Question 1

3pts

1. In a ____________________, the perpetrator uses false documentationsuch as an invoice, purchase order, or credit card billto cause his employer to issue payment for some fraudulent purpose.

Group of answer choices

False documentation scheme

Billing scheme

Skimming scheme

Corruption scheme

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Question 2

3pts

Billing schemes generally fall into one of three categories: shell company schemes, nonaccomplice vendor schemes, and _______________.

Group of answer choices

Personal purchases schemes

Check writing schemes

Skimming schemes

False documentation schemes

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Question 3

3pts

One basic fraud detection approach is to run a computer query that compares ________________________ to the ___________________ in the accounts payable system.

Group of answer choices

Names of vendors; shell company invoice

Invoices; purchase orders

Employees' home addresses; of vendors

Employee names; payment authorizers

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Question 4

3pts

Those with the authority to approve purchases would be among the most likely to engage in ___________ since they have fewer hurdles to overcome than other employees.

Group of answer choices

Personal purchases schemes

Skimming schemes

False documentation schemes

Billing schemes

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Question 5

3pts

A primary purpose of _________________ is to prevent any one person from having too much control over a particular business function.

Group of answer choices

Separating duties

Conducting criminal history checks of employees

Oversight and supervision

Antifraud training

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Question 6

3pts

Many times, shell companies schemes involve the purchase of services rather than goods such as "consulting services." Why is this?

Group of answer choices

Because services have no fixed market price, it is harder to compare value.

Because services are often authorized by organizational management, no one questions them.

Because services are not tangible, it is more difficult to confirm or deny their receipt

Because services are non-durable, it is more difficult to capitalize them.

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Question 7

3pts

One of the best ways to prevent and detect shell company schemes is to maintain and regularly update a list of:

Group of answer choices

Known shell companies in order to compare names of vendors with it.

Approved vendors that should be verified by someone independent of the purchasing function

Offshore banks whose routing numbers can be compared to vendor bank accounts (using the endorsements on cashed checks).

Purchases by employees that have no purchasing authority (because no one suspects them).

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Question 8

3pts

One common red flag useful in detecting fraudulent invoices is.

Group of answer choices

A. The often poor printing/formatting quality used

A lack of detail

A disproportionate cost relative to the services rendered

An unanticipated/inexplicable vendor discount

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Question 9

4pts

Sally was a secretary/assistant bookkeeper at a local non-profit food pantry. Part of her duties included opening mail, processing invoices, and authorizing payments. She used her position to intentionally pay some bills twice, then requested that recipients return one of the checks which she then intercepted and subsequently deposited into her own bank account. Sally's scheme is known as a:

Group of answer choices

Double-bill and intercept scheme

Pay-and -return-scheme

Pass-through scheme

Forged maker scheme

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Question 10

6pts

James Dunham was the CEO at a small non-profit ministry dependent on donor contributions that sent medical doctors and supplies to Haiti. The name of the non-profit was "Limye Medical Missions" (Limye means light in Haitian Creole). Eventually, the board received a tip from an employee that James had been stealing money from the organization. The investigation revealed that the way James did this was to direct his office staff to place the mail unopened on his desk each day. When James returned from lunch, he entered his office and locked his door and sorted the mail. He placed contributions into two stacks. One stack contained only checks that were made payable to Limye Medical Missions. These were deposited in the ministry's bank account. The other stack contained checks made payable simply to, "Limye." To these checks, James simply added the words "and Friends, Inc" on the payee line. The latter were then deposited by James into a shell company bank account called Limye and Friends. The type of check tampering scheme used by James is known as a ___________ scheme:

Group of answer choices

Fraudulent payee

Tacking on

Payments diversion

Forged endorsement

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Question 11

6pts

For a ghost employee scheme to work, four things must happen: (1) the ghost must be added to the payroll, (2) timekeeping and wage rate information must be collected and submitted for processing, (3) a paycheck must be issued to the ghost, and (4):

Group of answer choices

The check must be delivered to the perpetrator or accomplice

Income tax withholding must be filed in the name of the ghost.

An accomplice of the fraudster must cash the check.

At least three after-hours specter sitings on company property must have been independently reported in the previous pay period

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Question 12

4pts

Among the factors associated with financial statement fraud, the most common is pressure on upper management to ______________.

Group of answer choices

Comply with PCAOB regulations

Show earnings

Manage board relationships

Increase market share

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Question 13

4pts

There are three main groups of people who commit financial statement fraud. In descending order of likelihood of involvement, they are as follows: Senior management, mid- and lower-level employees, and ___________________.

Group of answer choices

Organized criminals

Government bureaucrats

Directors and officers of governing boards

Employees with purchasing authority

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Question 14

4pts

According to a 2010 study of 347 financial statement frauds from 1998 to 2007 conducted by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), ____________________ is the group most likely to commit financial statement fraud.

Group of answer choices

Publicly traded companies

Privately held enterprises

Senior Management

Organized criminals

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Question 15

4pts

Senior managers and business owners may "cook the books" for any of several reasons: to conceal true business performance, to preserve personal status/control, and to __________________________.

Group of answer choices

Deceive stockholders

Comply with PCAOB-mandated income targets

Maintain personal income/wealth

Get revenge on the organization (e.g., wages in kind)

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Question 16

4pts

Using data spanning 2002-2013 from the ACFE Report to the Nations on Occupational Fraud and Abuse, and made available through the Institute for Fraud Prevention (IFP), the authors examined private company FRF cases in comparison to those at public companies and found several key differences. These included the observation that a stronger antifraud environment in public companies appears to lead public company FRF perpetrators to use ____________ perhaps to make the fraud less obvious, rather than other fraud schemes such as fictitious revenues.

Group of answer choices

Off balance sheet liabilities

Bribery and illegal gratuities

Timing differences

Classifying expenditures as assets

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Question 17

6pts

An example of ______________ in accounting is the use of the _______________ rule as it relates to inventory valuation. That simply means that if a company paid one dollar for a widget and at a later date the price fell fifty cents, the lower of those two prices should be carried on the balance sheet; the resulting price fall should then be recorded on the income statement. If a company's financial statements violate the ____________ constraint, they could be fraudulent.

Group of answer choices

Transparency; "matching;" transparency

Periodicity; "smoothing earnings;" periodicity

Conservatism; "lower of cost or market"; conservatism

Materiality; "net present value;" materiality

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Question 18

4pts

Financial statement frauds can be broken down into five distinct categories: concealed liabilities and expenses, _______________, improper asset valuations, improper disclosures, and timing differences.

Group of answer choices

Fictitious revenues

Senior management fraud

Materiality

Inflated inventory