acct 240

Kristen Diamond worked in the mailroom at B&R Industries. When attaching postage to the outgoing mail, she would search for payments being sent to a specific vendor, K. D. Sand. She intercepted these checks and carefully changed them to appear payable to K. Diamond. She then endorsed the checks with her own name and deposited them into her personal bank account. What type of scheme did Kristen commit? Concealed check Payables skimming "Tacking on" Forged endorsement

"Tacking on"

In a shell company scheme, which of the following methods might a fraudster use to get a phony invoice approved for payment? Collusion A "rubber stamp" supervisor Falsification of purchase orders and receiving reports Any of the above

Any of the above

In a ______________ scheme, the perpetrator uses false documentation to cause a payment to be issued for a fraudulent purpose. Purchasing Skimming Larceny Billing

Billing

Purchasing personal items using an organization's money is what type of scheme? Larceny scheme Billing scheme Pay-and-return scheme Skimming scheme

Billing scheme

According to the 2012 Report to the Nations on Occupational Fraud and Abuse, the most common fraudulent disbursement schemes were: Billing schemes Check tampering schemes Payroll schemes Register disbursement schemes

Billing schemes

Dorothy McNally stole $232 from the company deposit while on the way to the bank. She can conceal the theft by recording the missing amount on the bank reconciliation as a(n): Deposit in transit Outstanding check Credit memo None of the above

Deposit in transit

All of the following are ways a fraudster might conceal cash larceny from the deposit except: Posting missing money as "deposits in transit" Deposit lapping Falsifying the bank copy of the deposit slip Destroying customer statements

Destroying customer statements

Which of the following can be used to test for commission schemes? Extract manual checks and summarize by salesperson and amount. Compare hours reported per timecard system to payroll system. Extract customer sale balances that exceed the customer credit limit. None of the above

Extract customer sale balances that exceed the customer credit limit.

Vicky Rogers works in the accounts payable department at HDU, Inc. When checks are returned to the company for incorrect vendor addresses, she is supposed to research them, correct them, and then forward them to the proper address. Instead, Rogers decided to convert some of the returned checks for her own use. Based on the information provided, what type of check tampering scheme is this likely to be? Forged maker Forged endorsement Concealed check Authorized maker

Forged endorsement

The person who prepares and signs the check is known as the ______________ of the check. Author Endorser Payer Maker

Maker

Abby Watkins works in the accounts payable department for SVX Company. Recently, she set up a payment to Pacific Industries for invoice number 7001a, which is unlike any invoice number she has seen from Pacific in the past. The voucher contains a purchase order that backs up the invoice, but it looks like a photocopy. Additionally, the accounting system shows that invoice number 7001 from Pacific was for a slightly different amount and has already been paid. Pacific Industries is an established vendor with SVX, but the payment address has recently been changed to a P.O. Box in the vendor file. What type of fraud does this situation most likely indicate? Personal purchases scheme Shell company scheme Non-accomplice vendor scheme False purchase requisition scheme

Non-accomplice vendor scheme

A pass-through scheme is usually undertaken by someone who works in which department? Accounts payable Receiving Purchasing Accounts receivable

Purchasing

Which of the following techniques is not used to conceal sales skimming schemes? Lapping Inventory padding Destroying records of transaction Recording false voids

Recording false voids

In one of the case studies in the textbook, Albert Miano, the facilities supervisor for a popular magazine, submitted phony invoices. When Miano received the checks for the phony invoices, he forged the contractor's signature. He then endorsed the check in his own name. How was the fraud caught? The auditors found a discrepancy in the invoices that were submitted. The new chief of internal audit found it by accident. A vendor received a check by mistake and called the accounts payable department. The external audit found it in an audit sample of canceled checks.

The new chief of internal audit found it by accident.

Which of the following is not necessary for a ghost employee scheme to succeed? Timekeeping and wage rate information must be collected. The ghost must be added to the payroll. The perpetrator must have access to a bank account in the ghost employee's name. A paycheck must be issued to the ghost.

The perpetrator must have access to a bank account in the ghost employee's name.

