Accounting Information Systems
Textbook Exam Questions
Course Introduction
Accounting Information Systems explores the integration of accounting methodologies with information technology to support effective financial reporting, decision-making, and internal controls within organizations. The course covers topics such as the design, implementation, and evaluation of computerized accounting systems, data security, database management, transaction cycles, and the role of emerging technologies like cloud computing in accounting. Students will gain practical experience in using accounting software and will learn how to analyze risks, ensure compliance with regulatory requirements, and apply ethical principles in the management and use of financial information systems.
Recommended Textbook
Forensic Accounting and Fraud Examination 1st Edition by Mary Jo
Kranacher
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Chapter 1: Core Foundation Related to Fraud Examination and Financial
Forensics
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Q1) The issues addressed by a forensic accountant during litigation must be central to the allegations made by the plaintiff's or defense attorneys.
A)True
B)False
Answer: False
Q2) From the statements below select the most correct.
A) Prevention and deterrence are typically more costly than attempting to remediate a fraud that has already occurred.
B) Fraud deterrence refers to creating environments in which people are prohibited from committing fraud.
C) Fraud detection refers to the process of preventing and discovering the presence of fraud.
D) Prevention and deterrence are typically more cost beneficial than attempting to remediate a fraud that has already occurred.
Answer: D
Q3) Identify common fraud schemes.
Answer: Common fraud schemes include asset misappropriation, corruption, and False statements.
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Chapter 2: Careers in Fraud Examination and Financial
Forensics
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Q1) This accreditation has been approved by the U.S. Department of Defense DoD for information management.
A) Information Systems Audit and Control Association ISACA
B) Certified Information Security Manager CISM.
C) Certified Information Systems Analyst CISA
D) Each of the above is accredited by the U.S. Department of Defense.
Answer: B
Q2) The Society of Financial Examiners is a professional society for examiners of insurance companies, banks, savings and loans, and credit unions primarily based in the European Economic Community.
A)True
B)False
Answer: False
Q3) The Sarbanes-Oxley Act of 2002 SOX Act and the Emergency Economic Stabilization Act of 2008 EESA both are focused on external controls and auditing practices.
A)True
B)False
Answer: False
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Chapter 3: Who Commits Fraud and Why: Criminology and Ethics
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Q1) Perceived opportunity is necessary so that the perpetrator of a fraud can make his illegal behavior intelligible to him and maintain his concept of himself as a trusted person.
A)True
B)False
Answer: False
Q2) According to Albrecht, opportunities to commit fraud may be created by individuals, or by deficient or missing internal controls.
A)True
B)False
Answer: True
Q3) With respect to security controls, Hollinger and Clark discovered that most employees regarded these measures to be
A) targeted toward external security.
B) targeted toward internal security.
C) part of increasing morale.
D) part of organizational trust communication.
Answer: A
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Chapter 4: Complex Frauds and Financial Crimes
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Q1) Terrorist organizations differ from organized crime groups in that:
A) Terrorists seek anonyminity; organized crime seeks publicity
B) Terrorists seek to corrupt public officials; organized crime seeks to bypass public officials
C) Terrorists seek publicity; organized crime seeks anonyminity
D) Terrorists seek to coerce and influence officials; organized crime seeks to gain elected office
Q2) Financial statement fraudsters often:
A) Start as accidental fraudsters and progress to predator fraudsters
B) Rely on collusion to mask the fraud
C) Frequently go from company to company committing the same type of fraud
D) All of the above
Q3) If a taxpayer suddenly stops filing his income tax returns, this is evidence of:
A) Fraud
B) An affirmative indicator
C) Predication of fraud
D) None of the above
Q4) Explain the difference between mail and wire fraud. Which do you think might be easier to detect? Why?
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Chapter 5: Cybercrime: Computer and Internet Fraud
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Q1) Computers offer cyber criminals efficient ways to hide fraudulent activities.
A)True
B)False
Q2) The "computer as a symbol" involves using a computer to intercept data transmission.
A)True
B)False
Q3) Computer crime and computer fraud are synonyms.
A)True
B)False
Q4) An employee, having authorized access to a work computer, commits fraud while using the computer. This is an example of a computer crime.
A)True
B)False
Q5) Computer crime involves the attempt to access data illegally.
A)True
B)False
Q6) Cyber-crime involves the use of cell phones.
