Questions and Answers of Fraud Examination

Which of the following noncontrol factors provides opportunities for fraud?a. Inability to judge the quality of performance.b. Lack of access to information.c. Failure to discipline fraud
Which of the following is not one of the three elements of the control system of an organization?a. The control environment.b. The accounting system.c. Management.d. Control activities or procedures.
Opportunity involves:a. Opportunity to conceal fraud.b. Opportunity to avoid being punished for fraud.c. Opportunity to commit fraud.d. All of the above.e. None of the above.
Which of the following is not a common type of fraud pressure?a. Vices.b. Work-related pressures.c. Financial pressures.d. Pressure to outsmart peers.
If pressures and opportunities are high and personal integrity is low, the chance of fraud is:a. High.b. Medium.c. Low.d. Very low.
Which of the following is a common perceived pressure?a. The ability to outsmart others.b. Opportunity to cheat others.c. A financial need.d. The ability to “borrow” money by committing fraud.
Which of the following is not one of the three elements of fraud?a. Perceived pressure.b. Perceived opportunity.c. Rationalization.d. Intelligence.
Fraud perpetrators:a. Look like other criminals.b. Have profiles that look like most honest people.c. Are usually very young.d. Are none of the above.
Power is rarely used to influence another person to participate in an already existing fraud scheme. (True/False)
Many frauds are allowed to be perpetrated because victims don’t have access to information possessed by the perpetrators. (True/False)
Good documents and records are some of the best preventive controls. (True/False)
A proper system of authorization will help ensure good internal controls. (True/False)
An individual who owns his or her own business and is the sole employee needs many control procedures. (True/False)
Appropriate hiring will not decrease an organization’s risk of fraud. (True/False)
Many organizations merely dismiss dishonest employees because of the expense and time involved in prosecuting them. (True/False)
Fraud perpetrators who are prosecuted, incarcerated, or severely punished usually commit fraud again. (True/False)
Fraud can be perpetrated to benefit oneself or to benefit one’s organization. (True/False)
The greater the perceived opportunity or more intense the pressure, the less rationalization it takes for someone to commit fraud. (True/False)
Effective fraud-fighters usually put most of their time and effort into minimizing the pressures for fraud perpetrators to commit fraud. (True/False)
Good controls will often increase opportunities for individuals to commit fraud within an organization. (True/False)
Management’s example or modeling is of little importance to the control environment. (True/False)
The three elements of the fraud triangle are a perceived pressure, a perceived opportunity, and rationalization. (True/False)
When hiring, it is usually difficult to know which employees are capable of committing fraud, especially without performing background checks. (True/False)
Which of the following is not true regarding the ACFE.a. It is the largest antifraud organization in the world.b. It has roughly 12,000 members throughout the world.c. The entire organization is
Which of the following is required to become a CFE?a. An individual must commit to abide by a strict code of professional conduct and ethics.b. Be an associate member, in good standing, of the
“Deceptive manipulation of financial statements” describes which kind of fraud?a. Management fraud.b. Criminal fraud.c. Stock market fraud.d. Bookkeeping fraud.
Which of the following is not an example of vendor fraud?a. A vendor overcharges a contracting job that it completed on time.b. A vendor bills for services not performed.c. A vendor bills for goods
Which of the following is not an example of employee embezzlement?a. Land conservation employees stealing equipment.b. Cashiers stealing money from the cash register.c. Angry employees vandalizing
Fraud fighting includes what type of careers?a. Professors.b. Lawyers.c. CPA firms.d. All of the above.
Civil law performs which of the following functions?a. Remedy for violation of private rights.b. Remedy for violations against society as a whole.c. Punishment for guilt “beyond reasonable
Which of the following is not a form of vendor fraud?a. Overcharge for purchased goods.b. Shipment of inferior goods.c. Nonshipment of goods even though payment has been made.d. Not paying for goods
Which of the following is not a fraud type?a. Direct employee embezzlement.b. Indirect employee embezzlement.c. Supervisor fraud.d. Investment scams.