Jason Herman works part-time as a retail clerk at a local bookstore. One night while his manager was out of town, Jason decided to keep the store open for a few extra hours. He reset the cash registers at the normal closing time, but continued making sales. Two hours later, when he closed for the night, he reset the registers again, removing all evidence that any extra transactions had been made, and pocketed the money from the after-hours sales. What kind of scheme did Jason commit? Register disbursement Force balancing Receivables skimming Unrecorded sales

Unrecorded sales

The City of Dixon recovered ___________ in a civil suit against their auditors, bank and a sole practitioner (Janis Card). Select one: a. $30 million b. $40 million c. $10 million d. $20 million

b. $40 million

It is reported that Rita embezzled approximately ____________ Select one: a. $40 million b. $53 million c. $60 million d. $20 million

b. $53 million

Rita used which City of Dixon account to shift money into her secret R.S.C.D.A. account? Select one: a. Hospital Fund b. Capital Development Fund c. Debt Service Fund d. Water Fund

b. Capital Development Fund

Since Kathe Swanson discovered the fraud, she is known as a _____________ Select one: a. Co-conspirator b. Whistle-blower c. None of the above d. Perpetrator

b. Whistle-blower

CliftonLarsonAllen paid approximately ___________ in the civil suit. Select one: a. $1 million b. $20 million c. $35 million d. $5 million

c. $35 million

Rita was sentenced to ____________ in federal prison. Select one: a. 10 years b. 2 years c. 19 years and 7 months d. 15 years

c. 19 years and 7 months

The City of Dixon auditors were ____________ Select one: a. PwC b. Deloitte c. CliftonLarsonAllen d. KPMG, LLP

c. CliftonLarsonAllen

Which of the following procedures will not help prevent ghost employee schemes? a. The personnel records are maintained separately from the payroll and timekeeping functions. b. The personnel department conducts background and reference checks on all prospective employees before hiring them. c. The person responsible for hiring new employees also supervises the payroll function. d. The personnel department verifies all changes to the payroll.

c. The person responsible for hiring new employees also supervises the payroll function.

Rita used ______ phony invoices to embezzle a significant portion of the City of Dixon's money. Select one: a. 150 b. 175 c. 200 d. 179

d. 179

In one of the case studies in the textbook, Albert Miano, the facilities supervisor for a popular magazine, submitted phony invoices. When Miano received the checks for the phony invoices, he forged the contractor's signature. He then endorsed the check in his own name. What controls weaknesses did the company have that facilitated Miano's scheme? a.Employees in the accounts payable department did not follow departmental procedures. b. Accounts payable never checked signatures on the invoices against the authorized signatures on file. c. Miano was allowed to pick up the approved invoices from the administrative vice-president's office and deliver them to the accounts payable department. d. All of the above

d. All of the above

Article - Six KC workers

stole 58k in overtime pay. Responsible for maintaining traffic signs. Would get calls for repairs on weekends and delay actually working on them until the next day. all sentenced to five years of prison, surrender cash

True or False: Rita declined to be interviewed for the All The Queen's Horses documentary. Select one: True False

True

True or False: Rita had thousands of dollars of unexplained income on her personal tax returns. Select one: True False

True

True or False: The Dixon embezzlement case is known as the largest municipal fraud in U.S. history Select one: True False

True

Which of the following choices is not a category of check tampering? Forged maker schemes Altered payee schemes Unauthorized endorsement schemes Concealed check schemes

Unauthorized endorsement schemes

The town of Dixon is located in which state?Select one: a. Texas b. Illinois c. California d. New York

b. Illinois

Producing a counterfeit check using the company's logo and bank account number is one type of concealed check scheme. True False

True

The central weakness of a cash larceny scheme is the resulting imbalance in the organization's accounting records. True False

True

In which of the following schemes does the fraudster intercept and convert a company check made payable to a third party? Forged maker scheme Authorized maker scheme Altered payee scheme Concealed check scheme

Altered payee scheme

In the Fraud Tree, all of the following are categories of fraudulent disbursements except: Payroll schemes Cash larceny Check tampering Billing schemes

