Forensic Accounting
Pre-Test Questions
Course Introduction
Forensic Accounting is a specialized course that explores the application of accounting principles and techniques to investigate financial discrepancies, fraud, and white-collar crimes. The course covers essential topics such as fraud detection, legal aspects of forensic accounting, evidence gathering, financial statement analysis, and litigation support. Students learn to identify and analyze financial anomalies, apply investigative techniques, and communicate findings effectively in a legal setting. By combining concepts from accounting, auditing, and criminology, this course prepares students to play a crucial role in uncovering financial misconduct and supporting legal proceedings.
Recommended Textbook
Ethical Obligations and Decision Making in Accounting Text and Cases 2nd Edition by Mintz
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8 Chapters
609 Verified Questions
609 Flashcards
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Chapter 1: Ethical Reasoning Implications for Accounting
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Sample Questions
Q1) Thomas Jefferson's writings in the preamble of the Declarations of Independence is a perfect example of what theory?
A)Rights Theory
B)Virtue Theories
C)Consequentialist Theories
D)Applied Ethics
Answer: A
Q2) Kant's categorical imperative principle suggests that:
A)Only equals should be treated equally
B)Everyone should be treated as a free and equal person
C)Everyone should be treated unequally
D)Only the elite are treated equally
Answer: B
Q3) Greatest good for the greatest number of people is the theory of __________.
A)Rights
B)Deontology
C)Utilitarianism
D)Justice
Answer: C
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Page 3
Chapter 2: Accountants Ethical Decision Process and Professional Judgment
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Sample Questions
Q1) Leroy audits the financial statements of a small business.During the course of his audit he notices that all five members of top management have purchased new BMWs.Given that each manager's salary is less than $100,000 per year, Leroy becomes suspicious about how all five of them were able to buy such an expensive automobile.He decides to double check the bank statements for the year and postings to expense accounts that might indicate improper expenditures.Leroy's actions demonstrate:
A)Professional skepticism
B)Objective decision making
C)Due care
D)All of the above
Answer: D
Q2) Kevin Greenberg's actions in the "Supreme Designs" case can be said to have been:
A)Selfish, in that he only thought of his own interests
B)Disloyal to the company
C)Unethical because he wrote checks to himself for unauthorized checks
D)Undertaken with the intent to help out his supervisor
Answer: D
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Chapter 3: Corporate Governance and Ethical Management
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80 Flashcards
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Sample Questions
Q1) One of the duties of a board of directors is to protect the interests of stakeholders.Which of the following is an example of protecting such interests?
A)Back dating options for executives
B)Deceptive business practices
C)Off balance sheet financing
D)Transparent financial reporting
Answer: D
Q2) Each of the following is an element of fairness in accounting except for:
A)Intellectual honesty
B)Unbiased
C)Transparency
D)Due care
Answer: D
Q3) What is an inspirational short statement on key values?
A)Code of ethics
B)Code of conduct
C)Code of practice
D)Credo
Answer: D
Page 5
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Chapter 4: Aicpa Code of Professional Conduct
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Sample Questions
Q1) Circular 230 applies to CPAs who:
A)Audit the financial statements of a tax client
B)Practice before the IRS
C)Practice before the SEC
D)All of the above
Q2) The revenue recognition issue in the Family Games case is:
A)Whether a company can record revenue before it is signed-off by the lawyers
B)Whether a company can record revenue before it is shipped to the customer
C)Whether a company can record revenue before the revenue recognition rules are met
D)All of the above
Q3) Which tax service is still permitted by the PCAOB for audit clients following the KPMG tax shelter case?
A)Aggressive tax shelter for audit clients
B)Auditing of deferred taxes
C)Tax services to audit client management or family members
D)Tax services for a contingent fee
Q4) Evaluate the ethics of tax standards in the Statements on Standards for Tax Services with respect to the ethics standards discussed in chapters 1 and 2.
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Page 6
Chapter 5: Audit Responsibilities and Accounting Fraud
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Sample Questions
Q1) The primary issue discussed in the Krispy Kreme case was:
A)Use of special-purpose-entities to keep debt off the books
B)Use of "round trip" transactions to accelerate the recording of earnings
C)Internal controls over operating activities
D)Internal controls over the making of doughnuts
Q2) The Audit Client Consideration case deals with issues related to:
A)Acceptance of new clients
B)Issues that arise between the predecessor audit firm and the client
C)Going concern issues raised by previous auditors
D)All of the above
Q3) What is the motive behind the PCAOB Integrated Audit Concept?
A)Elevation of importance of internal controls
B)Improvement of the quality and integrity of both internal controls over financial reporting and independent financial statement audits
C)Improvement of the speed and reliability of both corporate financial reporting and independent financial statement audits
D)Elevation of importance of independent financial statement audits
Q4) Explain the auditors' responsibilities to assess fraud including the role of professional judgment.
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Chapter 6: Legal and Regulatory Obligations in an Ethical Framework
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Sample Questions
Q1) In the U.S., if the auditor can demonstrate having performed services with the same degree of skill and judgment possessed by others in the profession, it can be said to have exercised:
A)Prudence
B)Scienter
C)Nonfeasance
D)Due Care
Q2) Under section 801 of the Sarbanes-Oxley Act of 2002, anyone who "knowing alters, destroys, mutilates, conceals, covers up, falsifies, or makes false entry in any record, document, or tangible object with the intent to impede, obstruct, or influence the investigation" is subject to certain penalties.How long after the end of the fiscal period in which the audit or review was concluded are auditors required to retain work papers?
A)1 year
B)7 years
C)Indefinitely
D)5 years
Q3) Explain the accounting issues involved and ethical lapses in one of the following two cases: (a) Equity Funding or (2) Crazy Eddie.
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Chapter 7: Earnings Management and the Quality of Financial Reporting
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Sample Questions
Q1) There are several aspects of Enron fraud that are dealt with directly in SOX further connecting Enron to reform in the accounting profession.Which of the following is true?
A)Prohibiting the provision of internal audit service for audit clients.
B)Off-balance-sheet financing activities must be disclosed in the notes to the financial statements.
C)Related-party transactions require disclosure in the notes.
D)All of the above.
Q2) The accounting rule for deferring profit on a sale-leaseback agreement such as the one dealt with in the Florida Transportation case can best be described as:
A)The seller-lessee can defer profit on a sale-leaseback transaction if the seller gives up substantially all of the use of the property through the leaseback.
B)The seller-lessee can defer profit on a sale-leaseback transaction if the seller retains substantially all of the use of the property through the leaseback.
C)Profit can be deferred if the upfront costs exceed future revenues.
D)Profit can be deferred if initial revenue exceeds future costs.
Q3) Explain when earnings management may be an ethical practice.
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Chapter 8: International Financial Reporting: Ethics and Corporate Governance Considerations
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Sample Questions
Q1) A common set of accounting standards on an international level can help to achieve each of the following except for:
A)Facilitate the understandability of financial reports prepared outside the home country of a potential investor.
B)Provide a foundation for professional judgment and support the implementation of international financial reporting standards (IFRS).
C)Provide a foundation for professional judgment and support the implementation of international standards of Auditing (ISAs).
D)Facilitate the enforcement of IFRS and (ISAs).
Q2) The trigger event that led to the disclosure of the scandal at Parmalat was:
A)Almost 4 billion of company funds that were supposed to be held in an account at Bank of America did not exist.
B)The company stuffed the channels with product that it eventually was not purchased by customers.
C)Parmalat officers violated the Foreign Corrupt Practices Act.
D)The company sold sour milk.
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