Which of the following characters is least likely to be involved in a fraud?a. A middle-aged person with a middle management position.b. A long-haired teenager wearing leather pants.c. A recent
What is the most important element in successful fraud schemes?a. Promised benefits.b. Confidence in the perpetrator.c. Profitable activities.d. Complexity.
What is the best way to minimize fraud within an organization?a. Detection of fraud.b. Investigation of fraudulent behavior.c. Prevention activities.d. Research company activities.
Which of the following is not an element of fraud?a. False representation.b. Accidental behavior.c. Damage to a victim.d. Intentional or reckless behavior.
Which of the following statements is true?a. Bank robberies are more costly than frauds.b. Fraud is often labeled the fastest growing crime.c. FBI agencies are currently spending approximately 35
Which of the following is not a reliable resource for fraud statistics?a. FBI agencies.b. Health agencies.c. Insurance organizations.d. Fraud perpetrators.
Studying fraud will help you:a. Learn evidence-gathering skills.b. Avoid high-risk and fraudulent activities.c. Learn valuable interviewing skills.d. All of the above.
Future careers in fraud will most likely be:a. In low demand.b. In moderate demand.c. Low paying.d. In high demand and financially rewarding.
Which of the following is not true of civil fraud?a. It usually begins when one party files a complaint.b. The purpose is to compensate for harm done to another.c. It must be heard by 12 jurors.d.
Investment scams most often include:a. An action by top management against employees.b. Worthless investments or assets sold to unsuspecting investors.c. An overcharge for purchased goods.d.
Corporate employee fraud fighters:a. Work as postal inspectors and law enforcement officials.b. Prevent, detect, and investigate fraud within a company.c. Are lawyers that defend and/or prosecute
“The use of one’s occupation for personal enrichment through the deliberate misuse or misapplication of the employing organization’s resources or assets” is the definition of which of the
People who commit fraud are usually:a. New employees.b. Not well groomed and have long hair and tattoos.c. People with strong personalities.d. Trusted individuals.
Fraud is considered to be:a. A serious problem that continues to grow.b. A problem that affects very few individuals.c. A mild problem that most businesses need not worry about.d. A problem under
Which of the following is not an important element of fraud?a. Confidence.b. Deception.c. Trickery.d. Intelligence.
Why does fraud seem to be increasing at such an alarming rate?a. Computers, the Internet, and technology make fraud easier to commit.b. Most frauds today are detected, whereas in the past many were
There is no difference between a Certified Fraud Examiner (CFE) and a Certified Public Accountant (CPA). (True/False)
The ACFE is a nonprofit organization dedicated to the prevention and dedication of fraud throughout the world. (True/False)
Despite intense measures meant to impede it, fraud appears to be one of the fastest growing crimes in the United States. (True/False)
Management fraud is when managers intentionally deceive their employees about the potential of raises, vacations, and other perks. (True/False)
It is most often people who are not trusted that commit fraud. (True/False)
A fraud may be perpetrated through an unintentional mistake. (True/False)
When fraud is committed, criminal prosecution usually proceeds first. (True/False)
A negative outcome in a civil lawsuit usually results in jail time for the perpetrator. (True/False)
In vendor fraud, customers don’t pay for goods purchased. (True/False)
Indirect fraud occurs when a company’s assets go directly into the perpetrator’s pockets without the involvement of third parties. (True/False)
Companies that commit financial statement fraud are often experiencing net losses or have profits less than expectations. (True/False)
Occupational fraud is fraud committed on behalf of an organization. (True/False)
Unintentional errors in financial statements are a form of fraud. (True/False)
Fraud perpetrators are often those who are least suspected and most trusted. (True/False)
The single most critical element for a fraud to be successful is opportunity. (True/False)
Fraud losses generally reduce a firm’s income on a dollar-for-dollar basis. (True/False)
Advances in technology have had no effect on the size or frequency of fraud. (True/False)
The only group/business that must report employee embezzlement is the federal government. (True/False)
Many companies hide their losses from fraud rather than make them public. (True/False)
In civil cases, fraud experts are rarely used as expert witnesses. (True/False)
Most people agree that fraud-related careers will be in demand in the future. (True/False)
A Ponzi Scheme is considered to be a type of investment scam. (True/False)
Management fraud is deception perpetrated by an organization’s top management. (True/False)
When perpetrators are convicted of fraud, they often serve jail sentences and/or pay fines. (True/False)
Telemarketing fraud is an example of employee embezzlement. (True/False)
Fraud involves using physical force to take something from someone. (True/False)
Manufacturing companies with a profit margin of 10 percent must usually generate about 10 times as much revenue as the dollar amount from the fraud in order to restore net income to its pre-fraud
One of the most common responses to fraud is disbelief. (True/False)
Perpetrators use trickery, confidence, and deception to commit fraud. (True/False)
All frauds that are detected are made public. (True/False)
Answer the following questions regarding this tip.1. Which law(s) are you concerned that the company may be violating and what are the consequences of violating this (these) law(s)?2. As audit
What is fraud?
