Forensic Accounting Test Preparation
Course Introduction
Forensic Accounting is a specialized course that introduces students to the principles, techniques, and applications of accounting within legal and investigative contexts. The course covers topics such as fraud detection, financial statement analysis, litigation support, and the process of gathering and presenting accounting evidence in courts of law. Students will learn how to identify, investigate, and document financial irregularities, and gain practical skills in using data analysis tools and forensic procedures to uncover financial misconduct. The curriculum also explores ethical responsibilities, legal considerations, and the role of forensic accountants in both civil and criminal cases.
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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50 Verified Questions
50 Flashcards
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Sample Questions
Q1) Fraud statistics come from all of the following sources EXCEPT:
A)Government agencies
B)Researchers
C)Insurance Companies
D)Victims
E)Fraud perpetrator
Answer: E
Q2) Which of the following observations concerning occupational fraud is NOT true?
A)It is clandestine.
B)It is committed for the purpose of direct or indirect financial benefit to the employee.
C)It usually involves two or more employees.
D)It costs the employing organization assets, revenues, or reserves.
Answer: C
Q3) What is the single most critical element for a fraud to be successful?
A)Criminal intent
B)Confidence
C)Greed
D)Compulsion
Answer: B
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Page 3
Chapter 2: Who Commits Fraud and Why
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57 Verified Questions
57 Flashcards
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Sample Questions
Q1) Financial statement fraud is typically committed by:
A)Employees with access to company assets
B)Top management
C)Customers
D)Vendors
Answer: B
Q2) Greed,living beyond one's means and high bills all describe what type of fraud-related pressure?
A)Financial
B)Peer
C)Environmental
D)Work-Related
Answer: A
Q3) Poor credit could become a ____ that could lead to fraud.
A)Financial pressure
B)Social pressure
C)Family pressure
D)Financial threat
Answer: A
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Page 4
Chapter 3: Fighting Fraud: an Overview
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56 Verified Questions
56 Flashcards
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Sample Questions
Q1) Although there are multiple approaches to fraud investigation,most investigators tend to rely heavily on ______.
A)invigilation
B)surveillance
C)interviews
D)confrontation
Answer: C
Q2) Which legislation makes it compulsory for every public company to have a code of conduct to convey expectations about what is and is not appropriate for its directors and officers?
A)Sherman Act
B)Glass-Steagall Act
C)Sarbanes Oxley Act
D)Gramm-Leach-Bliley Act
Answer: C
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Chapter 4: Preventing Fraud
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Sample Questions
Q1) Which of the following explains the Pygmalion effect?
A)Employees who commit fraud are likely to do so more than once.
B)The probability of fraud detection increases with the number of people involved.
C)People generally perform according to a leader's expectations.
D)Absence of controls leads to increased incidents of dishonesty.
Q2) Recruitment interview questions that deal with an applicant's race,sex,age,religion,color,national origin,or disability:
A)are allowed in most circumstances.
B)are allowed as long as the interviewee has verbally agreed.
C)are prohibited unless the criterion is pre-approved by the company management.
D)are usually prohibited unless the criterion is a bona fide occupational qualification.
Q3) Which method will result in biggest savings?
A)Fraud prevention--including EAP plans.
B)Fraud detection--including audit proactively, monitoring.
C)Investigation--including criminal prosecution.
D)Promotion--including raising rank or position.
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Chapter 5: Recognizing the Symptoms of Fraud
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45 Verified Questions
45 Flashcards
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Sample Questions
Q1) Increased scrap,excessive purchases,physical abnormalities,etc.are all examples of:
A)accounting anomalies.
B)external control weaknesses.
C)analytical anomalies.
D)unusual behavior.
Q2) 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
Q3) Which of the following is NOT a fraud symptom related to internal control weaknesses?
A)Lack of segregation of duties
B)Lack of physical safeguards
C)Inadequate accounting system
D)Lack of proper authorization
E)Excessive turnover of executives
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7
Chapter 6: Data-Driven Fraud Detection
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50 Flashcards
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Sample Questions
Q1) Which of the following is a true statement regarding the United States Social Security Administration (U.S.SSA)?
A)The U.S.SSA publishes a monthly list of newly issued Social Security numbers.
B)The U.S.SSA publishes a monthly list of Social Security numbers that are no longer in use.
C)The U.S.SSA database of valid numbers can be accessed by interested parties.
D)The U.S.SSA database can be used to create mailing lists.
