Investigative Accounting Exam Bank
Course Introduction
Investigative Accounting is a specialized course that explores the techniques and methodologies used to uncover, analyze, and document financial irregularities and fraud within organizations. Students will learn about forensic accounting practices, evidence gathering, and the legal aspects of financial investigations. The course covers topics such as fraud detection, data analysis, asset tracing, and report preparation for litigation or regulatory purposes. Practical case studies and real-world scenarios provide insight into the role of accountants in legal proceedings and corporate governance, preparing students for careers in forensic accounting and fraud examination.
Recommended Textbook
Forensic Accounting and Fraud Examination 1st Edition by Mary Jo Kranacher
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16 Chapters
916 Verified Questions
916 Flashcards
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Page 2
Chapter 1: Core Foundation Related to Fraud Examination and Financial
Forensics
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71 Verified Questions
71 Flashcards
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Sample Questions
Q1) Which of the following acts would not be considered an abuse or abusive?
A) Surf the Internet while at work.
B) Remove small amounts of cash from the cash register till.
C) Taking a long lunch or break.
D) Using sick leave to see a child's play at school.
Answer: B
Q2) Select the most correct statement from those below.
A) Timing - Recurring for auditing and fraud examination, nonrecurring for financial forensics.
B) Objectives - Opinion for auditing and financial forensics, affix blame for fraud examination.
C) Relationship - Nonadversarial for auditing, adversarial for fraud examination, and independent for financial forensics.
D) Methodology - Audit techniques for auditing and financial forensics, fraud examination techniques for fraud examination.
Answer: C
Q3) Identify common fraud schemes.
Answer: Common fraud schemes include asset misappropriation, corruption, and False statements.
Page 3
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Chapter 2: Careers in Fraud Examination and Financial
Forensics
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68 Verified Questions
68 Flashcards
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Sample Questions
Q1) M/C Most data extraction and analysis tools can:
A) retrieve, sort, and filter data.
B) extract, and analyze data from accounting databases.
C) identify gaps, duplicates, missing information, and statistical anomalies.
D) All of the above are correct answers.
Answer: D
Q2) The Institute for Fraud Prevention IFP fulfills the first of its two missions with member organizations supported research by selecting projects and providing funding, guidance, and data that will help us better understand fraud with a long-term goal of reducing its incidence and effects.
A)True
B)False
Answer: True
Q3) The long-term success of any professional endeavor is derived from several sources. In proper order they are:
A) Education, practice, and research.
B) Identify the problem, research, education, and practice.
C) Education, practice, and research
D) Research, practice, and education.
Answer: D
Page 4
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Chapter 3: Who Commits Fraud and Why: Criminology and Ethics
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Sample Questions
Q1) Describe occupational fraud and abuse.
Answer: Occupational fraud and abuse is defined as "the use of one's occupation for personal enrichment through the deliberate misuse or misapplication of the employing organization's resources or assets." Occupational fraud and abuse involves a wide variety of conduct by executives, employees, managers, and principals of organizations, ranging from sophisticated investment swindles to petty theft. Common violations include asset misappropriation, fraudulent statements, corruption, pilferage, petty theft, False overtime, using company property for personal benefit, fictitious payroll, and sick time abuses.
Q2) Cressey called embezzlers "temptation violators."
A)True
B)False
Answer: False
Q3) Cressey's classic fraud triangle helps explain the nature of all occupational offenders.
A)True
B)False
Answer: False
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Chapter 4: Complex Frauds and Financial Crimes
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63 Flashcards
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Sample Questions
Q1) Which of the following would be in violation of RICO:
A) Investing in a bank with ties to foreign nationals
B) Investing in a dry cleaning business used to place funds derived from prostitution
C) Investing in a bank that caters to cash-only businesses
D) All of the above
Q2) Signs than an individual is a predator fraudster include:
A) Repeat offenses
B) Takes advantage of sudden opportunity
C) Frequent job turnover caused by boredom
D) All of the above
Q3) Investment banks provide most of the banking services to high net worth individuals in the US.
A)True
B)False
Q4) Tax evasion involves careful study of the tax law so as to minimize payment of taxes legally.
A)True
B)False
Q5) Explain how the Patriot Act enhances RICO.
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Chapter 5: Cybercrime: Computer and Internet Fraud
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6 Verified Questions
6 Flashcards
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Sample Questions
Q1) Computer crime and computer fraud are synonyms.
A)True
B)False
Q2) Computer crime involves the attempt to access data illegally.
A)True
B)False
Q3) Cyber-crime involves the use of cell phones.
