White-Collar Crime Question Bank
Course Introduction
White-Collar Crime introduces students to the study of non-violent crime committed by individuals, businesses, and government officials in positions of trust and responsibility. The course examines the various forms of white-collar crime, including corporate fraud, embezzlement, insider trading, bribery, and environmental crime. Students will explore the social, economic, and political impacts of such crimes, the legal and regulatory frameworks designed to prevent and prosecute them, and key case studies illustrating how these offenses are detected and punished. The course also discusses theories explaining white-collar criminal behavior and contemporary challenges in enforcement and prevention.
Recommended Textbook
Forensic Accounting and Fraud Examination 2nd Edition by William S. Hopwood
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Chapter 1: Introduction to Forensic Accounting and Fraud Examination
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Q1) If your actions are the result of misleading, intentional actions or inaction (including misleading statements and the omission of relevant information) to gain an advantage, then you have committed:
A) Perjury.
B) Contempt.
C) Treason.
D) Fraud.
Answer: D
Q2) To date, there are only two forensic accounting organizations in the world.
A)True
B)False
Answer: False
Q3) If you are experienced in the valuation field and want to become credentialed by the National Association of Certified Valuation Analysts (NACVA), which credential would you be issued?
A) Certified Valuation Analyst.
B) Accredited Valuation Analyst.
C) Certified Forensic Financial Analyst.
D) National Valuation Analyst.
Answer: B
Page 3
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Chapter 2: The Forensic Accounting Legal Environment
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Q1) If issued a Citation, a person must:
A) Report for incarceration.
B) Submit to the booking procedure within several days after the citation.
C) Sign a confession.
D) Provide evidence that they are not guilty.
Answer: B
Q2) A Motions in Limine a request from the defendant to exclude some evidence that may be introduced during the trial.
A)True
B)False
Answer: True
Q3) When are communications considered privileged?
Answer: Privileged communications are typically between professionals and their clients such as attorney-client, spouse-spouse, doctor-patient, psychoanalysts-patient, clergy-congregation, and accountant-client in certain tax matters.
Q4) Search Warrants are the same as Affidavits.
A)True
B)False
Answer: False
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Chapter 3: Fundamentals I: Accounting Information Systems
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Q1) Internal controls can be viewed as:
A) a means to limit the amount of money paid in a fraud suit.
B) a hindrance to productive business practices.
C) loss prevention tools.
D) loss detection tools.
Answer: C
Q2) Audit work is primarily concerned with cash reconciliation.
A)True
B)False
Answer: False
Q3) One specific component of internal control is risk assessment and management.
A)True
B)False
Answer: True
Q4) Every time cash changes hands within a business, it should be:
A) audited.
B) counted.
C) rebundled.
D) reconciled to a sales total.
Answer: B
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Chapter 4: Fundamentals II: The Auditing Environment
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Q1) How are acceptable audit risk and acceptable detection risk related?
Acceptable audit risk is the level of audit risk the auditor is willing to accept. Similarly, while detection risk is a risk the auditor wants to avoid, acceptable detection risk is the level of detection risk the auditor is willing to accept. How does the level of acceptable audit risk or the level of acceptable detection risk affect the audit? If, for example, the level of audit risk the auditor is willing to accept increases, this increase generally acts to decrease the nature, timing, and extent of testing the auditor performs. The same is true for an increase in acceptable detection risk.
Q2) When auditors are judging materiality, they are concerned with:
A) Magnitude.
B) Errors.
C) Intentional omissions.
D) All of the above.
Q3) The Public Company Accounting Oversight Board was created by the ________?
A) Sarbanes-Oxley Act of 2002.
B) Securities and Exchange Commission.
C) Financial Accounting Standards Board.
D) United States Congress.
Q4) What two conditions must be met in order to issue a qualified statement?
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Chapter 5: Fraud Prevention and Risk Management
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Q1) What are some possible strategies for Risk Management/Treatment?
Q2) What are the three options when dealing with Risk Management?
A) Accept the risk, Resolve the risk, Counteract the risk.
B) Ignore the risk, Insure the risk, Write policies against the risk.
C) Accept the risk, Insure the risk, Implement controls against the risk.
D) Accept the risk, Insure the risk, Admonish employees who cause the risk.
Q3) An information security deliverable, information security management system and enterprise risk management are generally a part of a companies:
A) Internal Controls.