Q2) Which of the following records data for each case in a graph and analyzes the slope?
A)summarization analysis
B)time-trend analysis
C)fuzzy-matching method
D)cross tables method
Q3) Which of the following is the most direct method of focusing on changes in the company's balance sheet and income statement?
A)Calculating key ratios and comparing them from period to period
B)Comparing account balances in the statements from one period to the next
C)Performing a vertical analysis
D)Performing a horizontal analysis
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Page 8
Chapter 7: Investigating Theft Acts
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44 Verified Questions
44 Flashcards
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Sample Questions
Q1) 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
Q2) Which of the following is NOT a method for theft investigation?
A)Covert operations (surveillance)
B)Electronic searches
C)Invigilation
D)Physical evidence
Q3) Experts recommend that invigilation must continue:
A)for at least 7 days.
B)for at least 14 days.
C)for at least 21 days.
D)for an indefinite period determined by the individual investigator.
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Chapter 8: Investigating Concealment
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42 Verified Questions
42 Flashcards
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Sample Questions
Q1) Which of the following is generally considered a best practice while handling documentary evidence?
A)Copies of the document should be used during the investigation and trial and should be kept in the same file where the original is kept.
B)Photocopies are always preferable to original documents as evidence, as the original could be tampered with.
C)Copies of the document should not be made and only the original document should be used during investigation and trial.
D)Generally, a summary of the original document should be made for investigation and trial.
Q2) Which of the following statements is true?
A)Concealment investigation includes document investigation, physical asset counts, and computer searches.
B)Most concealment investigation techniques focus on obtaining eyewitness accounts as evidence.
C)Honesty testing is considered as a concealment investigation technique.
D)Concealment investigation is dependent on employee cooperation to gather evidence
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10
Chapter 9: Conversion Investigation Methods
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Sample Questions
Q1) Name the agency of the Department of Justice charged with enforcing laws against narcotics trafficking.
A)NCIC
B)Secret Service
C)DEA
D)SSA
Q2) Which federal agency maintains information on individuals who may be a threat to national security?
A)Department of Justice
B)Bureau of Prisons
C)Department of Defense
D)Secret Service
Q3) Name the major database maintained by the FBI.
A)CIA
B)UCC filings
C)DEA
D)NCIC
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Chapter 10: Inquiry Methods and Fraud Reports
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60 Verified Questions
60 Flashcards
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Sample Questions
Q1) Which response to ego threats is characterized by respondents not only refusing to?admit information,but also refusing to admit the information inwardly?
A)Denial
B)Disapproval
C)Loss of Status
D)Repression
Q2) Which of the following observations concerning pencil-and-paper honesty tests is true?
A)They are written tests that require elaborate answers.
B)They are used most frequently as crime determining tools.
C)They are considered to be 90 to 98 percent accurate.
D)They are ideal for applicant screening.
Q3) Assessment questions seek to:
A)gain an admission.
B)find out specific details related to the fraud.
C)establish credibility of the respondent.
D)obtain facts previously unknown.
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Chapter 11: Financial Statement Fraud
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47 Verified Questions
47 Flashcards
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Sample Questions
Q1) Many financial statement frauds have been perpetrated because:
A)management needed to report high income to support stock prices.
B)management wanted to decrease the total tax payable by the company.
C)management wanted to show artificial losses to employees.
D)management wanted to pay lower dividends to the shareholders.
Q2) According to the study done by the Securities and Exchange Commission,greatest number of enforcement actions was in the area of ________.
A)improper use of off-balance-sheet arrangements
B)improper expense recognition
C)improper accounting for business combinations
D)improper revenue recognition
Q3) 10-K forms refer to which of the following?
A)the corporate reports filed with the SEC.
B)the tax returns filed with the IRS.
C)the press releases to the newswires.
D)the bankruptcy filing document.
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Chapter 12: Revenue- and Inventory-Related Financial Statement
Frauds
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49 Verified Questions
49 Flashcards
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Sample Questions
Q1) Which of the following terms depicts processing orders for goods that are stored by the seller,often,because the buyer is not ready or able to receive the goods at the time of the order?
A)Sham sales
B)Side agreements
C)Consignment sales
D)Bill-and-hold sales
Q2) Inventory fraud often involves overstating inventory and/or understating cost of goods sold.The result is a decrease in the:
A)gross profit ratio.
B)inventory turnover ratio.
C)number of days sales in inventory.