A)True
B)False
Q4) Computers offer cyber criminals efficient ways to hide fraudulent activities.
A)True
B)False
Q5) The "computer as a symbol" involves using a computer to intercept data transmission.
A)True
B)False
Q6) 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
Page 7
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Chapter 6: Legal, Regulatory, and Professional Environment
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52 Verified Questions
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Sample Questions
Q1) The normal order of discovery includes the following steps in what sequence?
1) Interrogatories
2) Attorneys take depositions
3) Request to produce documents
4) Requests for admission
A) 1, 3, 2, 4
B) 2, 1, 4, 3
C) 4, 3, 2, 1
D) 1, 2, 3, 4
Q2) 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.
Q3) What is meant by demonstrative evidence? Give examples.
Q4) The Sarbanes-Oxley Act mandates that each member of a company's audit committee must be a member of its board of directors and must otherwise be independent.
A)True
B)False
Page 8
Q5) Under what circumstances would a Miranda warning be required?
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Chapter 7: Fraud Detection: Red Flags and Targeted Risk Assessment
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Sample Questions
Q1) Common tipsters for fraud are employees, co-workers, managers, and outside colleagues who interact with the fraudster daily, weekly, or monthly.
A)True
B)False
Q2) What is meant by behavioral red flags?
Q3) The Sarbanes-Oxley Act of 2002, in particular section 404:
A) ensures that customers receive accurate and timely invoices.
B) ensures that vendors are paid accurately.
C) puts considerable emphasis on the system of internal controls.
D) All of the choices are correct.
Q4) What are some red flags that may indicate that fraud is occurring?
Q5) How is materiality determined?
Q6) The main deterrent for fraud in the corporate environment:
A) remains the internal audit team.
B) remains the external audit team.
C) is the threat of getting caught.
D) is the effectiveness of the SEC and FBI investigators.
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Q7) Define the terms fraud prevention, fraud deterrence, and fraud detection and identify issues of timing.
Chapter 8: Detection and Investigations
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84 Flashcards
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Sample Questions
Q1) Sources of information include:
A) Witnesses to an act of fraud
B) Surveillance by private detectives
C) Surveillance by police officers
D) All of the above
Q2) Depositions are often a product of an interview.
A)True
B)False
Q3) One way of hiding assets is to:
A) Place them is a trust
B) Place them in a remote bank
C) Place them in a child's trust
D) All of the above
Q4) Bank analysis method:
Q5) Reviewing cash receipts before, during, and after an individual's employment is a form of invigilation.
A)True
B)False
Q6) Describe the process by which evidence should be handled.
Q7) Direct evidence
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Chapter 9: Effective Interviewing and Interrogation
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Sample Questions
Q1) A murderer is condemned to death. He has to choose between three rooms. The first is full of raging fires, the second is full of assassins with loaded guns, and the third is full of lions that haven't eaten in three years. Which room is safest for him?
Q2) With fraudulent representations such as materially misstated financial statements and improper tax returns, the investigator starts with the suspected perpetrator. A)True
B)False
Q3) When pushed into a corner, a subject or witness will often react to the stress created by deception. Some signs of stress that may accompany deception include all EXCEPT: A) Evasive answers to questions
B) An unwillingness to suspect anyone of committing the act under examination
C) Maintaining eye contact with the interviewer
D) Hostility toward the interviewer
Q4) What are the five types of interview and interrogation questions?
Q5) What are some of the reasons that persons often fail to identify lies?
Q6) Why are interviews in fraudulent financial statements and tax returns handled differently than interviews in other fraud examinations?
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Page 11
Chapter 10: Using Information Technology for Fraud
Examination and Financial Forensics
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57 Verified Questions
57 Flashcards
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Sample Questions
Q1) What is computer forensics?
Q2) The simple act of turning on a confiscated computer, digital camera, cell phone, PDA, etc. may make all the evidence on that digital device inadmissible in a courtroom.
A)True
B)False
Q3) List five assertions of management in respect to financial statements.
Q4) Which of the following would be considered a batch control for payroll?
A) A total on FICA taxes withheld.
B) A total on Federal Income taxes withheld.
C) A total on employee hours.
D) A total on state income tax withheld.
Q5) What are the two categories of data mining and knowledge discovery software?
Q6) The source documents that support the electronic data systems do not need to be pre-numbered and used in sequence.
A)True
B)False
Q7) What computer functions can make recovering deleted files more difficult?
Page 12
Q8) List and describe three graphical techniques used to support the forensics professional.
