White-Collar Crime Review Questions
Course Introduction
White-Collar Crime explores the nature, causes, and consequences of crimes committed by individuals, businesses, and government officials in the course of their professional activities. This course examines various forms of white-collar crime, including corporate fraud, embezzlement, insider trading, environmental violations, and corruption. Students will analyze case studies, relevant laws, and regulatory responses to understand how white-collar crimes differ from other criminal acts, their societal impacts, and the challenges of detection and prosecution. The course also discusses the ethical considerations and the role of enforcement agencies in preventing and responding to such crimes.
Recommended Textbook Fraud Examination 3rd Edition by W. Steve Albrecht
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Chapter 1: The Nature of Fraud
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Sample Questions
Q1) The most common type of fraud committed on behalf of organizations is usually perpetrated by:
A) Employees with access to company assets
B) Top management
C) Customers
D) Vendors
Answer: B
Q2) Fraud has a direct dollar for dollar impact on a company's:
A) Revenues
B) Net income
C) Profit margin
D) Stock price per share
E) All of the above
Answer: B
Q3) What is the most cost-effective way to minimize the cost of fraud?
A) Prevention
B) Detection
C) Investigation
D) Prosecution
Answer: A
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Chapter 2: Why People Commit Fraud
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Sample Questions
Q1) What are some of the vices closely related to financial pressures?
A) Gambling
B) Drugs & alcohol
C) Expensive extramarital relationships
D) All of the above
Answer: D
Q2) Fraud perpetrators are closer to which of the following groups?
A) College students
B) Property offenders
C) Politicians
D) Accountants
Answer: A
Q3) What is the most important element in a control environment?
A) Management's communication
B) Management's role and example
C) The hiring process
D) The internal audit department
Answer: B
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4
Chapter 3: Fighting Fraud: An Overview
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Sample Questions
Q1) An example of kickback fraud is:
A) Fraud perpetrated by an employee and the vendor
B) Fraud perpetrated by two or more employees
C) Fraud that conceals cash shortages by transferring funds
D) None of the above
Answer: A
Q2) Which of the following helps to maintain a culture of honesty and integrity?
A) Train management about effective modeling
B) Pay salaries based upon the amount each person can prove they earned for the company in a year.
C) Reward "whistle-blowers" who help to find fraud with 25% of recovered assets.
D) Earn employee's trust by giving $100 gifts to the person in the department who was most efficient for the month.
Answer: A
Q3) Which is not a type of evidence collected in fraud investigations?
A) Testimonial Evidence
B) Documentary Evidence
C) Electronic Evidence
D) Physical Evidence
Answer: C
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Chapter 4: Preventing Fraud
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Sample Questions
Q1) Which of the following is NOT one of the four steps involved in good proactive fraud auditing?
A) Identifying risk exposures
B) Conducting substantive test of account balances
C) Building audit programs that proactively check for symptoms and exposures
D) Investigating identified symptoms.
Q2) What method results in the biggest savings?
A) Prevention-including EAP plans
B) Detection-including audit proactively, monitoring
C) Investigation-including criminal prosecution
D) All are equally effective in saving money
Q3) What two business trends are likely to increase collusion fraud?
A) Emphasis on quarterly earnings targets from analysts
B) Elimination of middle management
C) Closer relationships between buyers and suppliers
D) Increasingly complex nature of business
Q4) True or false: The majority of frauds committed against companies involve collusion.
A)True
B)False
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Chapter 5: Recognizing the Symptoms of Fraud
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Sample Questions
Q1) Inaccuracies in ledgers are what type of fraud symptom?
A) Internal control weaknesses
B) Analytical anomalies
C) Accounting anomalies
D) Unusual behavior
Q2) Which of the following is a problem related to the segregation of duties?
A) Julie both writes expense checks and takes customers' cash
B) Bob both orders office supplies and orders company checks
C) Steve both records receivables and can write off bad accounts
D) Rebecca both types memos and orders lunch
Q3) Which one of the following fraud elements does not belong with the other three?
A) Theft
B) Rationalization
C) Conversion
D) Concealment
Q4) Which of the following fraud symptoms is usually the easiest to detect?
A) Accounting anomalies
B) Internal control weaknesses
C) Lifestyle changes
D) Analytical anomalies
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Chapter 6: Data-Driven Fraud Detection
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Sample Questions
Q1) All of the following are data analysis software except?