A)True
B)False
Page 7
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Chapter 6: Legal, Regulatory, and Professional Environment
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Q1) The PCAOB is charged with overseeing public company audits, setting audit standards, and investigating acts of noncompliance by auditors or audit firms.
A)True
B)False
Q2) Members of the PCAOB are appointed by the:
A) AICPA
B) SEC
C) FASB
D) IASB
Q3) Which of the following is not a responsibility of the PCAOB?
A) Registering public accounting firms that audit publicly traded companies.
B) Inspecting registered public accounting firms.
C) Converging GAAP standards with IFRS standards.
D) Enforcing compliance with the Sarbanes-Oxley Act.
Q4) How did the Sarbanes-Oxley Act address corporate governance and public accounting responsibilities?
Q5) What approaches are used by investigators to obtain documents?
Q6) What common law protections do individuals have during interviews?
Q7) What is the discovery process and how does it work?
Page 8
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Chapter 7: Fraud Detection: Red Flags and Targeted Risk Assessment
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Q1) As a result of its significant concern with financial statement fraud, the accounting profession responded in 2002 with:
A) SAS No. 1 - Consideration of Fraud in a Financial Statement Audit.
B) SAS No. 99 - Consideration of Fraud in a Financial Statement Audit.
C) the creation of the Public Company Accounting Oversight Board PCAOB.
D) guidance to overcome the "expectation gap" held by the public.
Q2) An independent auditor's "adverse" opinion on financial statements indicates the auditors have completed their work and are concerned with the "going concern" aspects of the audited entity.
A)True
B)False
Q3) Earnings management below a threshold value may be judged immaterial.
A)True
B)False
Q4) CAATTS computer-aided auditing tools and techniques are used primarily to select samples and detect collusion .
A)True
B)False
Page 9
Q5) Generally, how is the problem of management override and collusion addressed?
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Chapter 8: Detection and Investigations
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Q1) Types of evidence
Q2) Data can be altered by:
A) Changing numbers on a check; e.g. making a "3" an "8"
B) Destroying supporting detail
C) Making copies and submitting them as the original
D) All of the above
Q3) Chain of custody is achieved in which of the following scenarios:
A) A police officer tags each unit of evidence and places it in a separate envelope
B) A detective seals each unit of evidence in a manila envelope, signs and dates the envelope, and places it in protective custody
C) An evidence technician tags each unit of evidence in a sealed envelope, signs and dates the envelope, and places it with the evidence locker personnel for safekeeping
D) A police officer tags each unit of evidence, places it in a secure envelope, signs and dates the envelope, gives the envelope to evidence personnel for safekeeping and logging of access
Q4) Direct evidence
Q5) Circumstantial evidence
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Chapter 9: Effective Interviewing and Interrogation
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Q1) What are some of the verbal clues to deception?
Q2) Why are interviews in fraudulent financial statements and tax returns handled differently than interviews in other fraud examinations?
Q3) ________ questions contain the answer as a part of the question.
A) Open
B) Closed
C) Affirmative
D) Leading
Q4) ________ questions are those that limit the possible responses by requiring a precise answer - usually "yes" or "no."
A) Open
B) Closed
C) Affirmative
D) Leading
Q5) Non-verbal cues for deception include all EXCEPT:
A) Calmness
B) Hands over the mouth
C) Crossing the arms
D) Fleeing positions
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Chapter 10: Using Information Technology for Fraud
Examination and Financial Forensics
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Q1) What is the purpose of timelines in an investigation?
Q2) Once data sectors on computer files have been overwritten, generally a computer forensic specialist can still recover the files.
A)True
B)False
Q3) Restoring data and files is a more sophisticated approach to recovering deleted files.
A)True
B)False
Q4) An association matrix is not useful for identifying major players who are central to an investigation and to identify linkages between those players.
A)True
B)False
Q5) How do e-discovery rules have an impact on the storage of e-mail and other electronic files?
Q6) An activity that can enhance the ability to recover deleted files is the "Defrag" command.
A)True
B)False
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Chapter 11: Cash Receipt Schemes and Other Asset
Misappropriations
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Q1) Lapping is the crediting of one account through the abstraction of money from another account.
A)True
B)False
Q2) Which computer audit step could catch a false shipment scheme?
A) Shipping documents with no associated sales order
B) Shipping documents with an associated sales order
C) Shipping documents that have been independently approved by management
D) Receipts in the receiving system that do not agree to the payables invoice
Q3) Trend analysis on aging of customer accounts can't be used to highlight a skimming scheme.
