1. Which of the following is NOT authoritative guidance that applies AICPA members providing forensic accounting services?
a. Generally accepted auditing standards
b. AICPA Code of Professional Conduct
c. Statements on Standards for Consulting Services
d. Statements on Standards of Valuation Services

 

2. Regional Accounting Firm provided audit and tax advisory services for Neighborhood Home Care Inc.   Neighborhood Home Care was sued by one of its shareholders.  Regional Accounting firm's tax partner was called to testify as a fact witness about whether certain documentation was provided to the tax team as as of a particular date.  The tax partner will not testify as an expert.  Will this testimony impair Regional Accounting Firm's independence for next year's audit?
a. True
b. False

 

3. Which of the following is a TRUE statement regarding the Statement on Standards for Forensic Services No. 1 (SSFS No. 1)?
a. SSFS No. 1 applies to litigation matters only after a formal court proceeding has been initiated.
b. SSFS No. 1 permits expert witnesses to express an opinion regarding the ultimate conclusion of fraud.
c. SSFS No. 1 is an element of generally accepted auditing standards.
d. SSFS No. 1 prohibits  contingent fee arrangements for expert witness services.

 

4. Which of the following are NOT forensic accounting services?
a. Auditing the periodic financial statements that include accruals for litigation expense.
b. Gathering evidence necessary to support or refute a claim.
c. Testifying as an expert witness on economic damages associated with a business dispute
d. Reconstructing business records after an embezzlement.

 

5. Joe K. Davis is a manager in the US subsidiary of Global Financial Company.  Joe is the operations manager for the shared services center.

Joe opened a small business account at a bank that he doesn't normally do business for "JKD".   Then, late at night, Joe used his manager credentials to Global Financial Company's normal controls and set up JKD as an approved vendor in the Vendor Master File of the accounts payable system.  During the vendor set up, Joe provided his own small business bank account number for electronic payments,
Joe mailed a series of fictitious invoices purportedly from JKD Company for office supplies.  No goods or services were ever provided to Global Financial Company. Joe's assistant forwarded the invoices to Joe for managerial review, and Joe approved them for payment.   As a result, Global Financial wired money for these invoices directly to the JKD bank account that Joe controlled.  
What kind of fraud scheme is this?
a. Fictitious vendor scheme
b. Bill-and-hold scheme
c. Sales process larceny
d. Pay-and-return scheme
 

6. "Cookie-jar" reserves describes abusive and potentially fraudulent practice of manipulating judgmental accounting reserves.

a. True

b. False