Question 1

If management decides to use an inventory method that will provide them with a higher net income, this is an example of:

Accepted Answer

A)  Legitimate discretion. 
B)  Financial statement fraud. 
C)  Manipulation. 
D)  Aggressive accounting techniques. 
A)  Legitimate discretion. 
B)  Financial statement fraud. 
C)  Manipulation. 
D)  Aggressive accounting techniques. A

Question 2

Describe big bath accounting and what would make a company engage in it.

Accepted Answer

When a company makes a very large one-time write off, it's said to take a big bath. Taking a big bath is one sure fire way of improving future earnings. For this reason, many companies will take a big bath (often in the name of restructuring or inventory write-downs) when earnings performance is poor. In some cases companies will take a big bath in just an ordinary bad year. Management reasons that it's going to look bad anyway, so it won't make much difference if it looks really bad. The benefit of higher future income outweighs any negatives related to short run appearances. In other cases, a new CEO may be tempted to take a big bath. The blame can placed on the old CEO, and then the new CEO will look much better in future years.

Question 3

Fraud-related losses do not accrue for those who both buy and sell their shares during the FCIIP.

Accepted Answer

A) True 
 B)False  True

Question 4

About half of all financial statement fraud crimes involve:

Accepted Answer

A)  Understatement of liabilities. 
B)  Overstatement of capital. 
C)  Overstatement of assets and revenues. 
D)  Alteration of source documents. 
A)  Understatement of liabilities. 
B)  Overstatement of capital. 
C)  Overstatement of assets and revenues. 
D)  Alteration of source documents.

Question 5

Describe some of the nature of financial statement fraud.

Accepted Answer

The frauds tend to involve a misstatemen

Question 6

Schemes for overstating revenues include manipulating inventories and receivables.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following would be involved in a scheme involving overstating assets:

Accepted Answer

A)  Inventories. 
B)  Accounts receivables. 
C)  Property, plant and equipment. 
D)  Consignment sales. 
A)  Inventories. 
B)  Accounts receivables. 
C)  Property, plant and equipment. 
D)  Consignment sales.

Question 8

The Committee of Sponsoring Organizations for the Treadway Commission studied financial statement fraud cases and developed a taxonomy of financial statement fraud schemes applicable to publicly-traded companies that included Improper Revenue Recognition and Misappropriation of Assets.

Accepted Answer

A) True 
 B)False

Question 9

Name at least three schemes for overstating revenues.

Accepted Answer

Sham sales, Premature revenue recognitio

Question 10

How does SOX hope to prevent financial statement fraud?

Accepted Answer

A)  Through hard penalties for management. 
B)  By having management sign the financial statements. 
C)  By prompting strong oversight and governance within the business. 
D)  All of the above. 
A)  Through hard penalties for management. 
B)  By having management sign the financial statements. 
C)  By prompting strong oversight and governance within the business. 
D)  All of the above.

Question 11

By non-disclose of good news, management has:

Accepted Answer

A)  Protected the company from bad stock valuation on the market. 
B)  Cost investors who have sold their stock from realizing its true value. 
C)  Let those who have purchased stock on the market pay a higher price than they should have. 
D)  All of the above. 
A)  Protected the company from bad stock valuation on the market. 
B)  Cost investors who have sold their stock from realizing its true value. 
C)  Let those who have purchased stock on the market pay a higher price than they should have. 
D)  All of the above.

Question 12

The median amount of the fraud is approximately 50% of the median total assets.

Accepted Answer

A) True 
 B)False

Question 13

One of the biggest lessons learned by studying cases of financial statement fraud is that:

Accepted Answer

A)  Management will always have the power of greed behind them. 
B)  Only fools believe in fraudulent financial statements. 
C)  Auditors can only certify financial statements if they are paid off. 
D)  People who are making money from fraudulent financial statements want to believe in them. 
A)  Management will always have the power of greed behind them. 
B)  Only fools believe in fraudulent financial statements. 
C)  Auditors can only certify financial statements if they are paid off. 
D)  People who are making money from fraudulent financial statements want to believe in them.

Question 14

Earnings management is:

Accepted Answer

A)  Illegal as defined by SOX. 
B)  Illegal as defined by the IRS. 
C)  Illegal as defined by the SEc. 
D)  Legal, to a certain extent. 
A)  Illegal as defined by SOX. 
B)  Illegal as defined by the IRS. 
C)  Illegal as defined by the SEc. 
D)  Legal, to a certain extent.

Question 15

What is the general philosophy of SOX for preventing financial statement fraud?

Accepted Answer

The general philosophy behind SOX is to

Question 16

Why would management engage in earnings smoothing?

Accepted Answer

It's very well known on Wall Street that

Question 17

What are some motivators to financial statement fraud?

Accepted Answer

Covering up poor income performance, Cap

Question 18

Normally, markets reward profitability.

Accepted Answer

A) True 
 B)False

Question 19

The scheme involving recording fictitious sales and frequently includes falsified sales, inventory, and shipping records is called:

Accepted Answer

A)  Sham sales. 
B)  Recognition of conditional sales. 
C)  Improper cutoff of sales. 
D)  Consignment sales. 
A)  Sham sales. 
B)  Recognition of conditional sales. 
C)  Improper cutoff of sales. 
D)  Consignment sales.