A) ACL
B) MySQL
C) Picalo
D) IDEA
E) All of the above are examples of Data Analysis software
Q2) The data-driven method of fraud detection does not include which of the following characteristics:
A) Determining symptoms that the most likely frauds would generate
B) Understanding the business
C) Understanding and using Benford's law to analyze company databases
D) Understanding what kinds of frauds could occur
Q3) Benford's law can help detect fraud by
A) Establishing weaknesses in the accounting controls system
B) Identifying accounting anomalies
C) Identifying employees that are a high risk for fraud
D) Showing attempts by fraudsters to make stolen amounts look random
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8
Chapter 7: Investigating Theft Acts
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Sample Questions
Q1) Characteristics of invigilation include which of the following?
A) A method of creating a loosely monitored environment that catches the fraudulent action
B) An inexpensive method to monitor the suspect for a short time period.
C) A method comparing regular periods with a temporary period of enhanced controls
D) A method of watching and recording physical facts and movement
Q2) Undercover operations are costly and time-consuming and should be used with extreme care. In which situation would it better NOT to conduct an undercover operation?
A) Law enforcement authorities are informed when appropriate evidence has been accumulated
B) The investigation can be closely monitored
C) Other investigation methods are applicable
D) The investigation can remain secretive
Q3) Imposing strict temporary controls to supervise an employee is an example of:
A) Vulnerability chart analysis
B) Surveillance
C) Honesty Testing
D) Invigilation
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Page 9
Chapter 8: Investigating Concealment
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Sample Questions
Q1) Case Management software
A) Helps organize large cases with many investigators
B) Shows link analysis charts to help connect people, places, and events
C) Is inexpensive and available on the Internet
D) All of the above
E) A & B
Q2) Documents presented in court are often disputed. The following are questions that arise from disputed documents except:
A) Was the signature written before the rest of the document?
B) Is the signature genuine?
C) Was the writing disguised?
D) How old are the paper, printing and ink used?
E) All of the above are questions that arise from disputed documents
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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Chapter 9: Conversion Investigation Methods
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Sample Questions
Q1) The_________ is a database that contains arrest and criminal records on a nationwide basis.
A) National Crime Information Center
B) Interstate Identification Index
C) National Prison Bureau Database
D) None of the above
Q2) Which of the following is not a good reason for involving postal inspectors in a fraud investigation?
A) Postal inspectors share jurisdiction with other federal, state, and local agencies.
B) Postal inspectors work for the prosecution of offenders who violate postal laws.
C) Postal inspectors have access to an individual's past and current addresses.
D) Postal inspectors work to protect citizens from loss through theft that uses the mail system.
Q3) The Gramm-Leach Bliley Act prohibits
A) Telemarketers selling information to corporations
B) The use of false pretenses to access the personal information of others
C) Public access to FBI criminal database
D) None of the Above
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Chapter 10: Inquiry Methods and Fraud Reports
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Sample Questions
Q1) In an admission-seeking interview,
A) the interview should be held in the interviewee's office or home.
B) the interviewer must read Miranda Warnings.
C) the interviewee should be confronted as soon as authorities have reason to suspect him.
D) the interviewer should attempt to interrupt any denial.
Q2) Use of the following methods will help an interviewer deal with difficult people, except:
A) Disarm the interviewee using surprise
B) Change tactics
C) Make it hard to say "No"
D) Don't react
E) All of the above are useful in dealing with difficult people
Q3) Which of the following is NOT a step in the admission-seeking interview?
A) Interrupt denials,
B) Intimidation tactics
C) Delaying tactics
D) Accuse directly
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12
Chapter 11: Financial Statement Fraud
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Sample Questions
Q1) Your firm has just acquired a new audit client. The new client is a company that is highly leveraged and has debt with several institutions. The new client is also planning on expanding its business and wants to obtain additional debt financing in the near future. Based on these facts, which one of the following should be most carefully examined?
A) Large transactions that result in revenues and/or income
B) Loans and other financing transactions between related entities
C) Large amounts of goodwill on the balance sheet
D) Recent change in credit policies
Q2) Understanding a company's debt or leverage is important for which of the following reasons?
A) It helps in gaining a perspective of management's motivations.
B) It helps in understanding the pressures a company faces.
C) It helps identify opportunities in which the company might commit fraud.
D) B and C
E) All of the above
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13
Chapter 12: Revenue- and Inventory-Related Financial
Statement Frauds
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Sample Questions
Q1) Which of the following is not a typical analytical symptom of revenue fraud?
A) Revenue appears too high
B) Discounts appear too low
C) Allowance for doubtful accounts appears too high
D) Bad debt expense appears too low
E) All of the above are typical analytical symptoms of revenue fraud
Q2) An example of a(n) __________ is a lack of segregation of duties:
A) Analytical symptom
B) Accounting symptom
C) Control symptom
D) Lifestyle symptom
E) None of the above
Q3) Regarding related-party transactions, fraud occurs when:
A) The transactions are not properly disclosed.
