Question 1

In order to detect fraud at the earliest, a manager should pay attention to:

Accepted Answer

A)  present lifestyle. 
B)  past conduct. 
C)  attitude toward work. 
D)  absenteeism. 
A)  present lifestyle. 
B)  past conduct. 
C)  attitude toward work. 
D)  absenteeism. A

Question 2

When only a very small amount of money has been embezzled:

Accepted Answer

A)  taking no action is the best course of action. 
B)  the perpetrator should be punished by publishing the details of the fraud in the local newspapers. 
C)  the perpetrator should be prosecuted. 
D)  the company should transfer the perpetrator to a position with more supervision. 
A)  taking no action is the best course of action. 
B)  the perpetrator should be punished by publishing the details of the fraud in the local newspapers. 
C)  the perpetrator should be prosecuted. 
D)  the company should transfer the perpetrator to a position with more supervision. C

Question 3

Preventive controls include:

Accepted Answer

A)  independent checks. 
B)  segregation of duties. 
C)  documents and records. 
D)  financial statement reviews. 
A)  independent checks. 
B)  segregation of duties. 
C)  documents and records. 
D)  financial statement reviews. B

Question 4

What is a purpose of proactive fraud auditing?

Accepted Answer

A)  It creates an atmosphere of distrust between and among employees. 
B)  Its purpose is to deter employees from committing fraud. 
C)  It provides ways for employees to deal with personal pressures. 
D)  It eliminates collusion as a means of committing fraud. 
A)  It creates an atmosphere of distrust between and among employees. 
B)  Its purpose is to deter employees from committing fraud. 
C)  It provides ways for employees to deal with personal pressures. 
D)  It eliminates collusion as a means of committing fraud.

Question 5

Identify a situation that could usually lead to a conflict of interest.

Accepted Answer

A)  A manager has to choose between two of his best employees for the post of assistant manager. 
B)  A sales supervisor has to allocate targets to her team members, based on revenue generation probability per region. 
C)  A market analyst is asked to create a comparative growth forecast for four firms in an industry. 
D)  A purchase manager in the company runs an operation that produces the raw materials required by the company. 
A)  A manager has to choose between two of his best employees for the post of assistant manager. 
B)  A sales supervisor has to allocate targets to her team members, based on revenue generation probability per region. 
C)  A market analyst is asked to create a comparative growth forecast for four firms in an industry. 
D)  A purchase manager in the company runs an operation that produces the raw materials required by the company.

Question 6

Which of the following observations concerning collusive frauds is true?

Accepted Answer

A)  They are usually slower to develop than frauds committed by one individual. 
B)  Research indicates that the majority of frauds involve collusion. 
C)  Frauds involving collusion are usually the easiest to detect because of the involvement of multiple players. 
D)  The right-to-audit clause has been ineffective in discouraging collusive frauds. 
A)  They are usually slower to develop than frauds committed by one individual. 
B)  Research indicates that the majority of frauds involve collusion. 
C)  Frauds involving collusion are usually the easiest to detect because of the involvement of multiple players. 
D)  The right-to-audit clause has been ineffective in discouraging collusive frauds.

Question 7

Which of the following is NOT an indicator that a person with a salary of $50,000 per year is living above his or her means?

Accepted Answer

A)  A person owns several expensive cars. 
B)  A person closely monitors his/her investments. 
C)  A person hosts extravagant parties in his or her home. 
D)  A person owns a valuable art collection. 
A)  A person owns several expensive cars. 
B)  A person closely monitors his/her investments. 
C)  A person hosts extravagant parties in his or her home. 
D)  A person owns a valuable art collection.

Question 8

focuses more on creating a culture of openness than eliminating opportunities.

Accepted Answer

A)  Proactive auditing 
B)  Installing good internal controls 
C)  Monitoring employees 
D)  Creating a positive work environment 
A)  Proactive auditing 
B)  Installing good internal controls 
C)  Monitoring employees 
D)  Creating a positive work environment

Question 9

An organization requires that employees in its accounting department take mandatory, two-week-long, continuous vacations once a year. It allows no exceptions to this rule. Which control activity is the company using?

Accepted Answer

A)  Segregation of duties 
B)  Proper authorizations 
C)  Physical safeguards 
D)  Independent checks 
A)  Segregation of duties 
B)  Proper authorizations 
C)  Physical safeguards 
D)  Independent checks

Question 10

Which of the following should be emphasized in an employee reporting program? I. Fraud, waste, and abuse occur in few companies.
II) The company actively encourages employees with information to come forward.
III) The name of the employee reporting the fraud must be known.
IV) The report need not be made to one's immediate supervisor.