Cash larceny

The two categories of cash receipts schemes are: Lapping and skimming Lapping and cash larceny Cash larceny and skimming Skimming and billing schemes

Cash larceny and skimming

If discrepancies are found between the sales records and the cash on hand, which of the following schemes might be occurring? Cash larceny at the point of sale Cash larceny from the deposit Fraudulent disbursements Sales skimming

Cash larceny at the point of sale

Danielle Boyle, CFE, was hired to investigate some suspicious activity in the accounts receivable department at Red Technologies. While examining the company's accounting records, she noticed several payments posted to customers' accounts that were later reversed with journal entries to "courtesy discounts." What type of scheme might this situation indicate? Receivables skimming Deposit lapping Cash larceny of receivables Shell company

Cash larceny of receivables

If an employee generates a much higher percentage of uncollected sales than his coworkers, what type of scheme might he be committing? Sales skimming Commission scheme Multiple reimbursement scheme Shell company scheme

Commission scheme

Jed Butler is an internal auditor for Billings Industries. Recently he ran a program that identified customer accounts which had previously been dormant for six months or more but had sales in the last two months of the year. What type of fraud would this test most likely reveal? Shell company scheme Pay-and-return scheme Commission scheme Personal purchases scheme

Commission scheme

Which of the following procedures would not be useful in preventing and detecting sales skimming schemes? a. Comparing register tapes to the cash drawer and investigating discrepancies b. Summarizing the net sales by employee and extracting the top employees with low sales c. Installing video cameras at cash entry points d. Offering discounts to customers who do not get receipts for their purchases

Comparing register tapes to the cash drawer and investigating discrepancies

In one of the case studies in the textbook, Stefan Winkler was the controller for a beverage company in south Florida. Money was collected by either the delivery drivers who brought in the cash and checks from their route customers (route deposits), or by credit customers who mailed in their payments (office deposits). Winkler stole cash from the route deposits and made up for it by using checks from the office deposits. How did Winkler conceal his crime? He altered electronic files He stole cash receipt journals, copies of customer checks, and deposit slips He removed his personnel file All of the above

All of the above

Jeff Lewis is an accounts receivable clerk for FTB Industries. As customers pay off their balances, Lewis posts the payments but pockets the money. He can conceal his theft by: Making unsupported entries for the amount stolen Adjusting the account with a discount Destroying the records All of the above

All of the above

Methods of skimming sales include which of the following? Conducting unauthorized sales after hours Rigging the cash register so that the sale is not recorded Posting a sale for less than the amount collected All of the above

All of the above

Methods used to manipulate electronic payments include which of the following? Abusing legitimate access to the employer's payment system Gaining access to the employer's payment system through social engineering Exploiting weaknesses in the employer's internal control over its electronic payment system All of the above

All of the above

Receivables skimming can be concealed through: Lapping Force balancing Document destruction All of the above

All of the above

To prevent and detect forged maker schemes, an organization should: Separate the duties of check preparation and check signing. Rotate authorized check signers. Maintain a usage log for the signature stamp. All of the above

All of the above

To successfully carry out and conceal a check tampering scheme, the fraudster must have: Access to the check stock Access to the bank statements The ability to forge signatures or alter other information on the check All of the above

All of the above

Which of the following analyses can be used to identify ghost employee schemes? Identifying employees who have no withholding taxes taken out Comparing actual payroll expenses to budgeted expenses Comparing employees who have the same Social Security number, bank account, or physical address All of the above

All of the above

Which of the following computer audit tests can be used to detect forged maker schemes? Extract checks that are out of sequence Extract manual checks and summarize by vendor and issuer Extract all checks payable to "cash" and summarize by issuer for reasonableness All of the above

All of the above

Which of the following procedures can help prevent and detect the theft and conversion of outgoing company checks? Train employees to look for dual endorsements on canceled checks. Chart the date of mailing for every outgoing check. Track changes made to vendor records. All of the above

All of the above

Article - Russell Fotovich

Facilities engineer at DST systems scrap metal scheme where they sold scrap without company benefit Charged with filing false tax returns, participating in wire fraud conspiracy and to pay 388k. must pay restitution