B) Assets are transferred between related parties.
C) Business deals or arrangements are made between two parties that create a conflict of interest in a business setting.
D) all of the above
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Chapter 13: Liability, Asset, and Inadequate Disclosure
Frauds
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Sample Questions
Q1) All of the following are examples of disclosure fraud except:
A) Failing to disclose contractual obligations
B) Failing to disclose information regarding loans to creditors
C) Inadequately disclosing significant accounting policies
D) Inadequately disclosing information about pensions
E) All of the above are examples of disclosure fraud
Q2) Which of the following is a symptom of Accounts Payable fraud?
A) Discrepancies in cut-off tests
B) Discussion of Contingent liabilities in Board Minutes
C) Liens on properties that are supposed to be paid for
D) None of the above
Q3) Which of the following factors does not make frauds more difficult to detect?
A) Collusion with outsiders
B) Forgery, which GAAS auditors are not trained to detect
C) Off-book frauds in which no records on the company's books are fraudulent
D) None of the above
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15
Chapter 14: Fraud Against Organizations
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Sample Questions
Q1) Which of the following frauds cannot be performed with collusion?
A) Stealing Receipts
B) Stealing Assets on Hand
C) Stealing Through Disbursements
D) All of the above can be performed with collusion
Q2) Which of the following is not a skimming scheme?
A) Misappropriate customer payments and write off the receivable as "uncollectible'
B) Intercept checks intended for a third party and convert the checks to cash for their own use
C) Understate sales and collections by recording false or larger-than-reality sales discounts
D) Collude with customers so that they either pay later than required or less than required
Q3) Bribery involves offering, giving, receiving, or soliciting anything of value in order to influence a/an
A) Decision of government agents
B) Official act
C) Decision of employees
D) All of the above
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Page 16
Chapter 15: Consumer Fraud
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Sample Questions
Q1) Which organization should victims of identity theft contact first?
A) Social Security Office
B) A local police department
C) The victim's credit organization, such as Trans Union, Equifax, or Experian.
D) Federal Trade Commission
Q2) Common identity theft methods include all of the following, except:
A) Filing for bankruptcy in the victim's name
B) Opening new bank accounts in the victim's name
C) Changing a victim's mailing address
D) Destroying personal property, such as a home or car
Q3) Consumer fraud includes all of the following, except:
A) Telephone fraud
B) Internet services or auctions
C) Identity theft
D) Invigilation
Q4) 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
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Chapter 16: Bankruptcy, Divorce, and Tax Fraud
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Sample Questions
Q1) Chapter 11 bankruptcy:
A) Constitutes a complete shutdown of the organization
B) Requires the entity to reorganize to pay creditors
C) Is available only to persons
D) Requires debtors to repay creditors over a specified period
Q2) Which of the following is a possible indicator of concealment in a bankruptcy or divorce fraud?
A) Increases in operating losses that are not explained by economic factors
B) The size of orders placed on credit and the credit balances with suppliers suddenly and dramatically decrease
C) A sudden change in management is made without public notice
D) The company sells goods at large discounts
Q3) Which title of the U.S. Code governs the bankruptcy process?
A) Title 9
B) Title 11
C) Title 13
D) Title 7
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Chapter 17: Fraud in E-Commerce
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Sample Questions
Q1) Which of the following are controls over authorization of transactions and activities?
A) Passwords.
B) Digital Signatures.
C) Biometrics.
D) All of the above.
Q2) Which is not a method of preventing fraud through control activities
A) Separation of Duties
B) Sniffing
C) Authorization of transactions and activities
D) Physical control over assets and records
Q3) According to the book, which 3 of the 5 traditional internal control elements are most important in ebusiness transactions?
A) Control environment, risk assessment and monitoring
B) Risk assessment, control activities and information & communication.
C) Control environment, risk assessment and control activities
D) Control activities, information & communication and monitoring.
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Chapter 18: Legal Follow-Up
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Sample Questions
Q1) Which of the following protect the defendant from 'unreasonable searches and seizures by the government'?
A) 4th amendment
B) 5th amendment
C) 6th amendment
D) 7th amendment
Q2) Which court is the highest appeal court in the U.S.
A) U.S. Court of Appeals
B) U.S. Supreme Court
C) U.S. Administrative Agency
D) U.S. Claims Court
Q3) The following are all stages in civil litigation except:
A) Trial and appeal.
B) Discovery.
C) Investigation and pleadings.
D) All are stages in civil litigation.
Q4) Which type of trial uses pre-trial depositions?
A) Criminal
B) Civil
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