Question 1

Describe four ways companies can reduce losses from fraud.

Accepted Answer

Maintain adequate insurance.Keep a current backup copy of all program and data files in a secure off-site location.Develop a contingency plan for fraud occurrences and other disasters that might occur.Use special software designed to monitor system activity and help companies recover from frauds and malicious actions.

Question 2

Which of the following is not a management characteristic that increases pressure to commit fraudulent financial reporting?

Accepted Answer

A)  Close relationship with the current audit engagement partner and manager 
B)  Pay for performance incentives based on short-term performance measures 
C)  High management and employee turnover 
D)  Highly optimistic earnings projections 
A)  Close relationship with the current audit engagement partner and manager 
B)  Pay for performance incentives based on short-term performance measures 
C)  High management and employee turnover 
D)  Highly optimistic earnings projections A

Question 3

The simplest and most common way to commit a computer fraud is to

Accepted Answer

A)  alter computer input. 
B)  alter computer output. 
C)  modify the processing. 
D)  corrupt the database. 
A)  alter computer input. 
B)  alter computer output. 
C)  modify the processing. 
D)  corrupt the database. A

Question 4

Researchers have compared the psychological and demographic characteristics of white-collar criminals,violent criminals,and the general public.They found that

Accepted Answer

A)  few differences exist between white-collar criminals and the general public. 
B)  white-collar criminals eventually become violent criminals. 
C)  most white-collar criminals invest their illegal income rather than spend it. 
D)  most white-collar criminals are older and not technologically proficient. 
A)  few differences exist between white-collar criminals and the general public. 
B)  white-collar criminals eventually become violent criminals. 
C)  most white-collar criminals invest their illegal income rather than spend it. 
D)  most white-collar criminals are older and not technologically proficient.

Question 5

Which of the following is a financial pressure that could cause an employee to commit fraud?

Accepted Answer

A)  a feeling of not being appreciated 
B)  failing to receive a deserved promotion 
C)  believing that their pay is too low relative to others around them 
D)  having a spouse injured in a car accident and in the hospital for several weeks 
A)  a feeling of not being appreciated 
B)  failing to receive a deserved promotion 
C)  believing that their pay is too low relative to others around them 
D)  having a spouse injured in a car accident and in the hospital for several weeks

Question 6

"Cooking the books" is typically accomplished by all the following except

Accepted Answer

A)  inflating accounts payable. 
B)  accelerating recognition of revenue. 
C)  delaying recording of expenses. 
D)  overstating inventory. 
A)  inflating accounts payable. 
B)  accelerating recognition of revenue. 
C)  delaying recording of expenses. 
D)  overstating inventory.

Question 7

Which of the following is not an example of one of the basic types of fraud?

Accepted Answer

A)  While straightening the store at the end of the day, a shoe store employee finds and keeps an expensive pair of sunglasses left by a customer. 
B)  An executive devised and implemented a plan to accelerate revenue recognition on a long-term contract, which will allow the company to forestall filing for bankruptcy. The executive does not own any stock, stock options or grants, and will not receive a bonus or perk because of the overstated revenue. 
C)  A purchasing agent places a large order at higher-than-normal unit prices with a vendor that gave the agent tickets to several football games. 
D)  A salesperson approves a large sales discount on an order from a company owned partially by the salesperson's sister. 
A)  While straightening the store at the end of the day, a shoe store employee finds and keeps an expensive pair of sunglasses left by a customer. 
B)  An executive devised and implemented a plan to accelerate revenue recognition on a long-term contract, which will allow the company to forestall filing for bankruptcy. The executive does not own any stock, stock options or grants, and will not receive a bonus or perk because of the overstated revenue. 
C)  A purchasing agent places a large order at higher-than-normal unit prices with a vendor that gave the agent tickets to several football games. 
D)  A salesperson approves a large sales discount on an order from a company owned partially by the salesperson's sister.

Question 8

Which of the following is not an example of the fraud triangle characteristic concerned with easing a fraudster's conscience?

