Course Introduction
Forensic Accounting Exam Practice Tests
Forensic Accounting is a specialized field that combines accounting, auditing, and investigative skills to examine financial records for use in legal proceedings. This course explores techniques for detecting fraud, tracing illicit transactions, and analyzing evidence for litigation support. Students learn the fundamentals of forensic investigation, courtroom procedures, ethics, and reporting, gaining practical experience through case studies and simulations. By the end of the course, students are prepared to assist in criminal and civil investigations, contribute to dispute resolution, and provide expert testimony in financial matters.
Recommended Textbook Fraud Examination 5th Edition by W. Steve Albrecht
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18 Chapters
886 Verified Questions
886 Flashcards
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Page 2
Chapter 1: The Nature of Fraud
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Sample Questions
Q1) Which of the following frauds is usually the most expensive?
A)Vendor fraud
B)Customer fraud
C)Occupational fraud
D)Financial statement fraud
Answer: D
Q2) Which legal code makes the bribing of public officials illegal?
A)Title 18, U.S.Code Section 201
B)Title 41, U.S.Code Section 51 to 58
C)Title 18, U.S.Code Section 1341
D)Title 18, U.S.Code Section 1344
Answer: A
Q3) Which individual listed is most likely to commit financial statement fraud in order to benefit an organization?
A)an executive
B)an internal auditor
C)a floor manager (line supervisor)
D)the company Treasurer
Answer: A
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Page 3
Chapter 2: Who Commits Fraud and Why
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Sample Questions
Q1) Documents and records are an important control activity.Which of the following statements concerning this activity is true?
A)They serve as excellent preventive controls.
B)Adequate accountability can exist even in their absence.
C)The entire accounting system serves as a documentary control.
D)They are poor detective controls.
Answer: C
Q2) Which of the following is NOT one of the key elements common to all frauds?
A)Perceived pressure
B)Perceived inequality
C)Perceived opportunity
D)Rationalization
Answer: B
Q3) Which of the following is an example of a vice pressure?
A)expensive extramarital relationship(s).
B)an extravagant life-style.
C)needing to appear successful.
D)being offered a bribe.
Answer: A
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Page 4
Chapter 3: Fighting Fraud: an Overview
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Sample Questions
Q1) Organizations and individuals that have proactive fraud prevention measures usually find that their prevention efforts:
A)help in training employees about appropriate behavior.
B)often prompt smaller frauds.
C)pay big dividends.
D)aid in punishing fraud perpetrators.
Answer: C
Q2) All of the following are part of the fraud element triangle EXCEPT:
A)Theft act
B)Concealment
C)Conversion
D)Rationalization
Answer: D
Q3) Which is the highest level in the ethical maturity model?
A)Ethical leadership
B)Ethical courage
C)Personal ethical understanding
D)Application of ethics to business situations
Answer: A
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Page 5
Chapter 4: Preventing Fraud
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Sample Questions
Q1) Identify a recent business trend that could be contributing to the increased number of collusive frauds.
A)Reducing costs and product quality by using same suppliers.
B)Advances in technology that simplify the process of conducting business.
C)Increasing frequency of supplier alliances, and closer relationships between buyers and suppliers.
D)Increased competition amongst suppliers.
Q2) Which of the following is a sign of a positive work environment?
A)Rigid rules followed by the organization
B)Managers who care about the employee work ethic
C)Careful hiring policies
D)Having positive personnel and operating procedures
Q3) Which of the following is the role of an internal auditor in an organization?
A)to establish the controls for the organization
B)to write the code of ethical business conduct for the organization
C)to test the system of internal controls in order to attest that there are no material weaknesses
D)to assist management with the evaluation of internal controls currently in place
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Chapter 5: Recognizing the Symptoms of Fraud
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Sample Questions
Q1) In which stage do auditors have a good chance of detecting fraud,if the audit samples include altered documents and miscounts?
A)Theft act
B)Concealment
C)Conversion
D)Layering
Q2) Which of the following is NOT an analytical fraud symptom?
A)Consistent cash shortages
B)Overriding of existing controls
C)Excess purchases
D)Unreasonably high expenses
Q3) Increased scrap,excessive purchases,physical abnormalities,etc.are all examples of:
A)accounting anomalies.
B)external control weaknesses.
C)analytical anomalies.
D)unusual behavior.
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Chapter 6: Data-Driven Fraud Detection
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Sample Questions
Q1) While methods like high-low slope,average slope,handshaking,and Box-Jenkins exist,one of the most popular techniques for summarizing the slope of a graph is
A)summarization
B)stratification
C)statistical regression.
D)arithmetic progression
Q2) What is a unique feature of Picalo,the data analysis toolkit that differentiates it from other packages?
A)Picalo includes sampling techniques.
B)The primary focus of Picalo is auditing.
C)The Picalo program mames automation of procedures possible.
