Internal Auditors. Certified Public Accountants. Tips. Employee confessions. 2.5 points Question 2 Which of the following is an advantage of skimming to the fraudster? It results in large dollar amounts. It provides the fraudster with cash. It is difficult to detect. It is not considered a crime. 2.5 points Question 3 The concealment of accounts receivable skimming can be difficult because: The audit trail must be destroyed. Incoming customer payments are expected. Inventory must be increased to conceal shrinkage. This area is audited. 2.5 points Question 4 Requiring supervisory approval of writeoffs and discounts can help prevent accounts receivable skimming. True False 2.5 points Question 5 Where do most larceny schemes involving cash occur? After hours. In the mailroom. At the point of sale. At off site locations. 2.5 points Question 6 The major weakness in a cash larceny scheme is: The resulting imbalance in the organization's accounting records. It can be detected by trend analysis. The volume of cash transactions. The cash account is audited by the external audited. 2.5 points Question 7 John Post is the cashier and reconciles the bank account. He stole $2000 from a deposit. He may conceal this theft by: Creating a false deposit in transit. Recording a false outstanding check. Recording a decrease in the inventory account. Removing a piece of equipment from the accounting records. 2.5 points Question 8 Which of the following is not a warning sign of a shell company scheme? A vendor not listed in the phone book. Invoices lacking details of the items purchased. An unexpected and significant increase in consulting expense. An unreconciled bank account. 2.5 points Question 9 Which of the following is an internal control that could detect accounts receivable skimming through the use of a lapping scheme. Using cash registers. All customers are given a receipt. A system of video cameras are used in the cash receipts area. All customers are sent a statement of their account. 2.5 points Question 10 If you suspect skimming of sales at the cash register which of the following would you check first? Bank reconciliation. Check the cash register tape to note if there are many no sales. Balance the accounts receivable file to the control total. Examine the supporting documentation for the cash disbursements. 2.5 points Question 11 What is the most effective control to prevent receivable skimming? Establish proper segregation of duties. Perform a bank reconciliation. Place all cash in a safe. Pay all business expenses by check. 2.5 points Question 12 Which of the following is not a control that prevents/detects employees from stealing checks from the incoming mail. Segregation of duties. Use of cameras. Proper authorization for credit memos and charge offs. Maintaining cash in a locked, secure area after it is counted. 2.5 points Question 13 In regard to skimming which of the following is true? Skimming is easy to detect. Skimming is perpetrated after the cash is recorded. Skimming may be concealed by recording a fraudulent credit memo. Segregation of duties is not an effective control to prevent skimming. 2.5 points Question 14 Which of the following would be an indication of a possible accounts receivable lapping scheme? Noting several large cash disbursements. Transfers between bank accounts near the year end date. Conducting a surprise count of cash on hand and noting an overage. Uncovering the fraudster's "second set" of books. 2.5 points Question 15 In reference to billing schemes which of the following is true? Invoices that are submitted by shell companies are mostly for fictitious services. Most shell company schemes involve the purchase of goods rather than services. When a billing scheme is occurring, the company's expenses appear lower than they should, causing the financial statements to show inflated profits. 2.5 points Question 16 Fictitious entities created for the sole purpose of committing fraud are called: Ghost companies. Non-accomplice vendors. Shell companies. Rubber Stamp companies. 2.5 points Question 17 Which of the following might be a warning sign of a shell company scheme? Invoices lacking details of the items purchased. A vendor that is not listed in the phone book. An unexpected and significant increase in consulting expenses. All of the above. 2.5 points Question 18 Which of the following is not a red flag for a scheme involving fraudulent invoices from non-accomplice vendors? Noting that paid was marked on every voucher that has been paid. Mailing addresses differing from the real vendor address. Deviations from the approved vendor list. An invoice number out of sequence. 2.5 points Question 19 For the small business, which of the following is a good way to prevent or detect fraud? Segregate duties. Owner involvement in the business. CPA Audit. Hire trusted employees only. 2.5 points Question 20 Which of the following is not a way to detect personal purchases on company credit cards. Verify the business purpose for each expense. Establish spending limits for each card holder. Require original support for each expense. Utilize credit cards from several different companies. 2.5 points Question 21 Which of the following is the most difficult fraud to detect? Cash skimming Cash larceny. Shell company billing scheme. Use of company charge card for personal purchases. 2.5 points Question 22 Which of the following is not a control for preventing/detecting an employee from stealing from the bank deposit? Separating of duties for taking deposits to the bank and reconciling the bank account. Examining the bank deposit slip for alterations. Maintaining more than one copy of the bank deposit slip that is matched to the bank's receipt of the deposit. Insuring that the same person who opens the mail and prepares the deposit also reconciles the bank account. 