White-Collar Crime Exam Materials
Course Introduction
White-Collar Crime explores illegal acts committed by individuals and organizations in positions of trust, authority, or professional status, typically for financial gain and without the use of physical force. This course examines the nature, causes, and consequences of white-collar offenses, such as corporate fraud, embezzlement, insider trading, environmental crime, and cybercrime. Students will analyze key case studies, legal frameworks, enforcement challenges, and the broader social and economic impacts of these crimes. Emphasis is placed on understanding the motivations behind white-collar criminality and strategies for prevention, detection, and policy reform.
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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Chapter 1: The Nature of Fraud
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Sample Questions
Q1) One way that criminal law differs from civil law is that it:
A)provides remedies for violations of private rights.
B)must yield a unanimous verdict.
C)can have a jury of fewer than 12 persons.
D)allows for various claims in one action.
Answer: B
Q2) Which of the following is a common example of vendor fraud?
A)Fraud perpetrated through collusion between buyers and vendors.
B)Fraud perpetrated by upper management.
C)The perpetrator physically removes the inventory from the business premises.
D)A fraud perpetrated through financial statement manipulation.
Answer: A
Q3) Fraud in companies such as WorldCom,Enron,Waste Management,Sunbeam,Rite-Aid,Phar-Mor,Parmalat,and ZZZZBest are examples of:
A)Customer fraud.
B)Investment scams.
C)Vendor fraud.
D)Management fraud.
Answer: D
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Page 3
Chapter 2: Who Commits Fraud and Why
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Q1) Which of the following is NOT a perceived pressure that can lead to employee fraud?
A)experiencing high medical bills because of illness in family
B)frustration with a co-worker
C)anticipated actual financial reports that are below published expectations
D)a challenge to beat the system
Answer: C
Q2) Modeling and labeling are sub-components of which fraud-related element of an organization?
A)Control environment
B)Accounting system
C)Audit procedures
D)Review procedures
Answer: A
Q3) Which of the following is NOT an element of a good control environment?
A)Trust
B)Modeling
C)Appropriate hiring
D)Management's communication
Answer: A
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Page 4
Chapter 3: Fighting Fraud: an Overview
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Sample Questions
Q1) Which of the following is a component of the evidence square?
A)Rationalization
B)Perceived pressure
C)Personal observation
D)Perceived opportunity
Answer: C
Q2) Which of the following is FALSE concerning legal actions by organizations regarding fraud?
A)Legal action is expensive.
B)Legal action is time consuming.
C)Legal action is sometimes embarrassing.
D)Legal action stops future frauds.
Answer: D
Q3) Audits,public record searches,and net worth calculations are used to gather what type of evidence in fraud investigation?
A)Testimonial
B)Forensic
C)Documentary
D)Observational
Answer: C
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Chapter 4: Preventing Fraud
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Sample Questions
Q1) Which of the following observations is true?
A)The effectiveness of an ideal control system should be independent of the people enforcing it.
B)No internal control structure can ever be completely effective, regardless of the care followed in its design and implementation.
C)A control system by itself can provide assurance that fraud will be prevented.
D)The type of control activities include reactive controls and proactive controls.
Q2) An organization has a policy requiring the dual counting of all incoming cash receipts.Which control activity is being used here?
A)Segregation of duties
B)Proper authorizations
C)Physical safeguards
D)Documents and records
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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6
Chapter 5: Recognizing the Symptoms of Fraud
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Sample Questions
Q1) Which term refers to people who commit a fraud or other crime and do not feel guilt or stress?
A)Altruists
B)Utilitarians
C)Psychopaths
D)Agnostics
Q2) Which of the following is an analytical fraud symptom?
A)Increase in past due accounts receivable
B)Significant increase or decrease in account balances
C)Lack of independent checks
D)Excessive voids or credits
Q3) Which of the following appears to be common to most embezzlers who are caught?
A)Long-term focus
B)Investments made in low-risk instruments
C)Saving what they steal
D)Spending on lifestyle improvements
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Chapter 6: Data-Driven Fraud Detection
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Q1) What defines an extension of stratification?
A)Matosas matrix
B)A pivot table
C)Summarization
D)Soundex
Q2) Which statistical approach is one of the most powerful and yet simple methods for identifying outliers?
A)N-grams
B)Z-score
C)Time-trend analysis
D)Soundex algorithm
Q3) 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.