Accepted Answer

A)  II and III. 
B)  I, II, III, and IV 
C)  I, II, and IV 
D)  II and IV 
A)  II and III. 
B)  I, II, III, and IV 
C)  I, II, and IV 
D)  II and IV

Question 11

Company X has a good whistle-blowing program in place. Sara used the whistle-blowing system to alert management about a fraud being committed by a senior employee in the human resources department. The company investigated the allegation and punished the fraudster. However, Sara was shocked to find later that everyone on her team knew that she was the one who blew the whistle. What could be a major issue with the program at the company?

Accepted Answer

A)  Unclear policies regarding whistle-blowing 
B)  Lack of awareness about the program 
C)  Management inaction regarding anonymity policies 
D)  Lack of adherence to anonymity policies 
A)  Unclear policies regarding whistle-blowing 
B)  Lack of awareness about the program 
C)  Management inaction regarding anonymity policies 
D)  Lack of adherence to anonymity policies

Question 12

Which of the following would usually be an environment conducive to fraud?

Accepted Answer

A)  Low turnover 
B)  Reactive rather than proactive management 
C)  Supportive rather than rivalrous relationships 
D)  Long-term business focus 
A)  Low turnover 
B)  Reactive rather than proactive management 
C)  Supportive rather than rivalrous relationships 
D)  Long-term business focus

Question 13

Which of the following best describes an action that can cause a whistle-blowing system in place in the organization to fail?

Accepted Answer

A)  The organization requires employees to report all suspicious activity. 
B)  The employee suspecting fraud reports directly to his/her supervisor's manager. 
C)  Management is slow to act on reports of suspected fraud. 
D)  An extensive code of ethics is in place and on file in order to answer employee inquiries. 
A)  The organization requires employees to report all suspicious activity. 
B)  The employee suspecting fraud reports directly to his/her supervisor's manager. 
C)  Management is slow to act on reports of suspected fraud. 
D)  An extensive code of ethics is in place and on file in order to answer employee inquiries.

Question 14

Developing and promoting a well-defined corporate code of conduct is related to which element of the fraud-fighting model?

Accepted Answer

A)  Investigation and follow-up 
B)  Education and training 
C)  Tone at the top 
D)  Proactive fraud detection 
A)  Investigation and follow-up 
B)  Education and training 
C)  Tone at the top 
D)  Proactive fraud detection

Question 15

What is the most likely outcome when a company demotes the perpetrator but allows him or her to go unprosecuted?

Accepted Answer

A)  The company will avoid bad publicity. 
B)  The perpetrator may commit another fraud in the future. 
C)  The perpetrator will be saved from pain and embarrassment. 
D)  Management will send a signal that fraud will not be tolerated. 
A)  The company will avoid bad publicity. 
B)  The perpetrator may commit another fraud in the future. 
C)  The perpetrator will be saved from pain and embarrassment. 
D)  Management will send a signal that fraud will not be tolerated.

Question 16

An operating condition that can contribute to a higher risk of fraud is:

Accepted Answer

A)  management by crisis. 
B)  high company loyalty. 
C)  flexible rules. 
D)  proper authorization. 
A)  management by crisis. 
B)  high company loyalty. 
C)  flexible rules. 
D)  proper authorization.

Question 17

Fraud is most commonly detected by:

Accepted Answer

A)  monitoring employees. 
B)  auditors. 
C)  discouraging collusion. 
D)  tips and complaints. 
A)  monitoring employees. 
B)  auditors. 
C)  discouraging collusion. 
D)  tips and complaints.

Question 18

Approximately of all frauds are committed by an individual acting alone. The remaining involve collusion and often involve the thefts.

Accepted Answer

A)  63%, 37%, smallest 
B)  71%, 29%, largest 
C)  47%, 53%, smallest 
D)  18%, 82%, largest 
A)  63%, 37%, smallest 
B)  71%, 29%, largest 
C)  47%, 53%, smallest 
D)  18%, 82%, largest

Question 19

Which of the following explains the Pygmalion effect?

