Question 1

Once fraud within the financial statements is suspected, what are the next steps that the audit team would take? Provide examples.

Accepted Answer

The answer of Once fraud within the financial statements is...

Question 2

Social networking sites such as Facebook® and MySpace® can be a source of evidence.

Accepted Answer

A) True 
 B)False

Question 3

How does a Benford analysis work?

Accepted Answer

The answer of How does a Benford analysis work?...

Question 4

Investigation methods used to detect financial statement fraud are similar to those used to audit financial statements.

Accepted Answer

A) True 
 B)False

Question 5

Through Net Worth Analysis, you are attempting to determine:

Accepted Answer

A)  Total earnings for a period of years. 
B) The change in net worth for the year. 
C)  The amount of debt financing. 
D)  None of the above

Question 6

Provide at least three examples of both private and public databases.

Accepted Answer

The answer of Provide at least three examples of both...

Question 7

If skimming has been in practice for years in a business, why might it be hard to detect using horizontal analysis?

Accepted Answer

A)  Comparing a year in which receipts have been skimmed to other years in which. receipts have been skimmed will usually not reveal differences. 
B)  Horizontal analysis is typically performed in industries that have high skimming rates. 
C)  Gross margins for the industry typically won't reveal any fraud when evaluated via Horizontal analysis. 
D)  Skimming typically is revealed on the income statement and horizontal analysis is only done on balance sheet accounts.

Question 8

Which of the types of filings would most likely indicate a financial need that might motivate financial statement fraud?

Accepted Answer

A)  Bankruptcy. 
B)  Luxury vehicle loan. 
C)  Statement of net loss. 
D)  Divorce.

Question 9

Chemical analysis is performed by means of infrared, fluorescence, and spectro-chromatography to establish the difference between inks appearing on the same paper in handwriting analysis.

Accepted Answer

A) True 
 B)False

Question 10

Databases, court records and real estate records are all considered:

Accepted Answer

A)  Sources of information for an investigation. 
B)  Worthless in an investigation. 
C)  Forensic data collections. 
D)  Areas of hiding for individuals who wish to commit fraud.

Question 11

Explain some considerations for choosing the appropriate evidence-gathering technique.
To choose the appropriate technique, the forensic accountant should consider the following factors: the type of fraud believed to have been perpetrated; whether the fraud is ongoing; the extent of the fraud; the extent to which the investigation can be kept secret; the condition of the financial records, other source documents, and physical evidence; the sophistication of the suspect and whether collusion exists; the cost of applying a given method; the psychological and organizational impact of applying the given method; and the objectives of the investigation.

Accepted Answer

The answer of Explain some considerations for choosing the appropriate...

Question 12

Tracing and vouching are opposite investigation techniques.

Accepted Answer

A) True 
 B)False

Question 13

What is a search warrant?

Accepted Answer

A)  A tool used to allow a forensic accountant to talk to a suspect. 
B)  Part of the industry analysis that allows a forensic accountant to obtain financial statement from other businesses in the same industry to make comparative analysis. 
C)  It is similar to a arrest warrant, only more vague because the suspect is not specifically named. 
D)  A written order that allows a specified place to be searched and specified items to be seized.

Question 14

Which of the following type of records can typically only be access by law enforcement?

Accepted Answer

A)  Commercial Databases 
B)  Motor Vehicle Identification Number 
C)  Dealership vehicle records 
D)  UCC Filings

Question 15

__________ are used when third parties (persons other than the client) have knowledge of some aspect of a financial or non-financial matter and can be asked to provide this information.

Accepted Answer

A) Confirmations 
B)  Engagement Letters 
C)  Subpoenas 
D)  Grand Juries

Question 16

If the fraud investigator is not an employee of the IRS, or a member of a federal agency that can obtain tax records via subpoena, how much he obtain the information?

Accepted Answer

A)  Through a bench warrant. 
B)  Through discovery or voluntary consent of the tax payer. 
C)  Through a subpoena issued by a Grand Jury. 
D)  All of the above

Question 17

What are the five common types of analytical procedures?

Accepted Answer

The answer of What are the five common types of...

Question 18

The basis for net worth calculations is:

Accepted Answer

A)  Net Worth= Gross Pay - Tax Liabilities 
B)  Current Debt - Cash on hand 
C)  Assets= Liabilities - Owner's Equity 
D)  Assets = Liabilities + Owner's Equity

Question 19

If evidence is tangible, it is said to be _______ evidence.

Accepted Answer

A)  Documented 
B)  Heresy 
C)  Physical 
D)  Forged

Question 20

Which of the following would be a violation of the chain of custody?

Accepted Answer

A)  Locking documents in a safe that only the investigator has the combination to. 
B)  Mailing original documents to another party without proof of receipt. 
C)  Signing over original documents to legal counsel. 
D)  Documenting the placing of items in a case file for storage.

Exam 9: Fraud Examination Evidence I: Physical, Documentary, and Observational Evidence

Once fraud within the financial statements is suspected, what are the next steps that the audit team would take? Provide examples.

Social networking sites such as Facebook® and MySpace® can be a source of evidence.

How does a Benford analysis work?

Investigation methods used to detect financial statement fraud are similar to those used to audit financial statements.

Through Net Worth Analysis, you are attempting to determine:

Provide at least three examples of both private and public databases.

If skimming has been in practice for years in a business, why might it be hard to detect using horizontal analysis?

Which of the types of filings would most likely indicate a financial need that might motivate financial statement fraud?

Chemical analysis is performed by means of infrared, fluorescence, and spectro-chromatography to establish the difference between inks appearing on the same paper in handwriting analysis.

Databases, court records and real estate records are all considered:

Tracing and vouching are opposite investigation techniques.

What is a search warrant?

Which of the following type of records can typically only be access by law enforcement?

__________ are used when third parties (persons other than the client) have knowledge of some aspect of a financial or non-financial matter and can be asked to provide this information.

If the fraud investigator is not an employee of the IRS, or a member of a federal agency that can obtain tax records via subpoena, how much he obtain the information?

What are the five common types of analytical procedures?

The basis for net worth calculations is:

If evidence is tangible, it is said to be _______ evidence.

Which of the following would be a violation of the chain of custody?