Course Introduction
Accounting Ethics
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Accounting Ethics explores the fundamental ethical principles and professional standards that guide accountants in their work. The course examines the moral obligations of accountants, the importance of integrity and objectivity, and the ethical dilemmas faced in the accounting profession. Students will analyze real-world cases involving fraud, financial misstatement, whistleblowing, and conflicts of interest. Through critical discussion and practical examples, the course highlights the role of ethical decision-making in maintaining public trust and upholding the credibility of financial information in accordance with regulatory frameworks and professional codes of conduct.
Recommended Textbook
Forensic Accounting 1st Edition by Robert Rufus
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12 Chapters
588 Verified Questions
588 Flashcards
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Page 2
Chapter 1: Introduction to the World of Forensic Accounting
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Sample Questions
Q1) The purpose of the ________ is to form and express an opinion as to whether the organization's financial statements,taken as a whole,reflect its financial position on a given date and the results of its operations for a given period.
A) forensic accountant
B) external auditor
C) transactional accountant
D) internal auditor
Answer: B
Q2) Which of the following are the two major components of forensic accounting services?
A) fraud detection services and fraud deterrence services
B) expert services and consulting services
C) investigative services and litigation services
D) fraud examination services and business valuations services
Answer: C
Q3) Deductive reasoning draws conclusions from patterns.
A)True
B)False
Answer: False
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Page 3
Chapter 2: The Legal Environment of Forensic Accounting
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Sample Questions
Q1) Which of the following best defines the term attorney-client privilege?
A) It is the client's right to refuse to disclose and to prevent any other person from disclosing confidential communications between the client and the attorney.
B) It is the attorney's right to refuse to disclose and to prevent the testifying expert from disclosing confidential communications between the client and the attorney.
C) It is the client's obligation to disclose confidential communications between the client and the attorney.
D) It is the attorney's right to refuse to disclose and to prevent any other person from disclosing confidential communications between the attorney and the testifying expert.
Answer: A
Q2) Which of the following forms of justice is fairly administered according to the rules of statutory law?
A) social justice
B) civil justice
C) substantial justice
D) criminal justice
Answer: C
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Chapter 3: Screening and Staging Engagements
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Sample Questions
Q1) Drawing conclusions requires a mix of both deductive and inductive reasoning.
A)True
B)False
Answer: True
Q2) Which of the following is true of a joint expert?
A) A joint expert's opinion is considered more subjective.
B) Hiring a joint expert increases fees and the time.
C) Hiring a joint expert is most common in domestic litigation.
D) The chances of conflict of interest increases when a joint expert is hired.
Answer: C
Q3) Which of the following is generally covered in an engagement letter?
A) research plan
B) deadlines given by the court
C) evidence required to be gathered
D) right to terminate
Answer: D
Q4) A hypothesis is a statement of fact.
A)True
B)False
Answer: False
Page 5
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Chapter 4: Gathering Evidence Interviews and Observations
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Sample Questions
Q1) Which of the following is a difference between a formal interview and an informal interview?
A) Most formal interviews progresses from open-ended questions to structured questions, whereas most informal interviews rely on the spontaneous generation of questions in the natural flow of an interaction.
B) Formal interviews are systematic in nature, whereas informal interviews are more structured in nature.
C) Formal interviews are generally conducted in the beginning of an engagement, whereas informal interviews are generally conducted at a much later stage.
D) Formal interviews have a blend of open-ended and structured questions, whereas informal interviews are not controlled by a specific set of detailed questions.
Q2) Structured questions are designed to stimulate conversation.
A)True
B)False
Q3) Write a short note on the importance of establishing the order of witnesses.
Q4) Intimate zone is the space that is 18 inches to 4 feet from the individual.
A)True
B)False
Page 6
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Chapter 5: Financial Statements Analysis Reading
Between the Lines
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Sample Questions
Q1) Which of the following is true of the cost principle?
A) It highlights the proposition that value is not the focus of accounting and is not represented in financial statements.
B) Using this principle results in the subjectivity of value assessments.
C) Under this, costs are measured subjectively on actual basis.
D) It results in reflecting the current values of assets, liabilities, equity, revenues, and expenses shown on the financial statements.
Q2) Which of the following is true of the compound annual growth rate?
A) It reflects average annual growth over a period of multiple years.
B) It reflects total annual growth over a period of multiple years.
C) It reflects average annual growth for a year as compared to the previous year.
D) It reflects total annual growth for a year as compared to the previous year.
Q3) List the common disclosures that are to accompany a personal financial statement.
Q4) Financial ratios represent effects,not causes.
A)True
B)False
Q5) List and explain the three basic financial statements.
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Chapter 6: Fraud and White-Collar Crime
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Q1) Which of the following is required to establish fraudulent intent in the absence of a direct confession?
A) documentary evidence
B) character evidence
C) demonstrative evidence
D) circumstantial evidence
Q2) Under the knucklehead defense,an attorney argues that
A) even though the client has the ability to commit the crime, he or she did not have the intent to do it.
