White Collar Crime
Mock Exam
Course Introduction
This course explores the nature, causes, and consequences of white collar crime, emphasizing crimes committed by individuals, businesses, and government officials in positions of trust. Students will examine various forms of white collar offenses such as fraud, embezzlement, insider trading, bribery, and corporate misconduct. The course covers investigative and enforcement strategies, legal frameworks, regulatory agencies, and the sociological and economic impact of these crimes. Case studies and current events are utilized to illustrate challenges in detecting, prosecuting, and preventing white collar crime, fostering an understanding of its significance in contemporary society.
Recommended Textbook
Fraud Examination 3rd Edition by W.
Steve Albrecht
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18 Chapters
929 Verified Questions
929 Flashcards
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Chapter 1: The Nature of Fraud
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57 Verified Questions
57 Flashcards
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Sample Questions
Q1) An example of a vendor committing fraud by itself is:
A) An overcharge for purchased goods
B) The shipment of inferior goods
C) Non-shipment of goods even though payment is made
D) All of the above
Answer: D
Q2) What type of fraud was the ZZZZ Best fraud?
A) Employee Embezzlement
B) Investment Scams
C) Vendor Fraud
D) Management fraud
Answer: D
Q3) True or false: If a company experiences a $1,000 fraud, it will have to generate $1,000 in additional revenue to make up for the fraud.
A) True
B) False
Answer: B
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Chapter 2: Why People Commit Fraud
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56 Verified Questions
56 Flashcards
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Sample Questions
Q1) Which of the following is not a control activity?
A) Dual custody
B) Systems of authorization
C) Internal audit department
D) Documents and records
Answer: C
Q2) Greed, living beyond one's means and high bills all describe what type of fraud-related pressure?
A) Financial
B) Peer
C) Vice
D) Barometric
E) Work Related
Answer: A
Q3) All of the following functions should be set up as segregated duties except:
A) Writing checks
B) Making bank deposits
C) Reconciling bank statements
D) All of the above should be set up as segregated duties
Answer: D
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Chapter 3: Fighting Fraud: An Overview
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47 Verified Questions
47 Flashcards
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Sample Questions
Q1) Which of the following is false?
A) Most frauds start small and get larger and larger if not detected.
B) Research has shown that auditors-not employees and managers-detect most frauds.
C) The elements of fraud include concealment, theft act, and conversion.
D) Preventing fraud is the most cost-effective way to reduce losses from fraud.
Answer: B
Q2) Many people who suspect that fraud is occurring in an organization won't come forward because:
A) They think someone else will report the fraud
B) They don't want to wrongly accuse someone
C) All of the above
D) None of the above
Answer: B
Q3) According to research, what percent of frauds are detected by auditors?
A) 5%
B) 10%
C) 20%
D) 40%
Answer: C
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Page 5
Chapter 4: Preventing Fraud
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67 Verified Questions
67 Flashcards
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Sample Questions
Q1) Which is not a good measure of fraud detection?
A) Analyzing employee spending habits
B) Having a 1-800 for anonymous tips
C) Including a "right-to-audit" clause on the back of all purchase invoices
D) All of the above are good detection measures
Q2) The principle mechanism for deterring fraud is internal controls. The primary responsibility for establishing and maintaining these controls rests with
A) The internal auditors
B) Management
C) Corporate security
D) Independent auditors
Q3) An employee has five new cars and a gold watch. These facts would be considered:
A) Lifestyle symptoms
B) Accounting anomalies
C) Tips and complaints
D) Analytical symptoms
Q4) True or False. Internal controls are "fraud proof".
A)True
B)False
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Chapter 5: Recognizing the Symptoms of Fraud
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63 Verified Questions
63 Flashcards
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Sample Questions
Q1) Who of the following would be most likely to provide a tip regarding the conversion of a fraud:
A) Company accountants.
B) Auditors.
C) Friends.
Q2) Auditors are better positioned than anyone to detect which element of fraud:
A) Theft
B) Conversion
C) Concealment
D) None of the above
Q3) ___________ are often in the worst position to detect fraud.
A) Auditors
B) Co-workers
C) Managers
D) Company accountants
E) Friends
Q4) People who can delay gratification rarely embezzle.
A)True
B)False
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Chapter 6: Data-Driven Fraud Detection
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55 Verified Questions
55 Flashcards
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Sample Questions
Q1) Using these to detect fraud is much easier than assessing changes in the financial statement numbers themselves:
A) Financial statement ratios
B) Vertical analyses
C) Horizontal analyses
D) Data mining
Q2) ACL stands for:
A) Account coverage level.
B) Audit command language.
C) Actuarial confidence level.
D) Auditors can't learn
Q3) When a vendor takes control of a purchasing relationship, prices increase usually result from which kind of fraud?