D)The Picalo program is free.
Q3) Which of the following is the most important step in data analysis?
A)gathering the right data in the right format in the right time period
B)understanding the available data
C)learning the basics of table structure and field types
D)learning the basics of key relationships and query syntax
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Chapter 7: Investigating Theft Acts
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Sample Questions
Q1) Which of the following is a benefit of creating a vulnerability chart?
A)It forces the investigators to explicitly consider all aspects of a fraud act.
B)It conveys a warning to all employees that fraud will not be tolerated.
C)It lists/coordinates the steps the investigator must take to uncover the perpetrator.
D)It shows management where controls are weak.
Q2) What is used in court cases to prove that data has not been adversely affected during analysis?
A)Arithmetic mean
B)Deviation measure
C)Random sampling
D)Checksums
Q3) Undercover operations should be used only when:
A)large scale fraud is likely and other investigation methods fail.
B)controls are made so strict that opportunities to commit fraud are virtually impossible.
C)the investigation cannot be kept a secret.
D)there is a need to develop theories about what kind of fraud has occurred.
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Chapter 8: Investigating Concealment
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Sample Questions
Q1) Which of the following observations is true about subpoenas?
A)Subpoenas are generally used only in criminal cases.
B)Subpoenas are orders issued by the Company Law Board to produce documents.
C)Failure to honor a subpoena is punishable by law.
D)Every subpoena must be signed by the plaintiff and the accused.
Q2) The three most common ways to obtain documentary evidence which are valuable but difficult to obtain are:
A)subpoena, voluntary consent, and searching public records
B)subpoena, search warrant, and voluntary consent
C)search warrant, invigilation, and surveillance
D)voluntary consent, surveillance, and invigilation
Q3) When the document is in the custody of a public office:
A)it is permissible to obtain photocopies, which are considered secondary evidence, in a court of law.
B)copies of the document should be made but kept separate from the original document.
C)the document (or a copy) cannot be used as evidence, in a court of law.
D)a summary of the document will suffice.
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Page 10
Chapter 9: Conversion Investigation Methods
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Sample Questions
Q1) Which of the following does NOT constitute a federal source of information?
A)County clerk
B)CIA
C)Secret service
D)FBI
Q2) Which of the following is classified as a state source of information?
A)Bureau of Alcohol, Tobacco, and Firearms
B)County Clerk's office
C)Department of Motor Vehicles
D)Permit Departments
Q3) Which of the following statements is true?
A)Many fraud acts committed in the United States utilize the mail system.
B)The United States Postal Service is a governmental organization.
C)The United States Postal Inspection Service only shares its information with law enforcement agencies.
D)Postal inspectors are state-employed investigators.
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11
Chapter 10: Inquiry Methods and Fraud Reports
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Sample Questions
Q1) Which of the following is a facilitator of communication?
A)Threatened Egos
B)Trauma
C)Catharsis
D)Unconscious Behavior
Q2) Identify the strongest response to a threatened ego.
A)Repression
B)Disapproval
C)Loss of Status
D)Anger
Q3) Which of the following is NOT a characteristic of a good interview?
A)The interview is of sufficient length and depth to get relevant facts
B)The interview focuses on pertinent information
C)The interview is conducted as far away from the event as possible
D)The interviewer includes extraneous facts
Q4) Which of the following is NOT a verbal clue that someone may be lying?
A)Expressing reluctance to terminate the interview
B)Showing intolerance for shady conduct of others
C)Asking for the question to be repeated
D)Refusal to implicate other suspects
12
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Chapter 11: Financial Statement Fraud
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Sample Questions
Q1) Which of the following is NOT one of the components of the fraud exposure rectangle?
A)Accounting system controls
B)Management and directors
C)Financial results and operating characteristics
D)Organization and its industry
Q2) An auditor adjusts the audit plan by introducing unexpected audit procedures in response to what the auditor believes management may be doing to conceal a fraud based on management's strategic reasoning.Which order of reasoning is occurring here?
A)Low-order reasoning
B)Zero-order reasoning
C)Higher-order reasoning
D)First-order reasoning
Q3) There has been an auditor change at Company X.Which of the following situations may NOT signal a potential fraud problem?
A)Failure to pay an audit fee
B)Auditee believing that the auditor's fees are too high
C)Suspected fraud or other problems by the auditor
D)Auditor-auditee disagreement
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Chapter 12: Revenue- and Inventory-Related Financial
Statement Frauds
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Sample Questions
Q1) The least effective method for comparing financial statement information between companies is:
A)to perform ratio analysis.
B)to perform horizontal analysis.
C)to study the statement of cash flows.
D)to focus on changes in financial statement numbers.
Q2) Which of the following is a common inventory-related fraud scheme?
A)Channel stuffing
B)Cutoff problems
C)Related-party transactions
D)Side agreements
Q3) When using ratios to discover financial statement fraud,what is typically the most important aspect to evaluate?