B) External Controls.
C) Detective Controls.
D) Preventative Controls.
Q4) If your process has reached maturity, and has achieved lower costs, shorter development times, higher quality, and higher productivity, then it must have:
A) Process predictability.
B) Process control.
C) Process compliance.
D) Process effectiveness.
Q5) Who are some types of individuals posing active and passive threats?
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Chapter 6: Fraud Detection
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Q1) Explain how fraud detection relates to enterprise risk management.
Q2) Which of the following is NOT a step for financial statement auditing concerning fraud?
A) Gather information relevant to risks of misstatements in the financial reports.
B) Compare the financial statements to the owners personal assets.
C) Analyze and assess risks of misstatement in light of the entity's programs and controls.
D) Apply the information gathered to the structure and application of the audit.
Q3) Total Fraud Costs (TFC) =
A) Personnel Costs + Auditing Costs + Potential Losses .
B) Prevention Costs + Detection Costs + Correction Costs + Losses.
C) Auditing Costs - Losses.
D) Prosecution Costs + Detection Costs + Correction Costs.
Q4) As a general rule, preventative and detective controls cost more than corrective controls.
A)True
B)False
Q5) Describe the three step process under SAS 99, Consideration of Fraud in a Financial Statement Audit.
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Chapter 7: The Fraud Investigation and Engagement
Processes
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Q1) During the fraud investigation process, it is important to remember:
A) To never exceed the amount of billable hours authorized under GAAP.
B) The fraud investigator is not law enforcement and cannot provide evidence in a trial.
C) The rights of the victim as well as the accused.
D) To limit the investigation to the U.S. Code that has been violated.
Q2) When does the fraud investigation engagement process end?
A) With first contact to an organization.
B) After a 12-month follow-up audit
C) With a complete agreement regarding the fraud-investigation services to be provided by the investigator.
D) Upon conviction of a criminal.
Q3) Part of the fraud investigation process involves filing charges with a District Attourney.
A)True
B)False
Q4) While considering reverse proof, what are four standards of defense that a fraudster may counter charges with?
Q5) Describe the fraud investigation process.
Q6) Explain what a Unified Case File is and its three main purposes.
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Chapter 8: The Evidence Collection Process
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Q1) The fraud theory approach to fraud investigations is a process that posits a hypothesis regarding a fraud scheme, tests the hypothesis with evidence, and then accepts, modifies, or discards the hypothesis as is warranted by the evidence.
A)True
B)False
Q2) What is the fraud theory approach and provide an example of using it.
Q3) The "how" of a fraud scheme are:
A) The possible locations of the fraud.
B) The general functional area or position.
C) The conditions present to commit the fraud.
D) The mechanisms of the fraud.
Q4) The fraud scheme must answer the question "why" before charges can be filed.
A)True
B)False
Q5) Why would an investigator inverview the prime suspect last in the interview process?
Q6) What are the four types of evidence; explain each one.
Q7) Who's responsibility is it to establish a fraud theory and provide an example of one.
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Chapter 9: Fraud Examination Evidence I: Physical,
Documentary, and Observational Evidence
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Q1) When businesses or persons obtain mortgages for things other than real estate, these are called:
A) Leins
B) Chattel Mortgages
C) Collateral Loans
D) Uncollateralized Loans
Q2) Questioned documents are documents that are contested because their authorship or authenticity (or both) is not established.
A)True
B)False
Q3) A process that allows information in various databases and files to be evaluated and integrated in such a way that associations become apparent is called a(n):
A) Boon-lean search
B) Query
C) Link Analysis
D) Financial Records Search Warrant
Q4) It is impossible to determine which printer printed a document.
A)True
B)False
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Chapter 10: Fraud Examination Evidence II: Interview and Interrogation Methods
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Q1) Which of the following is NOT a type of final question that would be asked to non-suspects?
A) Confirm information received by the interviewer during the interview.
B) Obtain information that has not yet been gathered.
C) Ask for assistance in confronting the fraudster.
D) Seek the subject's agreement that he will continue to cooperate.
Q2) When should an interview be recorded?
A) Always
B) Never
C) Only if note taking will not be detailed enough.
D) With a court order.
Q3) Typically, the primary difference between interviewing and interrogating a subject is:
A) Miranda rights are read prior to interrogating.
