Multiple Choice Questions:
1. An investigator has identified a fraud in one loan application and wonders whether the same fraud also exists in other loan applications. For budgetary considerations, the investigator is not able to check 100 percent of the loan applications and decides to check every 10th loan application for fraud. This decision is an example of the application of which of the following?
a. Fraud risk.
b. Enterprise risk management.
c. Investigation risk.
d. None of the above.

2. In fraud theory, hypothesis testing involves which of these?
a. An application of discovery sampling.
b. The examination of a piece of evidence to decide whether it is consistent with the fraud theory under consideration.
c. The application of discovery sampling to examine evidence for consistency with the fraud theory under consideration.
d. None of the above.

3. Which statement is true regarding protocols for investigating fraud schemes?
a. A complete set of protocols is published by the American Institute of Public Accountants.
b. A complete set of protocols is published by the Association of Certified Fraud Examiners.
c. Complete set of protocols is published in the accounting literature.
d. None of the above.

4. The general rule for establishing fraud investigation protocols is that each fraud scheme has which of the following?
a. Three weak points.
b. Something known as a “smoking gun.”
c. A central audit point.
d. None of the above.

5. Almost all ongoing fraud schemes have one weakness in common:
a. They leave an audit trail.
b. The perpetrator is subject to being caught in the act.
c. The perpetrator does not have enough time to destroy the evidence.
d. All of the above.