Forensic Accounting Exam Solutions
Course Introduction
Forensic Accounting introduces students to the application of accounting principles and investigative techniques used to identify, examine, and prevent financial fraud. The course covers topics such as fraud detection, legal elements of fraud, methods for gathering and analyzing evidence, and the role of forensic accountants in litigation support. Students will explore case studies, learn to conduct financial investigations, and understand the ethical and legal standards governing the field, preparing them to address issues of financial misrepresentation and support litigation processes.
Recommended Textbook
Accounting Information Systems 4th Edition by Robert Hurt
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Chapter 2: Role and Purpose of Accounting Information Systems
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Sample Questions
Q1) Gloria wrote a paper on the AICPA core competencies for her accounting information systems class.She organized the paper in three main parts: broad business perspective competencies, functional competencies, conceptual framework competencies.In terms of the UMUC criteria for information evaluation, which of the following statements is most true?
A)Gloria must add at least one section for the paper to have sufficient coverage.
B)Gloria must add one section and delete one section for the paper to have sufficient coverage.
C)Unless the paper is published within six months, it will not be current.
D)The section on conceptual framework competencies must discuss all elements of the conceptual framework.
Answer: B
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Chapter 3: Transaction Processing in the Ais
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Q1) BLP Company is a consulting firm with offices in Atlanta and San Diego; it provides consulting services in three main areas: finance, marketing and operations.Selected account titles from BLP's accounting information system appear below:
Answer: 11ea8261_5017_3c75_bbd8_132fece16be9_TB4225_00_TB4225_00 In addition to its overall company financial statements, BLP wants to report selected financial data by geographic location and/or by consulting area.Use the principles of hierarchical coding to assign account numbers to the items listed above to facilitate BLP's financial reporting for marketing consulting in San Diego.Accounts receivable: 102.02.02
Accumulated depreciation-buildings: 202.02.02
Advertising expense: 704.02.02
Advertising payable: 304.02.02
Buildings: 201.02.02
Cash: 101.02.02
Depreciation expense: 705.02.02
Sales: 601.02.02
Wages expense: 703.02.02
Wages payable: 306.02.02
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Page 4
Chapter 4: Internal Controls
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Q1) Bonnie is the owner of Doggie Day Care, a pet-sitting service.Pet owners bring their dogs to Bonnie's facility, where they are either given private accommodations or are put in a large pen with other dogs.(Private accommodations are more expensive.) Bonnie and her employees feed the dogs twice a day; those dogs in private accommodations are also given two exercise periods per day.Owners pay half the daily fee at the start of the day, and the other half when they pick up the dog at the end of the day; owners must also certify that their dogs have had all required vaccinations.As Bonnie's company is a day care service, no dogs stay the night in her facility.Bonnie accepts cash, checks and major credit cards in payment.Bonnie has approached you, as a consultant, with concerns about the risks her company faces and how she might address them.Explain the concept of a risk/control matrix to Bonnie, then design such a matrix for three risks Bonnie's company must address.
Q2) Internal control relates to an organization's achievement of objectives in three major categories.Which of the following best pairs one of the categories with a specific example?
A)Judging, reconciling the bank statement at least monthly
B)Reporting, following the COSO internal control framework
C)Compliance, following the COSO internal control framework
D)Compliance, fulfilling the requirements of the Foreign Corrupt Practices Act
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Page 5
Chapter 5: Management Concepts
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Q1) Consider the following statements as you respond to the question: i.Ask managers to think of one hundred uses for a brick, other than for building things.ii.Assess the educational background and organizational experience of employees.iii.Conduct a one-day seminar on how business processes can create value in the marketplace.iv.Encourage managers to suggest ideas, even if they are impractical.v.Hold weekly meetings to update interested parties on the BPM project; ensure at least one member of top management attends each meeting.vi.Ignore opinions and insights from people not directly involved with a business process.The text discussed seven basic principles of business process management.Which of the following both illustrates one of the principles and relates to the event identification component of the COSO enterprise risk management framework?
A)I
B)IV
C)Both I and IV
D)Neither I nor IV
Q2) Explain how Brown's risk taxonomy, discussed in the chapter on internal control, relates to COSO's enterprise risk management framework.You do not need to list the elements of Brown's taxonomy.
Q3) List and discuss three basic principles of business process management.
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Page 6
Chapter 6: Information Systems Concepts
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Sample Questions
Q1) Robert is the president and CEO of Computer Solutions; the firm's main activity is installing enterprise resource planning software.When a client calls Robert, he does an "intake interview" where he assesses the client's needs and learns about their company.Robert tries to interview at least a dozen people at each client, including top management and mid- and lower-level employees.Which of the following activities would serve the same purpose as intake interviews if Robert uses the systems development life cycle?
A)Employee surveys
B)Database specifications
C)Training simulations
D)A lecture and presentation
Q2) In your own words, explain the purpose of the capability maturity model.List the levels of the model, and explain each one in your own words.
Q3) At what level of the capability maturity model are managers first involved?
A)Chaotic
B)Repeatable
C)Defined
D)Managed
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Chapter 7: Flowcharting
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Q1) Which kind of flowchart shows relationships between computers, printers, monitors and similar devices?