B) even if the client was motivated to commit the crime and had the ability to carry it out, he or she did not have the opportunity for it.
C) even if the client had the opportunity to commit the crime, he or she did not have an incentive to do it.
D) even if the client was motivated to commit the crime and had the opportunity, he or she did not have the ability to carry it out.
Q3) Write a short note on techniques of rationalization (neutralization).
Q4) Define the term prosecutorial misconduct.
Q5) Explain rationalization with respect to Cressey's fraud theory.
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Chapter 7: Conducting a Fraud Investigation
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Q1) An arbitration panel should include at least three lawyers.
A)True
B)False
Q2) A ________ is a payment back by a seller of a portion of the purchase price to a buyer to induce purchase or influence future purchases.
A) false discount
B) expense reimbursement
C) kickback
D) check tampering
Q3) Which of the following terms describes a fraud scheme in which two conspiring companies exchange payments and services for the sole purpose of inflating revenues?
A) billing scheme
B) kickback
C) switch contract
D) swap transaction
Q4) Mediation is less expensive than arbitration.
A)True
B)False
Q5) What are the two alternative dispute resolution strategies which are available?
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Chapter 8: Transforming Data Into Evidence
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Q1) Why is it important to define the universe of data?
Q2) Which of the following is true of the process of transcribing an interview?
A) The focus is on the transcript itself and not on the process.
B) Interview transcription involves data analysis and interpretation.
C) The forensic accountant does not play a very active role in the transcription process.
D) The interview should be transcribed by the person who conducted the interview.
Q3) Relationship charts,which illustrate relationships and flows,are a form of link analysis. A)True
B)False
Q4) Which of the following statements best defines the term data analysis?
A) It is the process of eliciting information.
B) It is the act of conducting a systematic enquiry or appraisal.
C) It is the separation of a whole into its component parts.
D) It is the process of consolidating data.
Q5) What are the benefits of a written data analysis plan?
Q6) Explain why an interview should be transcribed by the person who conducted the interview.
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Page 10
Chapter 9: Transforming Data Into Evidence
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Q1) Which of the following is a reason why a forensic accountant uses data mining?
A) to generate population of data based on a small sample
B) to collect observations that may be presented as evidence of misrepresentation of information
C) to reduce a large number of observations to a smaller number that can be examined more closely
D) to assist in providing random samples from a large set of data
Q2) Which of the following is a reason why the size of the data set is important to apply Benford's Law?
A) Large data sets often have more irregularities than small data sets.
B) It is easier to test small data sets for frequencies of digits, both lower and higher.
C) It is more difficult to identify significant deviations from Benford's profile in small data sets.
D) The results of tests on large data sets are not as precise as the results of tests on small data sets.
Q3) A graph should always have a title.
A)True
B)False
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11
Chapter 10: Professional Responsibilities
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Q1) As per AICPA's Code of Professional Conduct,________ imposes the responsibility to render services promptly and carefully,to be thorough,and to observe applicable technical and ethical standards.
A) integrity
B) independence
C) diligence
D) objectivity
Q2) As per ACFE Standards of Professional Conduct,which of the following requires a member not to disclose privileged information obtained during the course of an engagement without the express consent of the client or order of a court?
A) confidentiality and integrity
B) client interest and equal treatment
C) professionalism and fair dealing
D) due professional care and objectivity
Q3) How is "A Guide for Complying with Rules 102-505 (2008)" useful in making and acting on informed ethical decisions? Briefly explain the threats and safeguard approach described in "A Guide for Complying with Rules 102-505 (2008)."
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Chapter 11: Fundamentals of Business Valuation
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Q1) Which of the following situations will result in the investment value of a business approximating to the fair market value of the business?
A) when an investor's requirements and expectations are different than the fair value of the business
B) when an investor's requirements and expectations are representative of the book value of the business
C) when an investor's requirements and expectations are different than the market
D) when an investor's requirements and expectations are representative of the market
Q2) Which of the following methods is commonly used to establish a floor value for the company?
A) dividend payout method
B) capitalization of earnings method
C) net asset value method
D) guideline transaction method
Q3) Explain the two methods that are commonly considered under the market approach of valuation of the company.
Q4) Why is identification of the ownership interest to be valued important?
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13
Chapter 12: Special Topics
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Q1) Compensatory damages are meant to compensate a negligence of defendant,while punitive damages are meant to punish intentional nonperformance of duties by a defendant.
A)True
B)False
Q2) The two components of lost earnings in a civil litigation claiming damages are
A) expected lost earnings and unexpected lost earnings.
B) past lost earnings and recoverable lost earnings.
C) past lost earnings and future lost earnings.
D) past lost earnings and unexpected lost earnings.
Q3) Digital evidence can be time sensitive,because some data are intended for only temporary storage and may be overwritten on a regular basis.
A)True
B)False
Q4) The indirect method of proof ________ compared to the direct method of proof.
A) provides a greater level of certainty
B) is harder to refute in court
C) is generally less persuasive
D) is more easily understood
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