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8
Chapter 7: Investigating Theft Acts
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Sample Questions
Q1) Which of the following is important regarding invigilation?
A)Invigilation should include all areas of the business.
B)The time period for the invigilation should be at least one month.
C)Past records should be analyzed in order to establish an operating profile for the invigilation.
D)The investigator should make the decision regarding the temporary controls to be put in place for the invigilation.
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) What is the term for gathering and analyzing electronic evidence?
A)confiscating computers
B)computer forensics
C)electronic surveillance
D)electronic investigation
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9
Chapter 8: Investigating Concealment
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Sample Questions
Q1) Which of the following statements regarding sampling risk is FALSE?
A)To reduce sampling risk, the investigator can increase the sample size.
B)Sampling risk can only be slightly reduced by careful planning of the sampling procedure.
C)To reduce sampling risk, the investigator can use a random number table.
D)In fraud examination, sampling risk can be significant.
Q2) Which of the following is NOT an action by the fraud perpetrators to hide/conceal their illegal act(s)?
A)manipulating documentary evidence
B)modifying records in computer databases
C)photocopying fraud-related documents
D)deleting records in computer databases
Q3) What is another term used for discovery sampling?
A)investigative sampling
B)probability sampling
C)statistical random sampling
D)stop-and-go
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10
Chapter 9: Conversion Investigation Methods
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Sample Questions
Q1) Refer Data Set 9-1.The income from unknown sources for years 2 and 3 respectively are:
A)$255,200; $300,200
B)$171,200; $307,200
C)$73,800; $179,800
D)$65,800; $47,800
Q2) Funds from unknown sources equals:
A)Assets liabilities.
B)Net worth increase + living expenses.
C)Income funds from known sources.
D)Net worth prior year's net worth.
Q3) Which of the following does NOT constitute a federal source of information?
A)County clerk
B)CIA
C)Secret service
D)FBI
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11
Chapter 10: Inquiry Methods and Fraud Reports
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60 Flashcards
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Sample Questions
Q1) Interviewers who use pacing are employing a form of ____.
A)Kinetic communication.
B)Paralinguistic communication.
C)Chronemic communication.
D)Proxemic communication.
Q2) What is meant by calibrating?
A)The use of interpersonal space to convey meaning.
B)Process of observing behavior before critical questions are asked.
C)The strongest response to a threatened ego.
D)Reinforcement of the confessor's decision.
Q3) Which of the following is NOT included in the fraud report?
A)recommendations for control improvement
B)recommendations for legal action against the suspect(s)
C)all pertinent findings
D)all conclusions made by the investigator
Q4) Which of the following is a facilitator of communication?
A)Threatened Egos
B)Trauma
C)Catharsis
D)Unconscious Behavior
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Chapter 11: Financial Statement Fraud
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Sample Questions
Q1) The study done by the Committee of Sponsoring Organizations (COSO)on financial statement frauds that occurred during the period from 1987-1997 had many key findings.Which of the following is NOT one among them?
A)Frauds were most commonly perpetrated by improper revenue recognition, overstatement of assets, and understatement of expenses.
B)Most of these firms had audit committees that met at least four times a year.
C)Severe consequences were associated with companies who committed financial statement fraud.
D)Most companies were experiencing net losses or were just holding break-even positions in periods prior to the fraud.
Q2) Which of the following is a finding of the Treadway Commission?
A)Financial statement frauds occur very often, the average fraud lasts about two years.
B)The CEO perpetrates the fraud in 72% of the cases.
C)While financial statement frauds occur infrequently, they are extremely costly.
D)Financial statement fraud occurs mostly in companies that are listed.
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Chapter 12: Revenue- and Inventory-Related Financial
Statement Frauds
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Sample Questions
Q1) Which of the following is defined as selling unused assets for a promise to buy them or similar assets back at roughly the same price?
A)Bill-and-hold sales
B)Kiting
C)Channel stuffing
D)Round-tripping
Q2) Under SAS 99,financial statement auditors are required to make inquires of all but which of the following individuals or groups about possible fraudulent activity or red flags.
A)Management
B)Audit committee members
C)Internal audit personnel
D)Shareholders
Q3) Which of the following depicts the practice that suppliers use to encourage customers to buy extra inventory so as to increase current-year sales?
A)Kiting
B)Channel stuffing
C)Redating transactions
D)Partial shipments
Page 14
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Chapter 13: Liability, asset, and Inadequate Disclosure
Frauds
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Q1) 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
Q2) What is the easiest way to identify understatement of liability fraud exposures?