A)Systems
B)Program
C)Document
D)Hardware
Q2) Please refer to the following flowchart as you respond to the next problem:
Q3) Analyze the flowchart below and the statements which follow.Determine which statements are true based on the flowchart.
Q4) The chapter discussed four types of flowcharts.Which one would be most appropriately used in each of the following independent situations?
a.Demonstrating how to create a procedures manual
b.Explaining what happens in a financial statement audit
c.Illustrating the steps in the accounting cycle
d.Showing the relationship between computers and printers within an office building
e.Tracing the path of a check from the time it is written until it is paid by the bank
f.Writing computer code that will generate general purpose financial statements
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Chapter 8: Data Flow Diagramming
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Q1) Pablo had been asked by his supervisor to create a document explaining the process of paying an invoice.If he wants to create a diagram that focuses on data, he could create:
A)A systems flowchart
B)A data flow diagram
C)Either a systems flowchart or a data flow diagram
D)Some other representation of the system
Q2) Both systems flowcharts and data flow diagrams can be used to document accounting information systems.Explain two similarities of and two differences between the methods.
Q3) If an accounting information system is documented with a systems flowchart:
A)It does not need to be documented with a data flow diagram.
B)It cannot be documented with a data flow diagram.
C)It may also be documented with a data flow diagram.
D)A data flow diagram would serve no practical purpose.
Q4) Suppose a leveled set of data flow diagrams incorporates the levels indicated below.Specify how processes would be numbered at each level.
Q5) List and discuss two ways data flow diagrams are used in accounting information systems work.
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Chapter 7: Rea Modeling
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Q1) The Association of Certified Fraud Examiners offers one- and two-day seminars to its members throughout the year; members find out about the seminars via the association's web site or a catalog mailed on a quarterly basis.Each seminar must have at least ten registrants, but can have no more than thirty registrants.Association staff process seminar registrations, which may come in through the mail, over the phone or via the web site.Payment must be made in advance; the association does not refund registration fees for "no-shows." Each seminar has a single speaker who is paid a fixed fee regardless of the number of attendees; the speaker's fee is paid at the end of the seminar.A speaker may present the same seminar multiple times during the year, but each speaker is focused on a single seminar topic.At the end of each seminar, attendees receive a signed certificate of completion after they respond to a short quiz based on the seminar's content.Create database specifications (table and field names) for the registration and collection process.Indicate primary keys by underlining and foreign keys with brackets.
Q2) Analyze the REA model below.Identify and describe (in narrative form) the tables you would create based on the model; do not describe the tables by listing the field names.
Q3) List five weaknesses associated with view-driven accounting information systems.
Q4) In your own words, explain the steps used to create a REA model.
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Page 10
Chapter 8: XBRL
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Q1) A disaster recovery plan is a good internal control for which of the following risks associated with XBRL?
A)Tagging errors
B)Software failure
C)Both tagging errors and software failure
D)Neither tagging errors nor software failure
Q2) XBRL is organized in taxonomies.All of the following are XBRL taxonomies except:
A)US Country Taxonomy 2009
B)IFRS-GP
C)XML taxonomy
D)XBRL-GL
Q3) ABC Corporation, a US manufacturer, files its 10-K annual report with the SEC using XBRL.Being a US manufacturer tells ABC which ___ to use; the 10-K is a(n) ___.
A)Taxonomy; instance document
B)Taxonomy; specification
C)Specification; instance document
D)Specification; taxonomy
Q4) Explain the structure of XBRL, including its relationship to XML.
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Chapter 9: E-Business and Enterprise Resource Planning Systems
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Sample Questions
Q1) Within the context of ERP systems, a module is:
A)a part of the program aligned with a specific function of the organization.
B)another name for a database table.
C)Both a part of the program aligned with a specific function of the organization and another name for a database table.
D)Neither a part of the program aligned with a specific function of the organization nor another name for a database table.
Q2) Virtually all ERP systems are organized in:
A)database queries.
B)spreadsheets.
C)modules.
D)application service providers.
Q3) Modules in an ERP system that contain information about inventory include all the following except:
A)Customer relationship management
B)Human resource management
C)Supply chain management
D)Financial management
Q4) List and briefly discuss five major forms of e-business.
Page 12
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Chapter 10: Computer Crime and Information Technology Security
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Sample Questions
Q1) All of the following are elements of the CIA triad except:
A)Clarity
B)Confidentiality
C)Availability
D)Data integrity
Q2) George received an e-mail that threatened to release his personal financial data unless he paid a fee.That situation is an example of:
A)Extortion
B)Intrusion
C)Information manipulation
D)Error
Q3) COBIT's enablers include principles, policies and frameworks.Which of the following provides the best example of that enabler based on ISACA's explanation?
A)a risk/control matrix
B)a comprehensive set of financial statements
C)a corporate tax return
D)all of these
Q4) List the elements of Carter's taxonomy of computer crime.
Page 13
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Chapter 11: Salescollection Process
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Q1) As a form of internal control, pre-numbered documents can be related to which steps in the sales/collection process?