A)The size of the ratio
B)The direction of the ratio
C)The change in the ratio
D)The complexity of the ratio
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Page 14
Chapter 13: Liability, asset, and Inadequate Disclosure
Frauds
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Sample Questions
Q1) It is usually easier to detect inadequate disclosure fraud that involves______ disclosures?than it is to detect disclosure fraud that involves _______ disclosures.
A)fraudulent, irrelevant
B)unintentional; intentional
C)misleading; missing
D)missing; fraudulent
Q2) Disclosure frauds occur through misrepresentations about the company or through what other intentional act?
A)omissions in the footnotes to the financial statements
B)falsely increasing sales
C)creating off-balance sheet accounts
D)conducting related-party transactions
Q3) Which of the following is NOT a symptom of liability fraud?
A)A sudden decrease in accounts payable/inventory ratio.
B)Inappropriately capitalizing costs that should be expensed.
C)An unusual increase in current ratio.
D)Record payments made in later periods as being paid in earlier periods.
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Page 15
Chapter 14: Fraud Against Organizations
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Q1) Which function of the victim company is usually involved in Kickback schemes?
A)sales
B)accounting
C)human resources
D)purchasing
Q2) Which of the following is the most common target regarding asset misappropriation?
A)inventory
B)cash
C)equipment
D)valuable information
Q3) Which of the following is NOT a form of corruption?
A)extortion.
B)conflict of interest.
C)lapping.
D)bribery.
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Page 16
Chapter 15: Consumer Fraud
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Sample Questions
Q1) Which of the following observations is NOT true of foreign-advance fee scams?
A)Perpetrators are well-known businesses and there is usually some urgency to participate.
B)Perpetrators claim to trust the victim with their money or assets.
C)Perpetrators are always willing to transfer money or other assets to the victims, but only after money or information is extracted.
D)Perpetrators claim to have access to large sums of money or assets.
Q2) Which of the following is a true statement regarding The Gramm-Leach-Bliley Act?
A)The act gives financial institutions the right to share personal information for a profit.
B)The act expressly requires financial institutions to protect against identity theft.
C)The act allows financial institutions to share personal information, as long as it is not for a profit.
D)The act protects confidentiality of customer information.
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17
Chapter 16: Bankruptcy, divorce, and Tax Fraud
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Sample Questions
Q1) Which is the type of bankruptcy that allows large companies to reorganize themselves and pay off debt in the future?
A)Chapter 3
B)Chapter 5
C)Chapter 7
D)Chapter 11
E)Chapter 13
Q2) Which of the following statements is true concerning divorce cases?
A)Bankruptcy laws and statutes are much simpler than divorce laws and statutes
B)Divorce fraud never involves hiding or transferring assets
C)Most divorce cases are civil cases, with no criminal charges filed
D)It is illegal for divorce attorneys to hire investigators to help them find hidden assets
Q3) If reorganization does not work under Chapter 11 bankruptcy,judges may order which form of bankruptcy?
A)Chapter 5
B)Chapter 9
C)Chapter 10
D)Chapter 13
E)None of the above
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Page 18
Chapter 17: E-Commerce Fraud
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Sample Questions
Q1) A hacker sends a database command after regular data in an online submission form.This?command inserts an unauthorized record giving access to the hacker.Which risk is being discussed here?
A)SQL injection
B)HTML
C)Cross-site scripting
D)Java
Q2) Why is it that internet user information can be hijacked when they conduct web visits?
A)social engineering has made it easy to do so.
B)many managers lack the technical expertise to prevent and detect data theft.
C)data can be transferred easily and quickly to any location in the world.
D)subtle differences in Internet host names often go unnoticed by Internet users.
Q3) Why are passwords often considered the "Achilles' heel" of electronic systems?
A)Password selection is left to the end user and cannot be fully controlled.
B)Systems cannot handle complex passwords.
C)Any password can be easily hacked.
D)No other control can better prevent fraud than the wise use of passwords.
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Chapter 18: Legal Follow-Up
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Sample Questions
Q1) Which of the following is a written order in the name of the court,requiring a witness to submit to a deposition,give testimony at trial,or report to an administrative body?
A)Deposition
B)Subpoena
C)Production request
D)Discovery
Q2) Which of the following is a protection offered to defendants by the Fifth Amendment?
A)Protects against unreasonable searches.
B)Precludes a person from being tried twice for the same crime.
C)Grants the right to a speedy trial.
D)Allows the state to take a private party's property without just compensation.
Q3) Which of the following is a part of expert witness testimony during a trial?
A)presenting visuals to convey issues more completely regarding complex fraud issues
B)responding to direct-questioning by the attorney representing the opposing side
C)responding to questions for clarification from the jury
D)responding to cross examination by the attorney who hired the expert witness
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