Accepted Answer

A)  Employees who commit fraud are likely to do so more than once. 
B)  The probability of fraud detection increases with the number of people involved. 
C)  People generally perform according to a leader's expectations. 
D)  Absence of controls leads to increased incidents of dishonesty. 
A)  Employees who commit fraud are likely to do so more than once. 
B)  The probability of fraud detection increases with the number of people involved. 
C)  People generally perform according to a leader's expectations. 
D)  Absence of controls leads to increased incidents of dishonesty.

Question 20

An employee recently bought three new cars and remodeled his/her home. These facts would be considered as a:

Accepted Answer

A)  lifestyle symptom. 
B)  spending addiction symptom. 
C)  extravagant behavior symptom. 
D)  financial symptom. 
A)  lifestyle symptom. 
B)  spending addiction symptom. 
C)  extravagant behavior symptom. 
D)  financial symptom.

In order to detect fraud at the earliest, a manager should pay attention to:

When only a very small amount of money has been embezzled:

Preventive controls include:

What is a purpose of proactive fraud auditing?

Identify a situation that could usually lead to a conflict of interest.

Which of the following observations concerning collusive frauds is true?

Which of the following is NOT an indicator that a person with a salary of $50,000 per year is living above his or her means?

focuses more on creating a culture of openness than eliminating opportunities.

An organization requires that employees in its accounting department take mandatory, two-week-long, continuous vacations once a year. It allows no exceptions to this rule. Which control activity is the company using?

Which of the following would usually be an environment conducive to fraud?

Which of the following best describes an action that can cause a whistle-blowing system in place in the organization to fail?

Developing and promoting a well-defined corporate code of conduct is related to which element of the fraud-fighting model?

What is the most likely outcome when a company demotes the perpetrator but allows him or her to go unprosecuted?

An operating condition that can contribute to a higher risk of fraud is:

Fraud is most commonly detected by:

Approximately of all frauds are committed by an individual acting alone. The remaining involve collusion and often involve the thefts.

Which of the following explains the Pygmalion effect?

An employee recently bought three new cars and remodeled his/her home. These facts would be considered as a:

The Nature of Fraud

Who Commits Fraud and Why

Fighting Fraud: an Overview

Recognizing the Symptoms of Fraud

Data-Driven Fraud Detection

Investigating Theft Acts

Investigating Concealment

Conversion Investigation Methods

Inquiry Methods and Fraud Reports

Financial Statement Fraud

Revenue- and Inventory-Related Financial Statement Frauds

Liability, Asset, and Inadequate Disclosure Frauds

Fraud Against Organizations

Consumer Fraud

Bankruptcy, Divorce, and Tax Fraud

E-Commerce Fraud

Legal Follow-Up

Filters

Exam 4: Preventing Fraud

In order to detect fraud at the earliest, a manager should pay attention to:

When only a very small amount of money has been embezzled:

Preventive controls include:

What is a purpose of proactive fraud auditing?

Identify a situation that could usually lead to a conflict of interest.

Which of the following observations concerning collusive frauds is true?

Which of the following is NOT an indicator that a person with a salary of $50,000 per year is living above his or her means?

focuses more on creating a culture of openness than eliminating opportunities.

An organization requires that employees in its accounting department take mandatory, two-week-long, continuous vacations once a year. It allows no exceptions to this rule. Which control activity is the company using?

Which of the following would usually be an environment conducive to fraud?

Which of the following best describes an action that can cause a whistle-blowing system in place in the organization to fail?

Developing and promoting a well-defined corporate code of conduct is related to which element of the fraud-fighting model?

What is the most likely outcome when a company demotes the perpetrator but allows him or her to go unprosecuted?

An operating condition that can contribute to a higher risk of fraud is:

Fraud is most commonly detected by:

Approximately of all frauds are committed by an individual acting alone. The remaining involve collusion and often involve the thefts.

Which of the following explains the Pygmalion effect?

An employee recently bought three new cars and remodeled his/her home. These facts would be considered as a:

The Nature of Fraud

Who Commits Fraud and Why

Fighting Fraud: an Overview

Recognizing the Symptoms of Fraud

Data-Driven Fraud Detection

Investigating Theft Acts

Investigating Concealment

Conversion Investigation Methods

Inquiry Methods and Fraud Reports

Financial Statement Fraud

Revenue- and Inventory-Related Financial Statement Frauds

Liability, Asset, and Inadequate Disclosure Frauds

Fraud Against Organizations

Consumer Fraud

Bankruptcy, Divorce, and Tax Fraud

E-Commerce Fraud

Legal Follow-Up

Filters