According to the 2012 Report to the Nations on Occupational Fraud and Abuse, cash larceny schemes had the largest median loss of all cash misappropriations. True False

False

According to the 2012 Report to the Nations on Occupational Fraud and Abuse, check tampering has the lowest median loss of all fraudulent disbursement frauds. True False

False

According to the 2012 Report to the Nations on Occupational Fraud and Abuse, payroll frauds are the least costly type of fraudulent disbursement schemes. True False

False

According to the 2012 Report to the Nations on Occupational Fraud and Abuse, payroll frauds are the most common type of fraudulent disbursement schemes. True False

False

According to the 2012 Report to the Nations on Occupational Fraud and Abuse, skimming schemes are both the most common and the most costly type of cash misappropriation scheme. True False

False

Larceny schemes are generally more difficult to detect than skimming schemes. True False

False

Mavis Bosman works as an accounts receivable clerk at Brooks Publishing. She steals an incoming check from a customer and cashes it at a grocery store by forging the endorsement on the back of the check. This is an example of a check tampering scheme. True False

False

Peggy Booth is the bookkeeper for an equipment rental company. After recording the cash sales and preparing the bank deposit, she takes $200 dollars from the total. This is an example of a skimming scheme. True False

False

Producing an invoice that looks professional is the most difficult part of a shell company scheme. True False

False

Skimming can be either an on-book scheme or an off-book scheme, depending on whether cash or a check is stolen. True False

False

Skimming involves the theft of money that has already appeared on a victim's books, while cash larceny involves stealing money before it has been recorded. True False

False

To prevent altered payee schemes, the person who prepares the check should also review the check after it has been signed. True False

False

True or False: The City of Dixon adopted a commission-style of government after the fraud. Select one: True False

False

Which of the following is not a type of payroll scheme? Ghost employee scheme False deduction scheme Falsified hours and salary scheme Commission scheme

False deduction scheme

Allison Duval, CFE, has been retained by National Mortgage Company to investigate some suspicious activity. As part of her examination, Duval compares the company's payroll expenses to budgeted projections and to prior years' totals. She also runs an exception report looking for any employees whose compensation has increased disproportionately over the prior year. She then compares the payroll files to the human resource files to test for differing salary rates. What type of scheme is Duval most likely looking for? Ghost employee scheme Payroll tampering scheme Commission scheme Falsified hours and salary scheme

Falsified hours and salary scheme

Orange Publishing hired Moe McDonnell, CFE, to investigate some large variances in the company's labor costs. While looking through the payroll records for the shipping department, McDonnell noticed several employees who claimed extensive overtime during pay periods in which the company's incoming and outgoing shipments were minimal. McDonnell pulled the timesheets for these pay periods and noticed that those belonging to the suspect employees had signatures that didn't match the signatures on the other timesheets. What type of fraud might these findings indicate? Ghost employee scheme Commission scheme Falsified hours and salary scheme Overstated expenses scheme

Falsified hours and salary scheme

Mary Duncan is an internal auditor for the Western Realty Group. Recently, she ran a program that extracted checks that were out of the normal sequence. She found that four or five checks were written every month that fit this category. Based on the information given, which of the following schemes is likely occurring? Multiple reimbursement scheme Shell company scheme Personal purchases scheme Forged maker scheme

Forged maker scheme

Ellie Weaver works for the JAG Group as the customer service supervisor. When Joel Carter was hired into her department, she listed his start date as one month before he actually began work. Accordingly, the payroll department generated an extra paycheck for Carter, which Weaver intercepted and cashed at a liquor store. What type of fraud is this? Forged endorsement scheme Ghost employee scheme Altered payee scheme Falsified wages scheme

Ghost employee scheme

If a fraudster fails to remove a terminated employee from the payroll and collects the former employee's fraudulent paychecks, he or she is committing a: Payroll larceny scheme Falsified hours and salary scheme Forged endorsement scheme Ghost employee scheme

Ghost employee scheme

In one of the case studies in the textbook, Jerry Harkanell worked as an administrative assistant for a large San Antonio hospital, where his clerical duties included the submission of the payroll information for his unit. He found that he could add hours to the timesheets and receive extra pay. He continued to alter his timesheets until he was finally caught. What red flag was present that should have made someone suspicious? He used erasable ink to record the hours on the timesheets. He showed up for work on a day he had off so he could personally turn in the timesheets. No one else in the department had overtime hours but Harkanell. All of the above

He showed up for work on a day he had off so he could personally turn in the timesheets.