A) Asset fraud
B) Kiting
C) Management fraud
D) Kickback fraud
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Chapter 7: Investigating Theft Acts
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40 Flashcards
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Sample Questions
Q1) Which of the following is not a type of surveillance?
A) Stationary or fixed point
B) Covert invigilation
C) Moving or tailing
D) Electronic surveillance
Q2) Why do fraud investigations initially involve few people and avoid the word "investigation?"
A) To avoid alerting suspects about the investigation
B) To avoid incriminating innocent people
C) To avoid unnecessary stress or suspicion among employees
D) All of the above
Q3) When would an undercover operation not be recommended?
A) When large-scale collusion is suspected
B) When other investigation methods have failed
C) When investigation is difficult to monitor
D) When there is significant reason to believe that massive fraud is occurring
Q4) Surveillance is usually used to investigate
A) Theft acts
B) Concealment
C) Conversion
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Chapter 8: Investigating Concealment
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26 Verified Questions
26 Flashcards
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Sample Questions
Q1) Secondary evidence may be used in all of the following instances except:
A) The original document has been lost or destroyed without the intent or fault of the party seeking to introduce the secondary evidence.
B) The original document is in the possession of an adverse party who fails to produce it after a written notice to do so.
C) The original documents are too voluminous to permit careful examination.
D) The original documents are too fragile to be handled.
Q2) Which of the following is not a common way to obtain hard-to-get documentary evidence?
A) Subpoena
B) Search Warrant
C) Voluntary Consent
D) Force
Q3) Which of the following does not appear on a check, which has been cashed?
A) Teller number
B) Date
C) Transaction number
D) Time of the transaction
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10
Chapter 9: Conversion Investigation Methods
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61 Flashcards
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Sample Questions
Q1) Net worth calculations do all of the following except:
A) Determine Net worth
B) Determine funds from unknown sources
C) Determine where fraudulent monies are hidden
D) Determine a person's Net Worth Increase
Q2) Where can a fraud investigator search for public information without a search warrant?
A) County and local records
B) Federal and State records
C) Financial institution records
D) Internal Revenue Service records
Q3) Which of the following is a true disadvantage of using the net worth method?
A) the amounts are not readily accepted as evidence by courts
B) it rarely facilitates the obtaining of a confession
C) it is widely used by the DEA, FBI, and IRS
D) embezzlers typically spend their money on luxuries that are difficult to track
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Chapter 10: Inquiry Methods and Fraud Reports
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58 Verified Questions
58 Flashcards
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Sample Questions
Q1) Which of the following is not a good thing to do during an interview?
A) Conduct the interview in private
B) Establish the purpose of the interview
C) Interview more than one person at once
D) Do not invade body space
Q2) Which is not a verbal clue that would place suspicion on an interviewee?
A) Frequent reference to good character
B) Eagerness to end the interview
C) Avoidance of emotionally charged terms
D) Answering with a question
E) All of the above are suspicious verbal clues
Q3) All of the following are important elements to successful interviews except:
A) Using short questions confined to one topic, which can be clearly and easily understood
B) Using leading questions
C) Requiring direct responses
D) Pointing out some, but not all, of the circumstantial evidence
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12
Chapter 11: Financial Statement Fraud
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39 Verified Questions
39 Flashcards
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Sample Questions
Q1) Which of the following reasons for an organization to change auditors would not be a concern to a successor auditor or an investor?
A) Failure of the client to pay the auditor
B) Auditee's view that the fees are too high
C) Auditor suspicious of fraud or other problems
D) Auditor-auditee disagreement
Q2) Although GAAP does allow for some flexibility, which standards should be maintained in preparing financial statements?
A) Assertiveness
B) Integrity & Objectivity
C) Independence
D) None of the above
Q3) Which of the following is a true statement regarding financial statement fraud?
A) Financial statement frauds usually involve the theft of assets.
B) Financial statement frauds are usually detected by independent auditors.
C) Financial statement frauds are usually not costly to organizations.
D) Financial statement frauds are usually committed by the top management of the company.
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13
Chapter 12: Revenue- and Inventory-Related Financial Statement
Frauds
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46 Verified Questions
46 Flashcards
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Sample Questions
Q1) Under SAS 99, financial statement auditors are required to make inquires of all of the following individuals or groups about possible fraudulent activity or red flags except:
A) Management
B) Audit committee members
C) Internal audit personnel
D) Financial statement auditors must make inquiries of all of the above
Q2) Which of the following is not a common inventory-related fraud scheme?
A) Capitalizing costs that should be expensed
B) Cutoff problems
C) Consigned inventory
D) All of the above are inventory-related fraud schemes
Q3) Which of the following is most likely to be indicative of a potential revenue fraud?
