Question 1

The theft of proprietary company information is called:

Accepted Answer

A) Vendor fraud 
B) Customer fraud 
C) Espionage 
D) Management fraud 
A) Vendor fraud 
B) Customer fraud 
C) Espionage 
D) Management fraud

Question 2

The objectives of an internal control system include all of the following except:

Accepted Answer

A) Maintain ongoing education 
B) Safeguard assets 
C) Maintain accuracy and integrity of accounting data 
D) Ensure compliance with management directives 
A) Maintain ongoing education 
B) Safeguard assets 
C) Maintain accuracy and integrity of accounting data 
D) Ensure compliance with management directives

Question 3

A fraudster uses this to alter a program to slice a small amount from several accounts, crediting those small amounts to the perpetrator's benefit.

Accepted Answer

A) Trap door alteration 
B) Salami technique 
C) Trojan horse program 
D) Input manipulation 
A) Trap door alteration 
B) Salami technique 
C) Trojan horse program 
D) Input manipulation

Question 4

One of the components of internal control identified by COSO required that management must be considering threats and the potential for risks, and stand ready to respond should these events occur.This component is referred to as:

Accepted Answer

A) Control Environment 
B) Control Activities 
C) Risk Assessment 
D) Communication 
A) Control Environment 
B) Control Activities 
C) Risk Assessment 
D) Communication

Question 5

According to the authors of this textbook, which of the following is not one of general categories of people who commit fraud?

Accepted Answer

A) Employees 
B) Government Agencies 
C) Customers 
D) Management 
A) Employees 
B) Government Agencies 
C) Customers 
D) Management

Question 6

Management fraud may involve:

Accepted Answer

A) Overstating expenses 
B) Understating assets 
C) Overstating revenues 
D) Overstating liabilities 
A) Overstating expenses 
B) Understating assets 
C) Overstating revenues 
D) Overstating liabilities

Question 7

There are many possible indirect benefits to management when management fraud occurs.Which of the following in not an indirect benefit of management fraud?

Accepted Answer

A) Delayed exercise of stock options 
B) Delayed cash flow problems 
C) Enhanced promotion opportunities 
D) Increased incentive-based compensation 
A) Delayed exercise of stock options 
B) Delayed cash flow problems 
C) Enhanced promotion opportunities 
D) Increased incentive-based compensation

Question 8

Each of the following companies was involved in fraudulent financial reporting during 2001 and 2002, except:

Accepted Answer

A) Adelphia Communications Corp. 
B) Microsoft Corporation 
C) Enron Corp. 
D) Xerox Corporation 
A) Adelphia Communications Corp. 
B) Microsoft Corporation 
C) Enron Corp. 
D) Xerox Corporation

Question 9

The Phar-Mor fraud began when management:

Accepted Answer

A) Forgot to change the budgeted figures that had been incorrectly computed. 
B) Attempted to make the actual net income match the budgeted amounts. 
C) Overstated their expenses to cover amounts embezzled from the company. 
D) Understated the revenue in order to reduce the tax payable to the IRS. 
A) Forgot to change the budgeted figures that had been incorrectly computed. 
B) Attempted to make the actual net income match the budgeted amounts. 
C) Overstated their expenses to cover amounts embezzled from the company. 
D) Understated the revenue in order to reduce the tax payable to the IRS.

Question 10

Which of the following is not a condition in the fraud triangle?

Accepted Answer

A) Rationalization 
B) Incentive 
C) Conversion 
D) Opportunity 
A) Rationalization 
B) Incentive 
C) Conversion 
D) Opportunity

Question 11

Which of the following types of fraud is the most common, according to the Association of Certified Fraud Examiners?

Accepted Answer

A) Corruption Schemes 
B) Asset Misappropriation 
C) Earnings Management 
D) Financial Statement Misstatement 
A) Corruption Schemes 
B) Asset Misappropriation 
C) Earnings Management 
D) Financial Statement Misstatement

Question 12

Management misstatement of financial statements often occurs in order to receive indirect benefits such as:

Accepted Answer

A) Decreased income taxes 
B) Delayed cash flows 
C) Increased stock prices 
D) Increased dividends 
A) Decreased income taxes 
B) Delayed cash flows 
C) Increased stock prices 
D) Increased dividends

Question 13

AICPA Trust Principles identify five categories of risks and controls.Which category is best described by the statement, "Information process could be inaccurate, incomplete, or not properly authorized"€?

Accepted Answer

A) Security 
B) Availability 
C) Processing integrity 
D) Confidentiality 
A) Security 
B) Availability 
C) Processing integrity 
D) Confidentiality

Question 14

The COSO report identified a component of internal control as the policies and procedures that help ensure that management directives are carried out and that management directives are achieved The component is:

Accepted Answer

A) Control activities 
B) Risk assessment 
C) Monitoring 
D) Information and communication 
A) Control activities 
B) Risk assessment 
C) Monitoring 
D) Information and communication

Question 15

A company's cash custody function should be separated from the related cash recordkeeping function in order to:

Accepted Answer

A) Physically safeguard the cash 
B) Establish accountability for the cash 
C) Prevent the payment of cash disbursements from cash receipts 
D) Minimize opportunities for misappropriations of cash 
A) Physically safeguard the cash 
B) Establish accountability for the cash 
C) Prevent the payment of cash disbursements from cash receipts 
D) Minimize opportunities for misappropriations of cash

Question 16

When two or more people work together to commit a fraud, it is called:

Accepted Answer

A) Collusion 
B) Larceny 
C) Skimming 
D) Override 
A) Collusion 
B) Larceny 
C) Skimming 
D) Override

Question 17

Which individual or group has the responsibility to establish, enforce, and exemplify the principles of ethical conduct within an organization?

