Exam 11: Accounting Principles and Fraud

If a fraudster uses his computer to produce fictitious financial statements while completely ignoring the data in the accounting system, this is an example of what general financial statement fraud method?

Senior management is most likely to understate business performance in the financial statements for which of the following reasons?

According to the 2010 Report to the Nations on Occupational Fraud and Abuse, losses due to financial statement frauds are higher than other occupational fraud schemes.

The conservatism constraint for financial reporting states that, if there is any doubt, companies should aim to avoid overstating assets and income.

Investigating registered public accounting firms and their employees, conducting disciplinary hearings, and imposing sanctions where justified are duties of which of the following bodies?

Walden Industries is being sued by a former employee for wrongful termination. It is probable that the company will lose the case and be ordered to pay the plaintiff a significant sum of money. If Walden fails to report this information somewhere in its financial statements, it is violating the GAAP concept of:

Which of the following is not one of the provisions established under the Sarbanes-Oxley Act?

A company's financial statements are the responsibility of:

If a fraudster manipulates the assumptions used to calculate depreciation charges in order to increase earnings to a desired figure, which general method of financial statement fraud is the fraudster using?

Which of the following is a reason that a chief executive officer might commit financial statement fraud?

When a fraudster feeds fictitious information into the accounting system in order to manipulate reported results, this is called:

Fraudulent manipulation of the going concern assumption usually results from an organization trying to conceal its terminal business situation.

As the result of the Sarbanes-Oxley Act, the Securities Exchange Commission has implemented which of the following rules?

The financial statements for DRG Industries contain a misstatement that is so significant that reasonable investors would likely make a different investment decision if they were given the correct information. What concept of GAAP applies to this situation?

The Sarbanes-Oxley Act placed restrictions on the types of services that public accounting firms are allowed to perform for audit clients. Which of the following services are public audit firms now expressly prohibited from performing for their audit clients?

Under Sarbanes-Oxley, pubic accounting firms must rotate the lead partner or the partner reviewing the audit every year.

The Sarbanes-Oxley Act provides that members of the audit committee may receive compensation for consulting or advisory work only if approved by a majority of the board members.

According to the 2010 Report to the Nations on Occupational Fraud and Abuse, the most common type of occupational fraud is financial statement fraud.

The conceptual framework for financial reporting includes several assumptions that underlie generally accepted accounting principles. Which of the following is one of these assumptions?

Under Sarbanes-Oxley, chief executive officers and chief financial officers are required to personally certify annual and quarterly SEC filings. Which of the following is an item that they must certify in their reports?