A)First
B)Fifth
C)Both first and fifth
D)Neither first nor fifth
Q2) Accounting information systems have five generic elements.Which of the following would most appropriately be labeled "storage" within the context of the sales/collection process?
A)A paper file of outstanding customer invoices
B)An electronic database of sales transactions
C)Both a paper file of outstanding customer invoices and an electronic database of sales transactions
D)Neither a paper file of outstanding customer invoices nor an electronic database of sales transactions
Q3) In your own words, explain the role and purpose of the sales/collection process.Do not list the steps in the process as part of your response.
Q4) List, in order, the steps in the sales/collection process discussed in the text.
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14
Chapter 12: Acquisitionpayment Process
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Sample Questions
Q1) BSP Corporation wrote a check to RSR Corporation, one of its vendors.On the remittance advice, BSP indicated which invoices it was paying.Which of the following statements is most true?
A)BSP Corporation uses the open invoice method.
B)RSR Corporation uses the open invoice method.
C)BSP Corporation uses the balance forward method.
D)If RSR uses the open invoice method, BSP must also use the open invoice method.
Q2) The fifth step in the acquisition/payment process promotes strong internal control through:
A)Bank reconciliations.
B)Separation of duties.
C)Both bank reconciliations and separation of duties.
D)Neither bank reconciliations nor separation of duties.
Q3) Transactions involved in the acquisition/payment process include:
A)Debit inventory, credit cash
B)Debit inventory, credit accounts payable
C)Debit accounts payable, credit cash
D)All of these
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Chapter 13: Other Business Processes
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Q1) The purpose of the conversion process is to transform material, labor and overhead into a finished product.Which system would an organization that manufactures unique pieces of jewelry use for that purpose?
A)Job order
B)Process
C)Hybrid
D)Some other system
Q2) NCD Corporation pays annual dividends to its shareholders.A REA model of that process is likely to include which of the following as internal agents?
A)Shareholders
B)Board of directors
C)Both shareholders and board of directors
D)Neither shareholders nor board of directors
Q3) Which of the following internal controls could be applied to the creation of Form W-2 in the human resources process?
A)Use of information technology
B)Internal audits
C)Both use of information technology and internal audits
D)Neither use of information technology nor internal audits
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Page 16
Chapter 14: Decision-Making Models and Knowledge Management
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Sample Questions
Q1) Consider the following short case as you respond to the question: Amanda is a partner in a CPA firm; she supervises a staff of ten professionals, some of whom are already licensed CPAs and some of whom are still working toward licensure.She is responsible for audits of independent bookstores in California, Nevada and Arizona.Amanda is concerned that the less experienced professionals she supervises are repeating the mistakes she and the more experienced professionals on her team made when they began auditing.She therefore wants to create a knowledge management system.Call recommended seven steps for developing a knowledge management system, one of which relates to defining business goals.Appropriate business goals for Amanda's situation include:
A)Hire more auditors.
B)Cut down on relapse errors.
C)Both hire more auditors and cut down on relapse errors.
D)Neither hire more auditors nor cut down on relapse errors.
Q2) Which level of Steps for Better Thinking is indicated in each of the following?
a.Acquire background knowledge and skills.
b.Deal with limitations to the solution.
c.Identify the problem, relevant information and uncertainties.
d.Implement solutions.
e.Interpret and organize the information.
Page 17
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Chapter 17: Professionalism, Ethics, and Career Planning
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Q1) One mark of a professional is adherence to a code of ethical behavior.Which of the following statements is most true?
A)As the phrase is used in accounting, "code of ethical behavior" refers to utilitarianism and ethical egoism.
B)As the phrase is used in accounting, "code of ethical behavior" refers to deontology and virtue ethics.
C)Both as the phrase is used in accounting, "code of ethical behavior" refers to utilitarianism and ethical egoism and as the phrase is used in accounting, "code of ethical behavior" refers to deontology and virtue ethics are true.
D)Neither as the phrase is used in accounting, "code of ethical behavior" refers to utilitarianism and ethical egoism nor as the phrase is used in accounting, "code of ethical behavior" refers to deontology and virtue ethics is true.
Q2) Langenderfer and Rockness proposed:
A)that deontology is the best ethical viewpoint for professional accountants.
B)an eight-step model for dealing with ethical dilemmas.
C)the Sarbanes-Oxley Act of 2002.
D)standards of professionalism for accountants.
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Chapter 18: Auditing and Evaluating the Ais
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Q1) In the Audit Clarity Project, requirements:
A)explain what the auditor needs to do to ensure an unmodified report is issued.
B)can serve as a guide for designing specific financial statement audit procedures.
C)Both explain what the auditor needs to do to ensure an unmodified report is issued and can serve as a guide for designing specific financial statement audit procedures.
D)Neither explain what the auditor needs to do to ensure an unmodified report is issued nor can serve as a guide for designing specific financial statement audit procedures.
Q2) In ___, auditors examine a company's rules and procedures for conducting business.
A)A financial audit
B)An operational audit
C)A compliance audit
D)A systems audit
Q3) The chapter identified seven types of audits you are likely to encounter in your career.Identify and discuss two similarities and two differences between investigative audits and financial audits.
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