Accepted Answer

A) Board of Directors 
B) Securities and Exchange Commission 
C) Management 
D) Audit Committee 
A) Board of Directors 
B) Securities and Exchange Commission 
C) Management 
D) Audit Committee

Question 18

The approval or endorsement from a responsible person or department of an organization that has been sanctioned by top management is the process of:

Accepted Answer

A) Securing assets 
B) Segregating duties 
C) Authorizing transactions 
D) Adequate recording 
A) Securing assets 
B) Segregating duties 
C) Authorizing transactions 
D) Adequate recording

Question 19

The risk related to this category of Trust Principles is system or subsystem failure due to hardware or software problems.

Accepted Answer

A) Availability 
B) Security 
C) Integrity 
D) Confidentiality 
A) Availability 
B) Security 
C) Integrity 
D) Confidentiality

Question 20

Which of the following statements related to the COSO report is false?

Accepted Answer

A) The COSO report provided the standard definition of internal control accepted be the accounting industry. 
B) The COSO report is commonly known as the Internal Control Integrated Framework. 
C) The COSO report has not been updated since it was issued in 1992. 
D) The COSO report was the result of a comprehensive study of interest control. 
A) The COSO report provided the standard definition of internal control accepted be the accounting industry. 
B) The COSO report is commonly known as the Internal Control Integrated Framework. 
C) The COSO report has not been updated since it was issued in 1992. 
D) The COSO report was the result of a comprehensive study of interest control.

The theft of proprietary company information is called:

The objectives of an internal control system include all of the following except:

A fraudster uses this to alter a program to slice a small amount from several accounts, crediting those small amounts to the perpetrator's benefit.

One of the components of internal control identified by COSO required that management must be considering threats and the potential for risks, and stand ready to respond should these events occur.This component is referred to as:

According to the authors of this textbook, which of the following is not one of general categories of people who commit fraud?

Management fraud may involve:

There are many possible indirect benefits to management when management fraud occurs.Which of the following in not an indirect benefit of management fraud?

Each of the following companies was involved in fraudulent financial reporting during 2001 and 2002, except:

The Phar-Mor fraud began when management:

Which of the following is not a condition in the fraud triangle?

Which of the following types of fraud is the most common, according to the Association of Certified Fraud Examiners?

Management misstatement of financial statements often occurs in order to receive indirect benefits such as:

AICPA Trust Principles identify five categories of risks and controls.Which category is best described by the statement, "Information process could be inaccurate, incomplete, or not properly authorized"€?

The COSO report identified a component of internal control as the policies and procedures that help ensure that management directives are carried out and that management directives are achieved The component is:

A company's cash custody function should be separated from the related cash recordkeeping function in order to:

When two or more people work together to commit a fraud, it is called:

Which individual or group has the responsibility to establish, enforce, and exemplify the principles of ethical conduct within an organization?

The approval or endorsement from a responsible person or department of an organization that has been sanctioned by top management is the process of:

The risk related to this category of Trust Principles is system or subsystem failure due to hardware or software problems.

Which of the following statements related to the COSO report is false?

Introduction to AIS

Foundational Concepts of the AIS

Internal Controls and Risks in IT Systems

IT Governance

Enterprise Resource Planning ERP Systems

Auditing Information Technology-Based Processes

Revenue and Cash Collection Processes and Controls

Expenditures Processes and Controlspurchases

Expenditures Processes and Controlspayroll and Fixed Assets

Conversion Processes and Controls

Administrative Processes and Controls

Data and Databases

E-Commerce and E-Business

Filters

Exam 3: Fraud, Ethics, and Internal Control

The theft of proprietary company information is called:

The objectives of an internal control system include all of the following except:

A fraudster uses this to alter a program to slice a small amount from several accounts, crediting those small amounts to the perpetrator's benefit.

One of the components of internal control identified by COSO required that management must be considering threats and the potential for risks, and stand ready to respond should these events occur.This component is referred to as:

According to the authors of this textbook, which of the following is not one of general categories of people who commit fraud?

Management fraud may involve:

There are many possible indirect benefits to management when management fraud occurs.Which of the following in not an indirect benefit of management fraud?

Each of the following companies was involved in fraudulent financial reporting during 2001 and 2002, except:

The Phar-Mor fraud began when management:

Which of the following is not a condition in the fraud triangle?

Which of the following types of fraud is the most common, according to the Association of Certified Fraud Examiners?

Management misstatement of financial statements often occurs in order to receive indirect benefits such as:

AICPA Trust Principles identify five categories of risks and controls.Which category is best described by the statement, "Information process could be inaccurate, incomplete, or not properly authorized"€?

The COSO report identified a component of internal control as the policies and procedures that help ensure that management directives are carried out and that management directives are achieved The component is:

A company's cash custody function should be separated from the related cash recordkeeping function in order to:

When two or more people work together to commit a fraud, it is called:

Which individual or group has the responsibility to establish, enforce, and exemplify the principles of ethical conduct within an organization?

The approval or endorsement from a responsible person or department of an organization that has been sanctioned by top management is the process of:

The risk related to this category of Trust Principles is system or subsystem failure due to hardware or software problems.

Which of the following statements related to the COSO report is false?

Introduction to AIS

Foundational Concepts of the AIS

Internal Controls and Risks in IT Systems

IT Governance

Enterprise Resource Planning ERP Systems

Auditing Information Technology-Based Processes

Revenue and Cash Collection Processes and Controls

Expenditures Processes and Controlspurchases

Expenditures Processes and Controlspayroll and Fixed Assets

Conversion Processes and Controls

Administrative Processes and Controls

Data and Databases

E-Commerce and E-Business

Filters

AICPA Trust Principles identify five categories of risks and controls.Which category is best described by the statement, "Information process could be inaccurate, incomplete, or not properly authorized"€?