Question 20

In order for actual losses to occur in the bad-news case, the buyer must:

Accepted Answer

A)  Buy and sell within the FCIIP period. 
B)  Buy before the FCIIP period and sell within it. 
C)  Buy before the FCIIP period and sell after it. 
D)  Buy within the FCIIP period and sell after it. 
A)  Buy and sell within the FCIIP period. 
B)  Buy before the FCIIP period and sell within it. 
C)  Buy before the FCIIP period and sell after it. 
D)  Buy within the FCIIP period and sell after it.

If management decides to use an inventory method that will provide them with a higher net income, this is an example of:

Describe big bath accounting and what would make a company engage in it.

Fraud-related losses do not accrue for those who both buy and sell their shares during the FCIIP.

About half of all financial statement fraud crimes involve:

Describe some of the nature of financial statement fraud.

Schemes for overstating revenues include manipulating inventories and receivables.

Which of the following would be involved in a scheme involving overstating assets:

The Committee of Sponsoring Organizations for the Treadway Commission studied financial statement fraud cases and developed a taxonomy of financial statement fraud schemes applicable to publicly-traded companies that included Improper Revenue Recognition and Misappropriation of Assets.

Name at least three schemes for overstating revenues.

How does SOX hope to prevent financial statement fraud?

By non-disclose of good news, management has:

The median amount of the fraud is approximately 50% of the median total assets.

One of the biggest lessons learned by studying cases of financial statement fraud is that:

Earnings management is:

What is the general philosophy of SOX for preventing financial statement fraud?

Why would management engage in earnings smoothing?

What are some motivators to financial statement fraud?

Normally, markets reward profitability.

The scheme involving recording fictitious sales and frequently includes falsified sales, inventory, and shipping records is called:

In order for actual losses to occur in the bad-news case, the buyer must:

Introduction to Forensic Accounting and Fraud Examination

The Forensic Accounting Legal Environment

Fundamentals I: Accounting Information Systems

Fundamentals II: The Auditing Environment

Fraud Prevention and Risk Management

Fraud Detection

The Fraud Investigation and Engagement Processes

The Evidence Collection Process

Fraud Examination Evidence I: Physical, Documentary, and Observational Evidence

Fraud Examination Evidence II: Interview and Interrogation Methods

Fraud Examination Evidence III: Forensic Science and Computer Forensics

The Fraud Report, Litigation, and the Recovery Process

Employee, Vendor, and Other Frauds Against the Organization

Fraud and Sox Compliance

Tax Fraud

Bankruptcy, Divorce, Identity Theft

Organized Crime, Counterterrorism, and Anti-Money Laundering

Business Valuation

Dispute Resolution Services

Filters

Exam 14: Financial Statement Fraud

If management decides to use an inventory method that will provide them with a higher net income, this is an example of:

Describe big bath accounting and what would make a company engage in it.

Fraud-related losses do not accrue for those who both buy and sell their shares during the FCIIP.

About half of all financial statement fraud crimes involve:

Describe some of the nature of financial statement fraud.

Schemes for overstating revenues include manipulating inventories and receivables.

Which of the following would be involved in a scheme involving overstating assets:

The Committee of Sponsoring Organizations for the Treadway Commission studied financial statement fraud cases and developed a taxonomy of financial statement fraud schemes applicable to publicly-traded companies that included Improper Revenue Recognition and Misappropriation of Assets.

Name at least three schemes for overstating revenues.

How does SOX hope to prevent financial statement fraud?

By non-disclose of good news, management has:

The median amount of the fraud is approximately 50% of the median total assets.

One of the biggest lessons learned by studying cases of financial statement fraud is that:

Earnings management is:

What is the general philosophy of SOX for preventing financial statement fraud?

Why would management engage in earnings smoothing?

What are some motivators to financial statement fraud?

Normally, markets reward profitability.

The scheme involving recording fictitious sales and frequently includes falsified sales, inventory, and shipping records is called:

In order for actual losses to occur in the bad-news case, the buyer must:

Introduction to Forensic Accounting and Fraud Examination

The Forensic Accounting Legal Environment

Fundamentals I: Accounting Information Systems

Fundamentals II: The Auditing Environment

Fraud Prevention and Risk Management

Fraud Detection

The Fraud Investigation and Engagement Processes

The Evidence Collection Process

Fraud Examination Evidence I: Physical, Documentary, and Observational Evidence

Fraud Examination Evidence II: Interview and Interrogation Methods

Fraud Examination Evidence III: Forensic Science and Computer Forensics

The Fraud Report, Litigation, and the Recovery Process

Employee, Vendor, and Other Frauds Against the Organization

Fraud and Sox Compliance

Tax Fraud

Bankruptcy, Divorce, Identity Theft

Organized Crime, Counterterrorism, and Anti-Money Laundering

Business Valuation

Dispute Resolution Services

Filters