In one of the case studies in the textbook, Brian Lee, a top-notch plastic surgeon, collected payments from his patients without giving a cut to the clinic where he practiced. How was he punished? He was convicted of grand larceny and sentenced to probation. He was sued in civil court for the amount of the loss. He was terminated from the practice and was required to make full restitution in lieu of prosecution. He was allowed to continue to practice at the clinic but was required to make full restitution.

He was allowed to continue to practice at the clinic but was required to make full restitution.

In one of the case studies in the textbook, Ernie Phillips was a CPA who had fallen on hard times both financially and personally. He eventually got a job as a controller for a friend who had just been named as the receiver for a financial services company. Within a short period of time Phillips began writing checks to himself that had nothing to do with payroll. What happened to Phillips? He quit his job and moved to another state. He pleaded guilty to fraud and grand theft and spent 24 months in prison. He paid the money back by mortgaging his home. He was charged criminally, and while out on bail, he fled with his family.

He was charged criminally, and while out on bail, he fled with his family.

In one of the case studies in the textbook, Jerry Harkanell worked as an administrative assistant for a large San Antonio hospital, where his clerical duties included the submission of the payroll information for his unit. He found that he could add hours to the timesheets and receive extra pay. He continued to alter his timesheets until he was finally caught. How was the case resolved? He confessed to falsifying the overtime and was terminated. A civil suit was filed to recover the loss. He was convicted and sentenced to prison. None of the above

He was convicted and sentenced to prison.

In one of the case studies in the textbook, Katie Jordon was the "All-American Girl Next Door" working her first job out of college. As an on-site manager for an apartment complex in Dallas, she did such a good job that when her employer purchased a huge apartment complex in Houston, she was asked to run it. All was well until a member of the maintenance crew resigned. She continued to keep him on the payroll and pocketed his wages. She later added a non-existent assistant once she saw how easy it was to add an employee without being questioned. However, her scheme eventually came to light, and her days of bonus pay were over. What was her motivation for stealing? Her boyfriend, a professional motocross racer, was injured in a race. She was getting married and needed money for the wedding. She blew the engine in her car and didn't have the money to replace it. She wanted to pay off her college loan early so she could save for a house.

Her boyfriend, a professional motocross racer, was injured in a race.

Sue Meyers was an accounts receivable clerk for an insurance broker. When premium payments were received, she would steal the check of every tenth customer and cash it at a liquor store. To conceal her scheme, she would credit the account of the customer that she stole from with a payment that was received from another customer's account. This is an example of: Force balancing Lapping Understating sales A forged endorsement scheme

Lapping

Jan Ashley worked for the R&S Department Store as a sales associate in the fine linens department. As she would give change back to a customer for cash sales, she would also pull out a $10 bill and slip it in her pocket. She concealed her scheme by issuing one false refund at the end of her shift for the total amount she stole that day. This is an example of what type of scheme? Sales skimming Larceny at the point of sale Lapping Larceny at the deposit

Larceny at the point of sale

____________________ are schemes in which the employee intentionally mishandles payments that are owed to legitimate vendors. Pass-through schemes Pay-and-return schemes Shell company schemes Switch-and-swap schemes

Pay-and-return schemes

Myra Manning, CFE, was hired to investigate some suspicious activity at Arizona Medical Supply after one of the company's largest customers complained several times that its account statements do not reflect all the payments it has made. While examining the accounts receivable activity, Myra noticed a significant rise in the volume of overdue accounts during the last 6 months. What type of scheme might this situation indicate? Cash larceny Shell company Receivables skimming False refunds