A)Analyze the trend of accounts payable for the company.
B)By using the formula, assets = capital + liabilities.
C)Investigate the various transactions that involve liabilities and can be understated.
D)Compare the company's liabilities with those of other players in the industry.
Q3) If marketable securities increase,then cash should usually decrease by a similar amount,since cash was probably used to purchase the securities.An exception to this is:
A)when the company paid through a check.
B)when the marketable securities are purchased through a broker.
C)when the company incurred debt or traded an asset for the securities.
D)when the transaction was not recorded in the books of accounts.
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Page 15
Chapter 14: Fraud Against Organizations
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Q1) According to the ACFE study,which of the following comprises the highest percentage of asset misappropriation?
A)larceny
B)skimming
C)delayed payment recognition
D)fraudulent disbursement
Q2) Which fraud is committed by an employee who doesn't record customer sales and pockets the payment?
A)Larceny
B)Disbursement
C)Skimming
D)Illegal gratuities
Q3) Which of the following statements regarding larceny is NOT true?
A)Larceny is easier to detect than skimming and is less common.
B)Larceny occurs when employees steal cash before the amounts have been recorded in the accounting system.
C)Smaller occurrences of larceny are often written off as "shorts" or "miscounts."
D)Perpetrators of larcenies must have direct access to inventory or other assets.
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Chapter 15: Consumer Fraud
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Sample Questions
Q1) What is one of the biggest marketing campaigns of illegal MLMs?
A)Promise of full-time work from home for huge weekly earnings.
B)Absence of headhunter fees.
C)A mysterious "benefactor" interested in contributing a large sum of money.
D)Promise that investors will always make money from future downline growth.
Q2) Which act makes it illegal for any agency that receives federal funding to disclose privacy information about individuals?
A)Identity Theft and Assumption Deterrence Act
B)Family Education Rights and Privacy Act of
C)The Gramm-Leach-Bliley Act
D)Fair Credit Reporting Act
Q3) Which of the following is NOT a symptom of potential investment scams?
A)pressures to get in early on the investment.
B)a business with a history of bankruptcy or scandals.
C)use of a special tax loophole or a tax avoidance scheme.
D)promise of returns comparable to those of treasury bonds.
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17
Chapter 16: Bankruptcy, divorce, and Tax Fraud
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Sample Questions
Q1) Section 548 of the Bankruptcy Code defines as fraudulent certain transfers made,or obligations incurred,within what specified time period?
A)12 months
B)9 months
C)6 months
D)3 months
E)1month
Q2) Which of the following options is true concerning the concealment of assets during or in contemplation of a bankruptcy?
A)Often used in divorce cases
B)Often used in a planned bankruptcy
C)How a bust-out is designed
D)All of the above
Q3) Which bankruptcy participant administers a bankruptcy estate?
A)Examiner
B)Trustee
C)Adjuster
D)Creditor
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18
Chapter 17: E-Commerce Fraud
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Sample Questions
Q1) Passwords,biometrics,and digital signatures are examples of which of the following?
A)physical controls
B)segregation of duties
C)authorization controls
D)checks on performance
Q2) What is spoofing?
A)Using a subtly different Internet host name to mimic another business.
B)Changing the information in e-mail headers or IP addresses.
C)Extracting personal or corporate computer information from employees.
D)Viewing the information that passes along a network line.
Q3) Which of the terms below best describe the act of employees using sophisticated denial-of-service attempts on local machines?
A)phishing
B)sniffing
C)vandalism
D)wartrapping
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Chapter 18: Legal Follow-Up
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Sample
Questions
Q1) Carolyn Laney has just been convicted of mail fraud in a U.S.District Court.She is not satisfied with the judgment rendered by the court.What can she do next?
A)Appeal to the Supreme Court
B)Appeal the findings in one of 12 circuit courts of appeals
C)Appeal to a Probate Court
D)Nothing, as verdicts from the district courts cannot be appealed.
Q2) Which of the following are part of the organization of federal courts?
A)Probate courts
B)Bankruptcy courts
C)Criminal courts
D)Traffic courts
Q3) Which of the following is true regarding civil lawsuits against perpetrators of fraud?
A)Jury must consist of 12 members.
B)The jury's verdict must be unanimous.
C)The perpetrator must be proven guilty beyond a reasonable doubt.
D)The purpose of the lawsuit is for the defrauded party to gain financial restitution.
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