intentional acts

5.10 Organizations can increase the difficulty of committing fraud by all of the following except: a)Encrypting stored and transmitted data. b)Implementing strong internal controls. c)Maintaining adequate insurance. d)Restricting access to company assets and data.

c)Maintaining adequate insurance.

5-2.3 Which of the following statements are true? (Check all that apply.) a)Corruption is misrepresenting or leaving out facts in order to promote an investment that promises fantastic profits with little or no risk. b)Investment fraud is dishonest conduct, such as bribery and bid rigging, by those in power that often involves illegitimate or immoral actions. c)Misappropriation of assets is the theft of company assets by employees. d)Fraudulent financial reporting is intentional or reckless conduct that results in materially misleading financial statements.

c)Misappropriation of assets is the theft of company assets by employees. d)Fraudulent financial reporting is intentional or reckless conduct that results in materially misleading financial statements.

5-1.2 Terrorist attacks are considered which type of threat? a)Intentional acts b)Software errors and equipment failures c)Natural and political disasters d)Unintentional acts

c)Natural and political disasters

5-2.2 Which of the following statements are true? (Check all that apply.) a)Small businesses are less vulnerable to fraud than large companies because small companies typically have more effective internal controls than larger companies. b)Fraud perpetrators are often referred to as blue-collar criminals. c)The controls used to protect corporate assets make it more difficult for an outsider to steal from a company. d)Most fraud perpetrators are knowledgeable insiders with the requisite access, skills, and resources. e)A typical organization loses 5% of its annual revenue to fraud, indicating yearly global fraud losses of over $3.7 trillion.

c)The controls used to protect corporate assets make it more difficult for an outsider to steal from a company. d)Most fraud perpetrators are knowledgeable insiders with the requisite access, skills, and resources. e)A typical organization loses 5% of its annual revenue to fraud, indicating yearly global fraud losses of over $3.7 trillion.

5.7 Unauthorized theft, use, access, modification, copying, or destruction of software, hardware, or data is called a)Technology fraud. b)Hacking. c)computer fraud. d)assets misappropriation.

c)computer fraud.

5.5 Individuals who perpetrate fraud are often referred to as a)All of these are correct. b)bad actors. c)white-collar criminals. d)blue-collar criminals.

c)white-collar criminals.

5.8 Which of the following is an example of output fraud? a)An insurance company installed software to detect abnormal system activity and found that employees were using company computers to run an illegal gambling website. b)A man used desktop publishing to prepare bills for office supplies that were never ordered or delivered and mailed them to local companies. The invoices were for less than $300, an amount that often does not require purchase orders or approvals. A high percentage of the companies paid the bills. c)The office manager of a Wall Street law firm sold information to friends and relatives about prospective mergers and acquisitions found in Word files. They made several million dollars trading the securities. d)A fraud perpetrator scanned a company paycheck, used desktop publishing software to erase the payee and amount, and printed fictitious paychecks.

d)A fraud perpetrator scanned a company paycheck, used desktop publishing software to erase the payee and amount, and printed fictitious paychecks.

5-5.1 After a fraud has occurred, which one of the following is the best way to reduce the loss from that fraud? a)Develop and implement a strong system of internal controls. b)Implement computer-based controls over data input, computer processing, data storage, data transmission, and information output. c)Increase the penalty for committing fraud by prosecuting fraud perpetrators more vigorously. d)Create an organizational culture that stresses integrity and commitment to ethical values and competence. e)Collect on fraud insurance purchased before the fraud.

d)Create an organizational culture that stresses integrity and commitment to ethical values and competence.

5-5.2 Which of the following will improve the ability to detect fraud? (Check all that apply.) a)Restrict physical and remote access to system resources to authorized personnel. b)Implement project development and acquisition controls, as well as change management controls. c)Provide employee support programs so they know where they can get help to deal with pressures that might tempt them to perpetrate fraud. d)Implement whistleblower rewards. e)Implement a fraud hotline.

d)Implement whistleblower rewards. e)Implement a fraud hotline.

5-4.4 A woman sent her company fictitious medical bills from doctors who did not exist. The bills were processed in the normal way by her employer, and payments went to her husband's office address. She bilked her company out of millions of dollars. This is an example of what type of fraud? a)Computer instruction fraud b)Output fraud c)Data fraud d)Input fraud e)Processor fraud

d)Input fraud

5.4 Which of the following is not an example of asset misappropriation? a)The treasurer of the company makes an unauthorized wire transfer from the organization's bank to a personal account. b)The president of the company utilizes the organization's cash to pay for her overseas vacation. c)A warehouse employee takes home five boxes of iPhones without authorization. d)The controller of the company falsely adds $50 million to accounts receivable.

d)The controller of the company falsely adds $50 million to accounts receivable.

5-1.3 Threats that arise from human carelessness, failure to follow established procedures, and poorly supervised personnel are which type of threat? a)Software errors and equipment failures b)Natural and political disasters c)Intentional acts d)Unintentional acts

d)Unintentional acts

5-1.5 According to the text, which type of threat represents the greatest risk to information systems and causes the greatest dollar losses? a)Software errors and equipment failures b)Intentional acts c)Natural and political disasters d)Unintentional acts

d)Unintentional acts

5.2 Logic errors is an example of what type of AIS threat? a)Intentional acts. b)Software errors and equipment malfunctions. c)Natural and political disasters. d)Unintentional acts.

d)Unintentional acts.