Accepted Answer

A)  Revenge against the company 
B)  Sense of entitlement as compensation for receiving a lower than average raise 
C)  Intent to repay "borrowed" funds in the future 
D)  Belief that the company won't suffer because an insurance company will reimburse losses 
A)  Revenge against the company 
B)  Sense of entitlement as compensation for receiving a lower than average raise 
C)  Intent to repay "borrowed" funds in the future 
D)  Belief that the company won't suffer because an insurance company will reimburse losses

Question 9

What is the most prevalent opportunity within most companies to commit fraud?

Accepted Answer

A)  lack of any internal controls 
B)  failure to enforce the internal controls 
C)  loopholes in the design of internal controls 
D)  management's failure to believe employees would commit fraud 
A)  lack of any internal controls 
B)  failure to enforce the internal controls 
C)  loopholes in the design of internal controls 
D)  management's failure to believe employees would commit fraud

Question 10

A simple method for catching or preventing many types of employee fraud is to

Accepted Answer

A)  monitor all employee behavior using video cameras. 
B)  require all employees to take annual vacations. 
C)  explain to employees that fraud is illegal and that it will be severely punished. 
D)  monitor employee bank accounts and net worth. 
A)  monitor all employee behavior using video cameras. 
B)  require all employees to take annual vacations. 
C)  explain to employees that fraud is illegal and that it will be severely punished. 
D)  monitor employee bank accounts and net worth.

Question 11

Intentional or reckless conduct that results in materially misleading financial statements is called

Accepted Answer

A)  financial fraud. 
B)  misstatement fraud. 
C)  fraudulent financial reporting. 
D)  audit failure fraud. 
A)  financial fraud. 
B)  misstatement fraud. 
C)  fraudulent financial reporting. 
D)  audit failure fraud.

Question 12

Which characteristic of the fraud triangle often stems from a lack of internal controls within an organization?

Accepted Answer

A)  pressure 
B)  opportunity 
C)  rationalization 
D)  concealment 
A)  pressure 
B)  opportunity 
C)  rationalization 
D)  concealment

Question 13

Which characteristic of the fraud triangle relates to excuses that perpetrators use to justify their illegal behavior?

Accepted Answer

A)  pressure 
B)  opportunity 
C)  rationalization 
D)  concealment 
A)  pressure 
B)  opportunity 
C)  rationalization 
D)  concealment

Question 14

The fraud that requires the least computer knowledge or skill involves

Accepted Answer

A)  altering or falsifying source data. 
B)  unauthorized use of computers. 
C)  tampering with or copying software. 
D)  forging documents like paychecks. 
A)  altering or falsifying source data. 
B)  unauthorized use of computers. 
C)  tampering with or copying software. 
D)  forging documents like paychecks.

Question 15

SAS No.99 requires that auditors

Accepted Answer

A)  plan audits based on an analysis of fraud risk. 
B)  detect all material fraud. 
C)  alert the Securities and Exchange Commission of any fraud detected. 
D)  take all of the above actions. 
A)  plan audits based on an analysis of fraud risk. 
B)  detect all material fraud. 
C)  alert the Securities and Exchange Commission of any fraud detected. 
D)  take all of the above actions.

Question 16

Opportunity to commit fraud is comprised of three stages.The stage that often takes most time and effort would include

Accepted Answer

A)  stealing inventory from the warehouse. 
B)  selling stolen inventory to get cash. 
C)  lapping accounts receivable. 
D)  creating false journal entries to overstate revenue. 
A)  stealing inventory from the warehouse. 
B)  selling stolen inventory to get cash. 
C)  lapping accounts receivable. 
D)  creating false journal entries to overstate revenue.

Question 17

Most fraud perpetrators are insiders because

Accepted Answer

A)  insiders are more dishonest than outsiders. 
B)  insiders know more about the system and its weaknesses than outsiders. 
C)  outsiders are more likely to get caught than insiders. 
D)  insiders have more need for money than outsiders. 
A)  insiders are more dishonest than outsiders. 
B)  insiders know more about the system and its weaknesses than outsiders. 
C)  outsiders are more likely to get caught than insiders. 
D)  insiders have more need for money than outsiders.

Question 18

What are the actions recommended by the Treadway Commission to reduce the possibility of fraudulent financial reporting?