B) Miranda rights are read prior to interviewing.
C) Interviewing always occurs with a lawyer present.
D) Interrogating always takes place at a police station.
Q4) Describe the importance of the order in which multiple persons are to be interviewed
Q5) Describe the final questions to ask non-suspects and discuss their importance
Page 12
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Chapter 11: Fraud Examination Evidence III: Forensic Science and Computer Forensics
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Q1) What is the Locard Exchange Principle?
A) It takes at least two people to commit a crime.
B) Every contact leaves a trace.
C) Forensic scientists must share data to solve a crime.
D) Some evidence will be lost when transferring it from the scene to the lab.
Q2) To establish forensic identification, the points of comparison for the suspect must
A) Possess the same physical characteristics.
B) Be confirmed by a second independent forensic scientist.
C) Uniquely correspond with those of the person who committed the crime.
D) Contain DNA samples of the person who committed the crime.
Q3) How does Cache Storage work inside of a computer?
A) It is the high speed temporary are that the computer uses to process data.
B) It is the long term larger memory area of the computers.
C) It is a group of temporary files that the computer uses to help swap data from the RAM into the mass storage area.
D) It is the area of the computer that lets the system know what it's systems are when it is booting up.
Q4) Define forensic science and its earliest origins.
Q5) What are the members of a CART team?
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Chapter 12: The Fraud Report, Litigation, and the Recovery Process
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Q1) Which of the following is a key word to imply fraud, but not actually accuse someone of it?
A) Apparent
B) Consistent
C) Accused
D) Guilty
Q2) Once the IRS provides notice of TFRP, how many days does the business have to respond?
A) 60
B) 45
C) 30
D) 10
Q3) A fraud investigation report can sometimes be more helpful in ruling out fraud than in ruling it in.
A)True
B)False
Q4) Why should an employee not be fired prior to the investigators report being finalized or even court proceedings complete?
Q5) Outline the different options for fraud loss recovery
Q6) Explain the three methods of dealing with fraud loss. Page 14
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Chapter 13: Employee, Vendor, and Other Frauds Against the Organization
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Q1) When an accounts receivable clerk is allowed to steal one customers payment and apply the next one toward that payment and so on, this is a violation of:
A) segregation of duties.
B) management oversight.
C) checks and balances.
D) all of the above.
Q2) What are some examples of corporate culture that might lead to employee fraud?
Q3) How might a forensic accountant notice a program alteration?
A) By reviewing the programming knowledge of each employee.
B) By matching source code from the manufacturer to the program installed at the company.
C) Through interrogation of employees.
D) Through a program change log.
Q4) If bank deposit slips are not reconciled against bank deposit receipts, leakage can occur.
A)True
B)False
Q5) Describe at least two methods that vendors could use to fraud a company.
Q6) What are the three elements of the fraud triangle? Describe each.
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Chapter 14: Financial Statement Fraud
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Q1) When a company makes a very large one-time write off, it's said to take a(n):
A) Aggressive accounting position.
B) Big bath.
C) Earnings smoothing approach.
D) Legitimate discretion approach.
Q2) The scheme where normally the books are "closed" at the end of each reporting period, and sales that occur after the closing date do not appear in the current-period income statement is called:
A) Sham sales.
B) Recognition of conditional sales.
C) Improper cutoff of sales.
D) Consignment sales.
Q3) What is a consequence of financial fraud for managers?
A) They are immediately fired.
B) They must personally apologize to everyone effected.
C) They are exempt from consequences.
D) They are often named in civil suits.
Q4) What are some consequences to companies and their managers for financial statement fraud?
Q5) Name at least three schemes for overstating revenues.
Page 17
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Chapter 15: Fraud and Sox Compliance
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Q1) The United States Sentencing Commission bases its guidelines for sentencing upon the Guidelines Manual.
A)True
B)False
Q2) The enterprise risk management report defines 16 overlapping components.
A)True
B)False
Q3) The SEC created ISO 27002 to assist corporations with enhancing their Internal Control Standards.
A)True
B)False
Q4) The SOX grew out of which of the following situations?
A) FASB Statements being too overbearing.
B) GAAP becoming outdated.
C) The SEC and accounting professionals agreeing to more restrictive rules after each major accounting scandal.
D) Citizens forcing Congress to make more laws regulating the accounting industry.
