Homework answers / question archive / Chapter 1 – Introduction     1)Which of the following best describes the objective of a fraud examination? To make recommendations to management about how to prevent fraud To determine whether financial statements are free of misstatements due to fraud To express an opinion on the guilt or innocence of a suspect To determine whether a crime has been committed, and if so, who is responsible   Which of the following is not a part of the fraud theory approach? Analyze available dat Develop “what-if” scenarios

Chapter 1 – Introduction     1)Which of the following best describes the objective of a fraud examination? To make recommendations to management about how to prevent fraud To determine whether financial statements are free of misstatements due to fraud To express an opinion on the guilt or innocence of a suspect To determine whether a crime has been committed, and if so, who is responsible   Which of the following is not a part of the fraud theory approach? Analyze available dat Develop “what-if” scenarios

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Chapter 1 – Introduction

 

 

1)Which of the following best describes the objective of a fraud examination?

1. To make recommendations to management about how to prevent fraud
2. To determine whether financial statements are free of misstatements due to fraud
3. To express an opinion on the guilt or innocence of a suspect
4. To determine whether a crime has been committed, and if so, who is responsible

 

2. Which of the following is not a part of the fraud theory approach?

1. Analyze available dat
2. Develop “what-if” scenarios.
3. Identify who committed the fraud.
4. Refine the hypothesis.

 

3. Once sufficient predication has been established, what is the first step a fraud examiner following the fraud theory approach should take?

1. Create a hypothesis.   
2. Analyze data.
3. Interview witnesses.
4. Interview the suspect.

 

4. The discipline of fraud examination includes all of the following except:
   1. 1. 1. Writing investigative reports
         2. Determining the guilt of the suspect
         3. Testifying to findings
         4. Interviewing witnesses

 

5. Fraud examination differs from auditing in that fraud examination is:

a.   Recurring

b.   Adversarial

c.   General in scope

d.   All of the above

 

6. Which of the following is the correct order for a fraud examiner to interview witnesses?
   1. Corroborative witnesses, neutral third-parties, co-conspirators, suspect
   2. Suspect, co-conspirators, corroborative witnesses, neutral third-parties
   3. Neutral third-parties, corroborative witnesses, co-conspirators, suspect
   4. Suspect, corroborative witnesses, co-conspirators, neutral third-parties

 

7. In order to prove that fraud occurred, four elements must be present. Which of the following is not one of those elements?

1. A material false statement
2. Knowledge that the statement was false
3. Reliance on the false statement by the victim
4. Intent to cause the victim damages

 

 

8. Who developed the Fraud Scale?

1. Joseph T. Wells
2. W. Steve Albrecht
3. Richard C. Hollinger
4. Donald R. Cressey

 

9. Which of the following is not one of the legs of the Fraud Triangle?

1. Situational environment
2. Perceived non-sharable financial need
3. Perceived opportunity
4. Rationalization

 

 

10.  In a study by Steve Albrecht, Marshall Romney, and Keith Howe, participants were asked to rank personal characteristics as motivating factors that contributed to fraud. The highest ranked factor was:

1. Undue family or peer pressure
2. Lack of recognition of job performance
3. Living beyond one’s means
4. Lack of appreciation by management

 

11. In a study by Steve Albrecht, Marshall Romney, and Keith Howe, participants were asked to rank characteristics of the organizational environment that contributed to fraud. The highest ranked factor was:

1. Lack of clear lines of authority
2. Inadequate attention to detail
3. Lack of an internal audit function
4. Placing too much trust in key employees

 

12. Research in the Hollinger-Clark study suggests that the best way to deter employee theft is by:

1. Increasing sanctions imposed on occupational fraudsters
2. Increasing the perception of detection
3. Strengthening internal controls
4. Communicating the organization’s fraud policies to employees

 

13. According to the results of the Hollinger-Clark study, employees steal primarily because of:
    1. Job dissatisfaction
    2. Greed
    3. Informal organizational structures
    4. Economic pressures

 

14. In the 2012 Report to the Nations on Occupational Fraud and Abuse, the category that committed the smallest percentage of occupational fraud was:

1. Managers
2. Employees
3. Owners/Executives
4. External parties

 

 

15.  Joel Baker, a customer of ABC Electronics, stole a box containing computer games while the sales associate waited on another customer. Which of the following could Joel be charged with?

1. Larceny
2. Embezzlement
3. Fraud
4. All of the above

 

 

16. When Jill Michaels, an assistant to the director of procurement, moved into her new home, she used the company’s flat bed truck to move her furnishings on an afternoon when her boss was out of town. Which of the following best describes Michael’s act?

1. Fraud
2. Abuse
3. Embezzlement
4. Larceny

 

17. Eddie Dolan is the manager of shipping and receiving and has been working at the UFA Company for twenty years. He rarely calls in sick and gets good performance reviews every year. For the past year, his wife’s company, ABC Co., has been in serious financial trouble. ABC Co. likely will not be able to make the payroll for next month and may have to close down. Which leg of the Fraud Triangle best applies to Dolan’s situation?

1. Motive
2. Perceived opportunity
3. Rationalization
4. Non-sharable financial need

 

 

 

 

 

 

18. Alice Durant works in the accounts payable department for the BC Group.  She recently found out that Della Granger, another A/P clerk, received a bigger raise than she did, even though Durant has been with the company longer and frequently has to correct Granger’s errors. Which leg of the Fraud Triangle best applies to Durant’s situation?

1. Motive
2. Perceived opportunity
3. Rationalization
4. Non-sharable financial need

 

19. Arthur Baxter, a manager in records retention for SWC Company, has ordered seven laptop computers for his department, even though he only has five employees. In addition to each laptop, he ordered extra copies of several software programs. When the equipment arrives, Baxter sends one of the extra laptops to his son who is a freshman at Eastern University and sells three of the original software packages to friends. Which of the following offenses could Baxter be charged with?

1. Larceny
2. Embezzlement
3. Conversion
4. All of the above

 

20. Richard Moore is the controller for Ajax Company. Recently, he suffered several large losses at the race track, causing him to incur enormous personal debts. Which type of non-sharable financial problem best describes Richard’s situation?
    1. Business reversal
    2. Physical isolation
    3. Violation of ascribed obligations
    4. Status gaining

 

21. Samantha Lewis, CFE, is conducting an investigation into possible skimming of the accounts receivable at Southwest Paint and Supply Co. If Lewis plans to interview all of the following parties, whom should she interview first?
    1. Marie Riley, the primary suspect
    2. Jose Rodriguez, an accounts receivable clerk who filled in for Riley while she was on vacation
    3. Sean Miles, a regular customer of the company, whose complaint about his account balance prompted the investigation
    4. Thomas Banks, Riley’s supervisor, who is suspected of helping Riley cover up the fraud in exchange for a portion of the proceeds