Receivables skimming

George Albert was a property manager for a large apartment complex while he was going to college. One of his duties was to collect rent from the tenants. If rent was paid after the third of the month, a late fee was tacked on to the amount due. When a tenant paid his rent late, George would backdate the payment, record and remit only the rent portion to his employers, and pocket the late fee. This is an example of what type of fraud? Larceny Sales skimming Fraudulent write-offs Plugging

Sales skimming

The most important factor in preventing cash larceny from the deposit is: Separating the duties of the deposit function Having two employees deliver the deposit to the bank Having a visible management presence in the mailroom None of the above

Separating the duties of the deposit function

In one of the case studies in the textbook, Laura Grove was the head teller at a bank in Tennessee. As the head teller, she had the authority to open the night depository along with another teller. For security reasons, each teller only had half of the combination to the vault. In the end, Grove opened the vault and stole two deposit bags worth approximately $16,000. How was the case settled? She paid the bank back in lieu of prosecution. She was prosecuted and sentenced to eighteen months in jail. She was dismissed and signed a promissory note to repay the money. She was prosecuted but received probation in lieu of prison time.

She was prosecuted but received probation in lieu of prison time.

____________________ is the theft of cash from a victim entity prior to its entry in an accounting system. A fictitious disbursement Skimming Larceny Conversion

Skimming

The concealment of receivables skimming can be difficult because: The audit trail must be destroyed. The incoming payments are expected. Inventory must be padded to conceal shrinkage. All of the above

The incoming payments are expected.

According to the 2012 Report to the Nations on Occupational Fraud and Abuse, cash larceny schemes were the least common form of cash misappropriations. True False

True

Asset misappropriations are broken down into two categories: cash schemes and non-cash schemes. According to the 2012 Report to the Nations on Occupational Fraud and Abuse, cash schemes are much more common than non-cash schemes. True False

True

In a forged maker scheme, the perpetrator fraudulently affixes the signature of an authorized maker to a check. True False

True

Invoices that are submitted by shell companies can be for fictitious goods or services or for items that were actually sold to the victim company. True False

True

Running a report that summarizes user access for the sales, accounts receivable, cash receipt, and general ledger systems during non-business hours might identify a cash larceny scheme. True False

True

Skimming receivables is generally more difficult to conceal than skimming sales. True False

True

To prevent cash larceny through falsification of cash counts, an independent employee should verify the cash count in each register or cash box at the end of each shift. True False

True

True or False: The FBI and the U.S. Marshal Service determined that Rita orchestrated the fraud alone. Select one: True False

True

In one of the case studies in the textbook, Jerry Harkanell worked as an administrative assistant for a large San Antonio hospital, where his clerical duties included the submission of the payroll information for his unit. He found that he could add hours to the timesheets and receive extra pay. He continued to alter his timesheets until he was finally caught. How was his scheme detected? a. An exception report showed that Harkanell had claimed overtime hours for a period when there was no need to work overtime. b. The payroll department sent the timesheets for one pay period back to the supervisor for review when a suspicious number of hours had been indicated. c. An overtime audit was conducted revealing that Harkanell had worked an unusual number of hours compared to others in the department. d. The internal auditors received an anonymous tip.

a. An exception report showed that Harkanell had claimed overtime hours for a period when there was no need to work overtime.

Which of the following controls will help prevent and detect falsified hours and salary schemes? a. The duties of payroll preparation, authorization, and distribution are segregated. b. Sick leave and vacation time are monitored for excesses by the payroll department. c. Supervisors return authorized timecards to the employees for review before they are sent to the payroll department. d. All of the above

a. The duties of payroll preparation, authorization, and distribution are segregated.

Rita Crundwell held the position of ____________ Select one: a. Governor b. City comptroller c. Mayor d. City commissioner

b. City comptroller

In one of the case studies in the textbook, Bill Gurado was a branch manager for a consumer-loan finance company in New Orleans who decided to help himself to the daily deposits. Instead of depositing the money into the company's bank account, he deposited the money to his own personal account. How was the case settled? a. The company pursued civil action for the repayment of the stolen funds. b. Gurado was terminated and he immediately paid back the money. c. Gurado was convicted of grand theft and scheming to defraud, and he was placed on probation. d. Gurado was placed on deferred adjudication and required to make restitution.

b. Gurado was terminated and he immediately paid back the money.

