AC 689 First Homework (due February 9) Spring, 2012

1. Bob, an internal auditor for a manufacturing company learns a purchasing agent, Sally, has personal relationships with suppliers, a wheeler-dealer attitude, and a gambling problem. What is the first thing the auditor should do ?

a. Confront Sally and accuse her of fraud.

b. Alert management Sally has committed fraud.

c. Search Sallys computer and desk area.

d. Review internal records of Sallys work as a purchasing agent.

2. An investigation plan:

a. should inform employees at all levels of the organization.

b. establish limits on the scope and time of the investigation.

c. should establish which individuals violated the law.

d. should make a commitment to eradicate the fraudulent activity.

3. A fraud response plan:

a. should be complex and detailed.

sends a message that management takes fraud seriously.

c. should be flexible.

d. enables managers to respond to suspected incidents of fraud in a consistent manner.

4. GAAS requires auditors to

I. detect fraud.

II. be aware of the possibility of fraud during audit planning.

document facts and circumstances in dictating the possibility of fraud.

notify management of facts and circumstances in dictating the possibility of fraud.

a. I only.

b. II and III only.

c. II, III and IV only.

d. I, II, III, and IV.

5. Reasonable expectations of privacy

a. prevent investigations of private actions.

b. are negated by red flags of fraud.

c. do not exist in the workplace.

d. must be overcome by predicate to allow a legitimate investigation.

6. The ACFE Code of Ethics

a. forbids any disclosure of client information.

b. requires investigative reports to identify guilty parties.

c. allows testifying witnesses to receive contingency fees.

d. requires continuing education

7. Interviews

a. should be conducted in public.

b. should occur behind locked doors.

c. may include promises of immunity.

d. may not include promises of confidentiality.

8. Interview

a. rooms should be furnished with a table with chairs on each side for the investigator and subject.

b. notes should be verbatim.

c. questions to suspects should begin with a request for a confession.

d. questions to suspects should begin with Can you help me?.

9. Confessions

a. may not be obtained without warning the suspect of their right against self-incrimination.

b. should include the suspects rationalization for their acts.

c. must be in the words of the suspect.

d. should admit guilt for each crime, if more than one crime was committed.

10. A CFE suspects vendors might be submitting invoices twice in the hopes of being paid twice. Which of the following data analysis functions would be the easiest way to identify such invoices ?

a. Benfords Law analysis.

b. Textual analysis.

c. Correlation analysis.

d. Duplicate search.

11. A CFE is conducting textual analysis on email sent to and from specific employees suspected of fraud. He is using the fraud triangle to come up with a list of fraud keywords. Which of the following words found in an email might relate to rationalization ?

a. Deserve.

b. Write-off.

c. Override.

d. Quota.

12. Understanding data, determining whether predication exists, and building a profile of potential frauds are all steps of which phase of the data analysis process ?

a. Planning.

b. Preparation.

c. Testing and interpretation.

d. Poit-analysis.

13. Elements of the Fraud Triangle include:

I. Rationalization.

II. Opportunity.

III. Pressure.

IV. Greed.

a. II, III, and IV only.

b. II and III only.

c. I, II, and III only.

d. I, II, III, and IV.

14. Discovery in criminal cases

a. is the same as in civil cases.

b. minimizes surprises at trails.

c. includes interrogatories and requests for admissions and documents in criminal cases.

d.

15. The net worth method

a. provides direct evidence of unreported income.

b. estimates unreported income as the difference between budgeted and actual amounts

during a period.

c. estimates unreported income as the amount consumed during the period plus or minus changes

in assets and liabilities during the period.

d. estimates unreported income as the amount of net changes in personal assets.

16. What records are likely to detect purchase of real estate ?

a. Federal land bank.

b. Department of Housing and Urban Development.

c. Probate Court.

d. Chancery Clerk.

17. What records would likely confirm rumors a civil law suit filed in State Court ?

a. Circuit Clerk.

b. Civil litigation clearing house.

c. Secretary of State.

d. None of the above.

18. Fred calls Allans bank, claiming to Allen, and hangs up when a bank employee asked a security question. What crime, if any, has Fred committed ?

a. False statements to a phone operator.

b. Pretexting.

c. Defalcation.

d. Fraud in the inducement.

19. Printers may contain ____ designed to eliminate the need for a printer sever.

a. Cartridges.

b. Hard drives.

c. Network connections.

d. Phone connection.

20. Which of the following types of information do forensic experts expect to recover from computer systems ?

a. History of web sites visited.

b. Time and dates filed were used.

c. Deleted emails and documents.

d. All of the above.

21. Which of the following statements is true ?

a. Turning on a computer has little effect on files contained within the computer system.

b. Steganography refers to procedures used to convert information using an algorithm (cipher) that makes the information unreadable.

c. A, but not B.

d. Neither A or B.

22. Whish of the following statement is true ?

If a suspect confesses, the report may state the suspect is guilty.

When drafting a report, CFEs generally should not include an opinion on the credibility of witnesses.

c. A and B.

d. Neither A or B.

23. Which of the following statements is false ?

a. Reports should be timely (like homework and test answers).

b. Reports should state conclusions and opinions supported by evidence.

c. A and B.

d. A, but not B.

24. Expert opinions may be expressed in a report if:

a. based on commonly accepted evidence and methodology.

b. the subject matter of the opinion is the commission of a crime and the identity of the criminal.

c. A and B.

d. A, but not B.

25. A CFE is following a suspect on a public street, and wants to secret record his observations. Which of the following would be wrong ?

a. Taking photos form a car parked across the street.

b. Using a hidden or long range microphone.

c. Using a hidden camera.

d. Using a camera phone while walking within a few feet of the suspect.