Exam 7: Fraud Detection: Red Flags and Targeted Risk Assessment

Red flags are considered trouble signs in almost any environment and yet there seem to be many red flags in normal business operations which can reduce their value in finding fraudulent activities. Explain how this may happen.

In a collusive environment:

The first step in the ten-step approach to targeted fraud risk assessment is "Identify the business processes and consider differences in those processes in foreign operations, as well as between subsidiaries and decentralized divisions."

Electronic storage of entity financial and nonfinancial records is expensive and access to the information in data warehouses is limited to data mining activities.

What is meant by behavioral red flags?

Generally, how is the problem of management override and collusion addressed?

Three of the various objectives of an internal control program are:

Management must design, implement, and maintain internal controls and financial reporting processes to produce timely financial and nonfinancial information that reflects the underlying economics of the business.

What are the similarities and differences between analytical and accounting anomalies?

In searching for breakdowns of internal controls by collusion and fraud, auditors:

Materiality is relative. As such:

The difference between fraud and errors is:

The key to successful fraud detection and investigation using digital tools and techniques requires:

Information systems:

Some of the analytical anomalies include all of the following except:

The 2008 biennial ACFE Report to the Nation:

Targeted fraud risk assessment starts with:

Is earnings management considered fraud?

Fraud can be committed by:

"One-time" transactions of large values should be scrutinized to ensure they have an appropriate underlying business rationale because generally such transactions will be fraudulent.