Nicolas Hill, CFE, has been hired to look into suspicious activity at Mason & Jefferson, LLC. The company's controller has reason to believe that the company has fallen victim to a shell company scheme. As part of his investigation, Nicolas should do which of the following? a. Match the vendor master file to the accounts receivable file b. Review payments with little or no sequence between invoice numbers c. Extract all employees without a social security number d. All of the above

b. Review payments with little or no sequence between invoice numbers

In one of the case studies in the textbook, Laura Grove was the head teller at a bank in Tennessee. As the head teller, she had the authority to open the night depository along with another teller. For security reasons, each teller only had half of the combination to the vault. In the end, Grove opened the vault and stole two deposit bags worth approximately $16,000. Which of the following red flags made the investigators suspect Laura? a. The security system showed that she was the last one to leave the bank on the day before the bags were stolen. b. She broke out in a rash when she was interviewed. c. During the interview she made a point of mentioning that the other teller had been having financial problems. d. All of the above

b. She broke out in a rash when she was interviewed.

Which of the following computer audit tests would be the least useful in detecting a cash larceny scheme? a. Summarizing the difference between the cash receipt report and the sales register system by employee b. Summarizing the top sales producers by employee c. Summarizing discounts, returns, and cash receipt adjustments by employee d. Reviewing all unique journal entries in the cash accounts

b. Summarizing the top sales producers by employee

In one of the case studies in the textbook, a Southeastern medical college was plagued with fraudulent activity. What started as an investigation into some suspicious expense reimbursement activity eventually led to the discovery of a fictitious company that was set up to fraudulently bill the college for supplies that never existed. What was the first sign that there were more problems than the initial expense reimbursement fraud? a. The auditors found an usually high number of new unapproved vendors. b. The administrative assistant suddenly left town when requested to be interviewed. c. The supervisor resigned his position immediately. d. A tip was received by internal auditors.

b. The administrative assistant suddenly left town when requested to be interviewed.

In one of the case studies in the textbook, a Southeastern medical college was plagued with fraudulent activity. What started as an investigation into some suspicious expense reimbursement activity eventually led to the discovery of a fictitious company that was set up to fraudulently bill the college for supplies that never existed. How was the case resolved? a. The perpetrator was terminated, and the funds were recovered. b. The perpetrator was convicted and placed on probation, and partial restitution was ordered. c. The perpetrator left the state and was caught pulling the same scam at another company. d. A civil suit was filed and restitution was ordered.

b. The perpetrator was convicted and placed on probation, and partial restitution was ordered.

In one of the case studies in the textbook, Katie Jordon was the "All-American Girl Next Door" working her first job out of college. As an on-site manager for an apartment complex in Dallas, she did such a good job that when her employer purchased a huge apartment complex in Houston, she was asked to run it. All was well until a member of the maintenance crew resigned. She continued to keep him on the payroll and pocketed his wages. She later added a non-existent assistant once she saw how easy it was to add an employee without being questioned. However, her scheme eventually came to light, and her days of bonus pay were over. How was her scheme discovered? a. An employee tipped off the main office when she saw the timesheets listing an employee that she had never heard of. b. When Jordon's boss made a routine visit to the office, he noticed that there was no sign of an assistant in the office. c. She was splitting the proceeds with her boyfriend, and he contacted the home office when she broke up with him. d. The auditors found it when they conducted a routine audit of all new acquisitions after being in business for one year.

b. When Jordon's boss made a routine visit to the office, he noticed that there was no sign of an assistant in the office.