A)True
B)False
Q4) What is meant by inventory "shrinkage"?
Q5) Far off in the woods, there is a cabin. The cabin contains three people. Two are in one room; the other is alone in another room. All doors to the cabin are locked tight and have not been opened. All three people are dead. There was no sign of violence in this cabin. How did they die?
Q7) How may the larceny of noncash assets be prevented? Page 13
Q6) List three proactive audit tests to detect noncash misappropriations.
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Chapter 12: Cash Disbursement Schemes
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Q1) In order for a ghost employee scheme to work, the paycheck for the ghost must go to the person involved in the scheme.
A)True
B)False
Q2) A pass through scheme requires:
A) The availability of an accomplice at a legitimate vendor
B) The ability to add vendors to the vendor master file
C) The ability to change purchase order prices after approval
D) All of the above
Q3) Which of the following is a red flag that fraudulent expense reporting is occurring:
A) Receipt numbers for the same establishment that are consecutive even though they occur over a period of time
B) Expense amounts ending in "0"
C) Expense amounts consistently under the threshold for requiring a receipt
D) All of the above
Q4) Fraudulent disbursements are commonly made to a fictitious payee.
A)True
B)False
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Chapter 13: Corruption and the Human Factor
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Q1) The threat of ________, especially in businesses that are currency-intensive, may be a powerful deterrent to occupational fraud and abuse.
A) jail time
B) surprise audits
C) conflicts of interest policy
D) external reviews
Q2) What types of abuses may occur at the pre-solicitation stage of the bidding process?
Q3) Why is it problematic for an organization to set standards that are too high?
Q4) What is a kickback scheme, and how is it committed?
Q5) The competitive bidding process, in which several suppliers or contractors are vying for contracts in what can be a very cutthroat environment can be subverted by:
A) Blind bidding
B) An abundance of bidders
C) Excessively low bids
D) Bid-rigging schemes
Q6) List the four major corruption schemes.
Q7) What is the defined as "something of value?"
Q8) How does the "perception of detection" impact fraud deterrence?
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Chapter 14: Financial Statement Fraud
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Q1) Why might senior management overstate or understate business performance?
Q2) Events occurring or becoming known after the close of the period may have a significant effect on the financial statements and should be disclosed are called:
A) Reportable events
B) Subsequent events
C) Proximate events
D) Known events
Q3) If expenditures are capitalized as assets and not recognized during the current period, income will be understated.
A)True
B)False
Q4) The premise of the economic entity assumption is that the activity of a business enterprise should be kept separate and distinct from its owners and other business entities
A)True
B)False
Q5) What is the conceptual framework for financial reporting?
Q6) How may improper asset valuation inflate the current ratio?
Q7) What are the four classifications of financial statement fraud?
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Chapter 15: Consulting, Litigation Support, and Expert
Witnesses: Damages, Valuations, and Other Engagements
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Q1) The decedent or his or her surviving family in a wrongful death suit may have suffered the following types of losses, both past and future, that need to be considered with the exception of:
A) Loss of earnings
B) Loss of employment benefits associated with the earnings
C) Losses associated with the ability to perform "nonmarket services"
D) Losses associated with intangible assets
Q2) In some cases, documents are not only subjected to confirmation with external transaction participants but also subjected to fingerprint analysis and procedures for forgery and/or fictitious or altered documents.
A)True
B)False
Q3) Risk and return are inversely related.
A)True
B)False
Q4) What are the different types of consulting and litigation support activities for fraud and forensic professionals?
Q5) What are the different types of commercial damages?
Q6) What are the various categories and calculations used in ratio analysis?
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Chapter 16: Remediation and Litigation Advisory Services
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Q1) Corporate governance is the set of processes, customs, and policies that affect the way an organization is directed.
A)True
B)False
Q2) The ________ Rule makes an opinion admissible only if that opinion has general acceptance in the scientific community.
A) Frye
B) Daubert
C) Campbell
D) Brislin
Q3) During cross-examination, the fraud examiner or forensic accountant has several goals, EXECPT for:
A) Be combative with the opposing attorney
B) Be cooperative
C) Maintain the credibility of his or her conclusions and opinions
D) Be alert for reasonable and proper opportunities to provide explanation and disagree
Q4) What three attributes must the plaintiff demonstrate in a civil framework?
Q5) What is the difference between fact witnesses and expert witnesses?
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