A) a sudden increase in the sales discount percentage
B) a high sales return percentage
C) a rapidly increasing asset turnover ratio
D) a rapidly decreasing working capital turnover ratio
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Chapter 13: Liability, Asset, and Inadequate Disclosure
Frauds
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64 Verified Questions
64 Flashcards
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Sample Questions
Q1) Which type of financial statement fraud almost never causes analytical symptoms and only sometimes creates documentary symptoms?
A) Inventory Fraud
B) Revenue Fraud
C) Liability Fraud
D) Disclosure Fraud
Q2) What is the first step for identifying frauds involving liabilities?
A) Identify transactions that involve liabilities that can be understated
B) Review asset listings
C) Analyze the trend in gross margin for the company.
D) All of the Above
Q3) With liability fraud, which is most likely to occur?
A) Liabilities will be overstated
B) Interest expense will increase
C) Items will be expensed rather than capitalized
D) Net income will be understated
E) Balances in general that relate to this fraud will tend to be low
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Page 15
Chapter 14: Fraud Against Organizations
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48 Verified Questions
48 Flashcards
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Sample Questions
Q1) When an employee demands payment from a vendor in order to conduct business with the vendor, he or she is committing a ________.
A) Bribery scheme
B) Conflict of interest scheme
C) Economic extortion scheme
D) Illegal gratuity scheme
Q2) Which of the following is representative of a conflict of interest?
A) The owner of the company is aware of an employee's relationship with a vendor
B) The owner of the company is unaware of the employee's relationship with a vendor
C) When the employee accepts kickbacks from a vendor
D) When the employee makes fraudulent disbursements to him or herself though a fictitious vendor
Q3) Bid-rigging is a form of a:
A) Conflict of interest
B) Bribery
C) Extortion
D) Illegal gratuity
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Page 16
Chapter 15: Consumer Fraud
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35 Flashcards
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Sample Questions
Q1) Consumer fraud is described as any fraud that:
A) Is committed by a consumer
B) Takes place against an individual
C) Is fraud committed within an organization
D) Comes from a separate country
Q2) Which act provides fines and punishments for identity theft?
A) Identity Theft and Assumption Deterrance Act
B) Family Education Rights and Privacy Act of 1974
C) The Gramm-Leach-Bliley Act
D) Fair Credit Reporting Act
Q3) Which act gives individuals the right to opt-out of having their information sold?
A) Identity Theft and Assumption Deterrance Act
B) Family Education Rights and Privacy Act of 1974
C) The Gramm-Leach-Bliley Act
D) Fair Credit Reporting Act
Q4) Multi-level Marketing Companies are illegal in the United States.
A)True
B)False
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Chapter 16: Bankruptcy, Divorce, and Tax Fraud
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57 Verified Questions
57 Flashcards
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Sample Questions
Q1) Which is not something that a fraud perpetrator conducting a bust-out is likely to do?
A) Work to establish credibility
B) Contact law enforcement to strengthen their cover
C) Quietly buy an existing company that already has established credit or business
D) Take on a business name similar to a well-reputed company
E) A fraud perpetrator conducting a bust-out is likely to do all of the above
Q2) Which of the following best explains why pressure to commit fraud exists in bankruptcy and divorce cases?
A) Fraudsters don't have accurate records
B) Assets are taken away from one party and given to others
C) To see if private investigators can find the hidden asset
D) None of the above
Q3) Which of the following may indicate concealment of assets during a bankruptcy?
A) Large transfers of assets to related parties or individuals
B) Rapid reduction in assets
C) Missing, inaccurate, or damaged documents
D) All of the above
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18
Chapter 17: Fraud in E-Commerce
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51 Verified Questions
51 Flashcards
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Sample Questions
Q1) Using techniques to gain passwords and other personal information directly from victims is known as:
A) Social engineering
B) Spoofing
C) Data theft
D) Customer impersonation
Q2) Which of the following uses features of the human body to create secure access controls?
A) Biometrics
B) Spoofing
C) Biological Signatures
D) Physical science controls
Q3) Which activity is used legitimately by companies to monitor network traffic, but may also be used illegally to capture confidential information?
A) Sniffing
B) Spoofing
C) Hijacking
D) Impersonation
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Chapter 18: Legal Follow-Up
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Sample Questions
Q1) In the discovery stage of a civil litigation, attorneys obtain information about the other side's case through all of the following except?
A) Motion practice.
B) Subpoenas.
C) Depositions.
D) Requests for admission.
Q2) _________ is the body of law that provides remedies for violations of private rights.
A) Civil Law
B) Criminal Law
C) Judicial Law
D) Constitutional Law
E) Personal Injury Law
Q3) Which of the following motions are frequently made during the pretrial phase?
A) A motion to dismiss charges as a matter of law
B) A motion to suppress certain evidence because it was illegally obtained
C) A motion to dismiss charges as a matter of principle
D) Both C and A
E) Both A and B
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Page 20