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Chapter 11: Cash Receipt Schemes and Other Asset
Misappropriations
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Sample Questions
Q1) Larceny of receivable is generally not concealed through which method?
A) Force balancing
B) Reversing entries
C) Destruction of records
D) Including phone checks in the bank deposits
Q2) A sales employee created a "dummy" customer record. The sales employee then recorded phony refunds and then pocketed the cash. What procedure would likely catch this fraud?
A) Extract customers with no telephone numbers or tax ID number
B) Summarize user access to accounts receivable
C) Summarize user access to the sales account
D) Review business logs for phone calls during non-business hours.
Q3) Inventory with a negative quantity balance may indicate:
A) Fraudulent cash receipts
B) Fraudulent cash payments
C) False shipments
D) Improper access of accounts receivable system
Q4) List three proactive computer audit steps for detecting skimming from page 304306.
Q5) What is the difference between skimming and cash larceny?
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Chapter 12: Cash Disbursement Schemes
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Sample Questions
Q1) Forged expense schemes involve the changing of amounts on legitimate expense documents.
A)True
B)False
Q2) "Kickback" schemes involve the vendor as an accomplice.
A)True
B)False
Q3) One way of diverting revenue for personal gain is to make fictitious sales to accomplices using bogus credit cards and "splitting the difference".
A)True
B)False
Q4) After an invoice is vouched, a check is generated by the computer: The next step should be:
A) Having accounts payable mail the check to the vendor
B) Having Purchasing mail the check to the vendor
C) Having the cashier mail the check to the vendor
D) Any of the above
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15
Chapter 13: Corruption and the Human Factor
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Sample Questions
Q1) A woman had two sons who were born on the same hour of the same day of the same year, but they were not twins. How could this be?
Q2) Kickbacks are undisclosed payments made by vendors to employees of purchasing companies.
A)True
B)False
Q3) An ________ is considered by most professionals to be the cornerstone of an employee reporting program.
A) hotline
B) audit
C) conflict of interest policy
D) external review
Q4) What is a fail safe way to eliminate fraud in the workplace?
A) Pay people competitive salaries
B) Mandate annual financial disclosure for all employees
C) Strong internal controls
D) Eliminate people
Q5) What is meant by a conflict of interest?
Q6) How do bribery and illegal gratuities differ?
Page 16
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Chapter 14: Financial Statement Fraud
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Sample Questions
Q1) In valuing a firm's assets for financial statement purposes, it is assumed that the business is not one that will continue into the future
A)True
B)False
Q2) Which of the following is NOT one of the more common reasons senior management understate business performance?
A) To defer "surplus" earnings to the next accounting period.
B) To take all possible write-offs in one "big bath" now so future earning will be consistently higher.
C) To preserve a trend of consistent growth and avoid volatile results.
D) To enhance the earnings per share.
Q3) Fixed assets are subject to manipulation through several different schemes. Which scheme is NOT commonly used?
A) Booking fictitious assets
B) Misrepresenting asset valuation
C) Improperly capitalizing inventory and startup costs
D) Depreciating an asset to an amount less than zero
Q4) What are some of the ways in which financial statement fraud is committed?
Q5) List four steps to reduce the opportunity to commit financial statement fraud.
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Chapter 15: Consulting, Litigation Support, and Expert
Witnesses: Damages, Valuations, and Other Engagements
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Sample Questions
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) What is the purpose of practice aids in forensic and valuation services?
Q3) What are the considerations related to forecasting income and cash flows?
Q4) CPAs may provide consulting services that are concerned with fraud but are not necessarily fraud examination services, auditing, or litigation support services. These might include all EXCEPT:
A) Assessing the risk of fraud and illegal acts
B) Performing bookkeeping services for the client
C) Evaluating the adequacy of internal control systems
D) Preparing company codes of business ethics and conduct
Q5) Risk and return are inversely related.
A)True
B)False
Page 18
Q6) How many outs are there in an inning?
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Page 19
Chapter 16: Remediation and Litigation Advisory Services
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Sample Questions
Q1) Forensic accounting is the use of accounting for possible courtroom purposes.
A)True
B)False
Q2) What three attributes must the plaintiff demonstrate in a civil framework?
Q3) Albrecht notes types of symptoms that may indicate a fraud is occurring. Which is not such a symptom?
A) Accounting anomalies including irregular, unusual, or missing source documents
B) Internal control weaknesses including the lack of segregation of duties, physical safeguards, independent checks, proper authorization of documents and records
C) Tips and complaints from employees, customers, suppliers, family, and friends
D) A company listing in a national business magazine of "Top 100 companies to work for"
Q4) 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
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