Which of the following computer audit tests can be used to detect skimming schemes? a. Summarizing by employee the difference between the cash receipt report and the sales register system b. Identifying unique journal entries to the cash account c. Joining the customer statement report file to the accounts receivable and reviewing for balance differences d. Extracting invoices paid by cash

c. Joining the customer statement report file to the accounts receivable and reviewing for balance differences

Which of the following actions is least likely to help prevent and detect schemes involving fraudulent invoices from non-accomplice vendors? a. Marking "paid" on every voucher that has been paid b. Verifying vendor address changes before disbursements are issued c. Matching all bank statement items to canceled checks d. Separating the duties of purchasing, authorizing, and distributing payments

c. Matching all bank statement items to canceled checks

In one of the case studies in the textbook, Melissa Robinson, who worked as an executive secretary for a worldwide charitable organization and was active in her children's school, was also a thief. As one of two people allowed to sign checks on the organization's bank accounts, she learned early on that she could forge the second person's signature without anyone becoming suspicious. How was Robinson punished? a. She was allowed to resign and agreed to pay the money back. b. She resigned, and a civil suit was filed to recover the loss. c. She was found guilty and ordered to make restitution to the organization and its insurance company. d. Charges were dismissed with prejudice when the evidence was thrown out on a technicality.

c. She was found guilty and ordered to make restitution to the organization and its insurance company.

In order to start up a shell company, the fraudster will most likely need which of the following? Certificate of incorporation Mailing address Bank account All of the above

All of the above

In one of the case studies in the textbook, Brian Lee, a top-notch plastic surgeon, collected payments from his patients without giving a cut to the clinic where he practiced. How was his fraud discovered? Through a routine audit of the clinic's records Through an anonymous tip to the clinic By accident None of the above

By accident

Article - Kathleen Frederico

Kansas city woman employed as accounting and special projects manager at St. Luke's hospital. began stealing 2003 total taken: 558k 20 years in prison, 546k fee

A method of concealing receivables skimming by crediting one account while abstracting money from a different account is known as: Account substitution Kiting Lapping Plugging

Lapping

The most common method of misappropriating funds from the payroll is: Overpayment of wages Using a ghost employee Overstating commissions Theft of payroll deductions

Overpayment of wages

Charles Dieter and Joey Davis worked together to steal nearly $50,000 from Valdosta Medical Supply. Charles, an accounts payable clerk, deliberately overpaid a few of the company's vendors. He then called the vendors, explained the "mistake," and asked for the excess to be refunded. Joey, a mailroom employee, intercepted the incoming refund checks and cashed them. The two men split the proceeds. What type of scheme did Charles and Joey commit? Shell company Larceny Pass-through Pay-and-return

Pay-and-return

In one of the case studies in the textbook, Ernie Phillips was a CPA who had fallen on hard times both financially and personally. He eventually got a job as a controller for a friend who had just been named as the receiver for a financial services company. Within a short period of time Phillips began writing checks to himself that had nothing to do with payroll. Control weaknesses that facilitated the commission of this fraud include which of the following? The bank statements were sent directly to Phillips. Phillips had check signing authority. There was no separation of duties between accounts payable and the treasury department. All of the above

The bank statements were sent directly to Phillips.

According to the 2012 Report to the Nations on Occupational Fraud and Abuse, billing schemes were the second most costly type of fraudulent disbursements schemes. True False

True

Cash misappropriations are divided into two broad groups: fraudulent disbursements schemes and cash receipts schemes. True False

True

Which of the following was a big issue with the city comptroller role? Select one: a. Lack of segregation of duties b. Lack of training c. None of the above d. Incorrect use of technology

a. Lack of segregation of duties

Dixon's financial situation should have been similar to which neighboring city? Select one: a. Chicago b. Sterling c. Moline d. Rockford

b. Sterling

Kathe discovered the fraud and reported the issue to (the) _____________ Select one: a. None of the above b. Dixon Police Department c. Mayor Jim Burke d. Federal Bureau of Investigation (FBI)

c. Mayor Jim Burke

Which of the following controls can be used to prevent or detect personal purchases on company credit cards? a. Having credit card statements sent directly to someone with signature authority on the account for review and payment b. Requiring employees to receive store credits rather than cash when returning items they purchased with the company's credit card c. Monitoring credit card expenses for unexplained increases in purchasing levels d. All of the above

c. Monitoring credit card expenses for unexplained increases in purchasing levels

Kathe Swanson held the position of ______________ Select one: a. Mayor b. City commissioner c. None of the above d. City clerk

d. City clerk