D)accounts receivable turnover ratio.
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
14
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Chapter 13: Liability, asset, and Inadequate Disclosure
Frauds
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Sample Questions
Q1) How is a contingent liability reported if it is considered 'reasonably possible'?
A)the liability may or may not be recorded in the footnotes to financial statements
B)the contingent liability should be disclosed in the footnotes to the financial statements
C)the liability should be disclosed in the footnotes as well as on the face of the financial statements.
D)no mention of the liability needs to be made in the financial statements
Q2) Which of the following items listed provide the best opportunity to find contingent liabilities that should be recorded.
A)Tips and complaints
B)Lifestyle symptoms
C)Documentary symptoms
D)Analytical symptoms
Q3) With liability fraud,which of the following is most likely to occur?
A)Liabilities will be overstated
B)Balances in general that relate to this fraud will tend to be low
C)Items will be expensed rather than capitalized
D)Net income will be understated
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Page 15
Chapter 14: Fraud Against Organizations
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Sample Questions
Q1) Which of the following is NOT a possible way to commit fraud by using a payroll scheme?
A)overstating expenses.
B)falsifying hours worked.
C)creating ghost employees.
D)producing false worker compensation claim.
Q2) Identify the statement that does NOT represent one of the four types of corruption.
A)Offering, giving, receiving, or soliciting anything of value in order to influence an official act.
B)Overbilling the company for travel and other related business expenses, such as business lunches, hotel bills, and air travel.
C)The employee demands a payment from a vendor in order to make a decision in that vendor's favor.
D)The exertion of an employee's influence to the detriment of his or her company.
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Chapter 15: Consumer Fraud
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45 Flashcards
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Sample Questions
Q1) Accumulating documentation belongs to which stage of the identity theft cycle?
A)The action stage
B)The discovery stage
C)The trial stage
D)The concealment stage
Q2) All of the following are types of foreign advance schemes,EXCEPT:
A)Disbursement of money from wills.
B)Multi-level marketing scams.
C)Sale of crude oil below market price.
D)Purchase of real estate scam.
Q3) Which of the following is a scam in which consumers respond to an advertisement that promises income simply for filling envelopes?
A)Craft assembly
B)Bogus mystery shopping
C)Mail stuffing
D)Skimming
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Chapter 16: Bankruptcy, divorce, and Tax Fraud
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66 Verified Questions
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Sample Questions
Q1) What is generally indicated in a divorce or bankruptcy when books and records of the debtor/marital partner have been destroyed or are hard to locate,it generally means:
A)Fraud has caused the bankruptcy or divorce
B)The bankruptcy or divorce is used to perpetrate the fraud
C)The bankruptcy or divorce is used to conceal the fraud
D)None of the above
Q2) All of the following are examples of ways to conceal assets in a bankruptcy or divorce fraud except which one?
A)Not reporting sales on the debtor's books but dispersing them to another entity
B)Damaging or hiding the books and records of the debtor
C)Dispersing cash received from receivables to third party
D)Not disclosing interests held in other partnerships, corporations, or other assets
E)All of the above are ways to conceal assets
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Chapter 17: E-Commerce Fraud
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Sample Questions
Q1) What is the term that describes the act of trying to gain access to networks and secure information?
A)troubleshooting
B)intrusion detection
C)encryption
D)security audit
Q2) Which of the following refers to the tactic of keeping security holes,encryption algorithms,and processes secret in an effort to confuse attackers?
A)Authorization control
B)Secure socket layer
C)Security through obscurity
D)Biometrics
Q3) What is biometrics?
A)A vital part of the security of any electronic system.
B)The use of unique features of the human body to create secure access controls.
C)The most important aspect of internal control in an organization.
D)An authorization that reassures users that transactions are valid.
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Chapter 18: Legal Follow-Up
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Sample Questions
Q1) Identify the factor that distinguishes lower-level and higher-level trial courts.
A)the number of judges available
B)the seriousness of the crime(s)
C)the availability of the court
D)the case is an initial action.
Q2) What is the legal term for a written declaration given under oath?
A)a deposition.
B)an admission.
C)an affidavit.
D)a testimony.
Q3) During cross-examination,an expert witnesses should:
A)respond in general terms to questions that are difficult.
B)resist responding with simple yes or no answers that may be misleading without some qualification or explanation.
C)take your client's side by effectively playing an advocacy role.
D)not raise his/her voice to emphasize an important point.
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