2.5 points Question 23 Shell Company invoices may be identified by all of the following except: Lack of a telephone number on the invoice. Lack of a detailed description. Use of a residential address. Use of different colors for printing the invoice. 2.5 points Question 24 In reference to billing schemes which of the following is false? Separation of duties should not be considered a control used to prevent billing scheme frauds. Prior approval for purchases made with a company credit card is normally not required. In a pass through scheme merchandise is resold to the victim company at ahigher price. Individuals who approve purchases are most likely to engage in a billing scheme. 2.5 points Question 25 In a small business environment which of the following functions most likely would be done by the company's outside certified public accountant? Prepare the deposit. Prepare refund checks. Prepare disbursement checks. Maintain the general ledger. Review the bookkeeping. 2.5 points Question 26 Most lapping schemes are detected: By employee tips. By audits. Because they collapse under their own weight because of the complexity and volume of transactions. Because they involve collusion between two employees. 2.5 points Question 27 Which of the following is not a component of the fraud triangle? Motive Opportunity Employee Rationalization 2.5 points Question 28 Which of the following statements is true? Studies show that frauds perpetrated by males average a larger dollar amount than those perpetrated by females. Studies show that frauds perpetrated by females average a larger dollar amount than those perpetrated by males. Studies show that frauds perpetrated by males and females average basically the same dollar amount. 2.5 points Question 29 Which of the following statements is true? The average amount for a fraud in a large business is more than the average amount in a small business. The average amount for a fraud in a small business is more than the average amount in a large business. The average amount for a fraud in a small business and a large business is basically the same. 2.5 points Question 30 Most frauds utilizing lapping of accounts receivable occur because: The same person collects the cash and reconciles the bank account. The same person collects the cash and records the accounts receivable. The same person collects the cash and controls the inventory. The same person collects the cash and records entries in the general ledger. 2.5 points Question 31 Which of the following is not part of the COSO definition of internal control? Reliability of financial reporting. Effectiveness and efficiency of operations. Ability to make a profit. Compliance with applicable laws and regulations. 2.5 points Question 32 Increasing the perception of frauds being detected does not provide a significant deterrent to employee theft. True False 2.5 points Question 33 From the article Small Business, Big Losses which of the following is true? Audits and hotlines were noted as the ineffective crime busters in the ACFE study. Audits and hotlines were noted as non existent in small businesses. Audits and hotlines were noted as the best crime busters in the ACFE study. Hotlines were noted as illegal for small businesses. 2.5 points Question 34 From the article Solving Employee Theft Cases which of the following statements is false? During investigations co-workers often provide the best clues as to who is stealing from the company. Innocent suspects are most eager to see the case solved. The key for the investigator is to show the thief's co-workers that it is in their best interest to share what they know to help catch the thief. Most employees know for sure who the thief is. 2.5 points Question 35 From the article Lapping it Up which of the following is not a classic red flag of lapping? Delays in posting customer payments. Customer complaints. Minimal writeoffs of accounts receivable. Excessive billing errors. 2.5 points Question 36 From the article And One For Me which of the following is not a lesson learned about the value of independent oversight. Increased revenue is a red flag that someone is skimming. Separate accounting from cash handling. Hire an independent contractor on an annual basis to take a complete inventory. Have a CPA review the company's bank statements on a regular basis. 2.5 points Question 37 From the article The Padding That Hurts which of the following is false? Expense reimbursements should be monitored periodically by supervisory personnel or auditors. Executives engaging in immaterial fraud may also engage in material fraud. To prevent expense account abuse some companies set a very conservative per diem rate for employee travel. Making a photo copy of an altered document is a common expense account. 2.5 points Question 38 From the article Keep Ghosts Off the Payroll ghost employees can be detected by all of the following except: Duplicate names, addresses and social security numbers in the payroll records. Paychecks without deductions for taxes. Monthly bank reconciliations. Budget variations in payroll expense. 2.5 points Question 39 From the article Protect Small Business which of the following is not a major factor contributing to small business fraud? Inadequate employee prescreening. Insufficient personnel to adapt adequate internal controls. Too much trust in employees. Lack of an annual audit by a certified public accountant. 2.5 points Question 40 From the articles on Billing Schemes in order to prevent or detect personal purchases which of the following is not true? Do not permit the same employee to originate purchases and approve them. Establish maximum purchasing limits for each employee. Identify personal purchases that may be paid for with company funds. Examine shipment receiving reports for merchandise ordered and paid for but not delivered