Accepted Answer

Establish an organizational environment

Question 19

Which of the following best describes lapping?

Accepted Answer

A)  Applying cash receipts to a different customer's account in an attempt to conceal previous thefts of cash receipts. 
B)  Inflating bank balances by transferring money among different bank accounts. 
C)  Increasing expenses to conceal that an asset was stolen. 
D)  Stealing small amounts of cash, many times over a period of time. 
A)  Applying cash receipts to a different customer's account in an attempt to conceal previous thefts of cash receipts. 
B)  Inflating bank balances by transferring money among different bank accounts. 
C)  Increasing expenses to conceal that an asset was stolen. 
D)  Stealing small amounts of cash, many times over a period of time.

Question 20

Amy wants to open a floral shop in a downtown business district.She doesn't have funds enough to purchase inventory and pay six months rent up front.Amy approaches a good friend,Coleen,to discuss the possibility of Coleen investing funds and becoming a 25% partner in the business.After a lengthy discussion Coleen agrees to invest.Eight months later,Coleen and Amy have a falling out.In order for Coleen to sue Amy for fraud,all the following must be true except

Accepted Answer

A)  Amy told Coleen she had worked at a floral shop for several years, when in fact she did not have any prior experience in floral retail. 
B)  Coleen's decision to invest was primarily based on Amy's assertion that she had prior floral retail experience. 
C)  Coleen's 25% share of the business is worth substantially less than her initial investment. 
D)  Before Coleen invested, Amy prepared a detailed business plan and sales forecasts, and provided Coleen with copies. 
A)  Amy told Coleen she had worked at a floral shop for several years, when in fact she did not have any prior experience in floral retail. 
B)  Coleen's decision to invest was primarily based on Amy's assertion that she had prior floral retail experience. 
C)  Coleen's 25% share of the business is worth substantially less than her initial investment. 
D)  Before Coleen invested, Amy prepared a detailed business plan and sales forecasts, and provided Coleen with copies.

Exam 5: Computer Fraud

Describe four ways companies can reduce losses from fraud.

Which of the following is not a management characteristic that increases pressure to commit fraudulent financial reporting?

The simplest and most common way to commit a computer fraud is to

Researchers have compared the psychological and demographic characteristics of white-collar criminals,violent criminals,and the general public.They found that

Which of the following is a financial pressure that could cause an employee to commit fraud?

"Cooking the books" is typically accomplished by all the following except

Which of the following is not an example of one of the basic types of fraud?

Which of the following is not an example of the fraud triangle characteristic concerned with easing a fraudster's conscience?

What is the most prevalent opportunity within most companies to commit fraud?

A simple method for catching or preventing many types of employee fraud is to

Intentional or reckless conduct that results in materially misleading financial statements is called

Which characteristic of the fraud triangle often stems from a lack of internal controls within an organization?

Which characteristic of the fraud triangle relates to excuses that perpetrators use to justify their illegal behavior?

The fraud that requires the least computer knowledge or skill involves

SAS No.99 requires that auditors

Opportunity to commit fraud is comprised of three stages.The stage that often takes most time and effort would include

Most fraud perpetrators are insiders because

What are the actions recommended by the Treadway Commission to reduce the possibility of fraudulent financial reporting?

Which of the following best describes lapping?

Accounting Information Systems: an Overview

Overview of Transaction Processing and Erp Systems

Systems Documentation Techniques

Relational Databases

Computer Fraud and Abuse Techniques

Control and Accounting Information Systems

Information Systems Controls for System Reliability Part 1: Information Security

Information Systems Controls for Systems Reliability Part 2: Confidentiality and Privacy

Information Systems Controls for Systems Reliability Part 3: Processing Integrity and Availability

Auditing Computer-Based Information Systems

The Revenue Cycle: Sales to Cash Collections

The Expenditure Cycle: Purchasing to Cash Disbursements

The Production Cycle

The Human Resources Management and Payroll Cycle

General Ledger and Reporting System

The Rea Data Model

Implementing an Rea Model in a Relational Database

Special Topics in Rea Modeling

Introduction to Systems Development Systems Analysis

Ais Development Strategies

Systems Design, implementation, and Operation

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