Q5) Explain some of the increased corporate responsibilities indicated in SOX.
Q6) What are some of the benefits of SOX according to President Bush?
Page 18
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Chapter 16: Tax Fraud
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Q1) Who does the IRS recognize as tax practitioners and what are their continuing education requirements?
Q2) There are quite a few statutory arguments including the assertion that wages are not income and that the income tax does not apply to citizens who live in area other than the District of Columbia and territories such as Puerto Rico because the definition contained in the Internal Revenue Code does not include states.
A)True
B)False
Q3) What does the U.S. Corporate Tax applicable to?
A) Dividends distributed.
B) Gross Income of the Corporation.
C) Gross Income of the management.
D) Retained Earnings of the Corporation.
Q4) For self-employed individuals, a 25.3% self-employment tax is imposed on net self-employment income.
A)True
B)False
Q5) What are at least three methods of proof that the IRS may employ.
Q6) Describe the evolution of the internal revenue code.
Page 19
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Chapter 17: Bankruptcy, Divorce, Identity Theft
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Q1) What is typically one of the first signs that an individual's identity has been stolen?
A) Unauthorized change in address.
B) Bill collectors begin calling for accounts the individual is not aware of.
C) Incorrect information appearing on credit reports.
D) Unauthorized charges appear on statements.
Q2) What are five things that a forensic accountant can look for in a tax return that will lead to the discovery of hidden assets?
E. (income from rental properties, royalties, and estates and trusts, partnerships, and S corporations). Verify the dispositions of the underlying assets. Also, activity loss carryovers should be treated as an asset.
Q3) What is identity theft, how big is the problem and who is largely responsible for it?
Q4) Chapter 13 bankruptcy is less desirable for the debtor, since it requires debt repayment from the debtor's future income.
A)True
B)False
Q5) What did the Fair and Accurate Credit Transaction Act of 2003 (FACTA) accomplish?
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Chapter 18: Organized Crime, Counterterrorism, and Anti-Money Laundering
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Q1) Organized crime is a global problem that sucks over a trillion dollars a year out of the legitimate world economy.
A)True
B)False
Q2) What is Labor Racketeering?
A) The criminal act of scaring away potential employees from a business.
B) The domination, manipulation, and control of a labor movement which affects related businesses and industries.
C) The domination, manipulation, and control of employment taxes prior to their submission to their governmental authority.
D) The criminal act of manipulating and controlling labor unions.
Q3) Where do some terrorist organizations base their operations?
A) Local government buildings.
B) Banks.
C) Houses of worship such as Mosques.
D) All of the above.
Q4) What are the four major components of terrorists cells (describe in detail).
Q5) Describe that the World Islamic Front Statement is:
Q6) What are the three phases of money laundering and how do they work?
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Chapter 19: Business Valuation
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Q1) Explain what restrictions on transferability are and how they might effect business valuation.
Q2) Investment value is normally determined by analytical methods that seek to find the "true value" or the "underlying value" of an asset.
A)True
B)False
Q3) The capitalized income method is a variation on the:
A) Asset approach.
B) Market approach.
C) Income approach.
D) Discount income method.
Q4) Appraisal organizations that issue credentials are all a part of the U.S. Government or United Nations.
A)True
B)False
Q5) What are the components of the Asset approach to valuation?
Q6) Define the general process of valuating a business:
Q7) Describe at least 3 of the 6 levels of the fair value hierarchy as defined by the Financial Accounting Standards Board's Fair Value Project.
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Chapter 20: Dispute Resolution Services
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Q1) Which mediation style doesn't the mediator express opinions with respect to the facts of the case or the reasonableness of the participants' negotiating positions?
A) Facilitative.
B) Evaluative.
C) Participative.
D) Arbitrational.
Q2) What are some examples of specific services that Accountants can provide in ADR cases?
A) In corporate acquisitions, evaluating for the seller the buyer's notice of objection to the closing balance sheet.
B) Suggesting mediation or arbitration procedures, or ADR administrators, to clients.
C) Identifying, locating, and evaluating documents and information relevant to evaluating disputed issues.
D) All of the above.
Q3) Explain the accounting practice of litigation support services.
Q4) How does on-line dispute resolution work and what are its benefits?
Q5) Contrast and compare mediation and arbitration.
Q6) Explain nontraditional alternative dispute resolution techniques.
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