All frauds that a re detected by organizations are made public. True/False
Clever, Inc., is a car manufacturer. Its 2018 income statement is as follows:Clever, Inc. Income Statement for the YearEnded December 31, 2018Sales revenue
For the past year, you have been working as a secretary processor for a local construction company, XYZ Homes, which specializes in the building of low-cost, limited-option homes. You left a
One of the most common responses to fraud is disbelief by those around the fraud. True/False
For each of the following examples, identify whether the fraud is employee embezzlement, management fraud, investment scam, vendor fraud, customer fraud, or miscellaneous fraud.1. Marcus bought a $70
Which of the following is not true of civil litigation?a. It usually begins when one party files a complaint.b. The purpose is to compensate for harm done to another.c. It must be heard by 12
Which of the following is the least reliable resource for fraud statistics?a. FBI agencies.b. Health agencies.c. Insurance organizations.d. Fraud perpetrators.
Advances in technology have had no effect either on the size or frequency of fraud or on the detection or investigation of fraud. True/False
What is the best way to minimize fraud expense within an organization?a. Effective early detection of fraud.b. Effective investigation of fraudulent behavior.c. Effective prevention of fraud.d.
Which of the following is not a common type of fraud?a. Direct employee embezzlement.b. Employee bribes.c. Executives embezzling from petty cash.d. Investment scams.
Occupational fraud is fraud committed on behalf of an organization. True/False
Fraud fighting can include which of the following type(s) of careers?a. Professors.b. Lawyers.c. CPA firms.d. All of the above.
Intentional manipulation of financial statements describes which kind of fraud?a. Management fraud.b. Criminal fraud.c. Stock market fraud.d. Bookkeeping fraud.
The introduction to this chapter discusses the case of Dennis Greer, an individual who became involved in a large-scale check kiting scheme. The fraud literature suggests that when an individual
Which of the following is probably the least common type of fraud pressure?a. Vices.b. Work-related pressures.c. Financial pressures.d. Pressure to outsmart peers.
Fraud opportunity involves:a. Opportunity to conceal fraud.b. Opportunity to avoid being punished for fraud.c. Opportunity to commit fraud.d. All of the above.e. None of the above.
Bob's Country Kitchen, a small family-owned restaurant in northern New York, has seen a drop in profitability over the past three years and the owners want to know why. Bob's has been a local
In October 2014, the following case was heard in New Jersey. A former optometrist was sentenced to seven years in state prison for conspiracy, theft by deception, falsifying records, and
Fred is a friend of yours and works with you at the same company. He is a well-respected and trusted employee. He has two young children and is a leader in his community. You have discovered that
1. Part of avoiding fraud is to create a positive work environment. Describe a few conditions mentioned within the case that could contribute to a poor work environment.2. What symptoms should an

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