Deck 6: Fraud and White-Collar Crime

Question 1

The most common type of financial statement fraud is overvaluation of assets.

Answer 1

False

Question 2

The fraud scale study proposes replacing the incentive component of the fraud triangle with integrity.

Answer 2

False

Question 3

Which of the following is a white-collar crime as identified by FBI?

A) foreign lottery fraud
B) social security fraud
C) robbery
D) food and stamp fraud

Answer 3

A

Question 4

Which of the following describes fraud?

A) a crime of intent
B) a crime of innocence
C) a crime of revenge
D) a crime of honor

Question 5

General theory of crime explains crime as a natural consequence of constantly restraining human desire to seek pleasure and avoid pain.

Question 6

Which of the following is one of the six attributes of white-collar crimes?

A) lack of integrity
B) concealment
C) pretense
D) loss of standing

Question 7

Who conducted the seminal research on which the fraud theory was founded?

A) Edwin Sunderland
B) Donald Cressey
C) Skousen and Wright
D) Wolfe and Hermanson

Question 8

Why should financial crimes meet the "beyond a reasonable doubt" burden of proof standard?

A) because these are victimless
B) because these do not involve violent acts
C) because it is a criminal offense
D) because it is the lowest standard of proof

Question 9

White-collar crimes have a potential for violence.

Question 10

Which of the following best describes the term fraud?

A) use of force to persuade someone to surrender property
B) use of one's wealth to gain power and influence decisions
C) use of deception to persuade someone to surrender property
D) unintentional misrepresentation of financial statements

Question 11

Neutralization is a principal theory of rationalization.

Question 12

Which of the following types of financial crime is in the primary jurisdiction of the FBI?

A) tax fraud
B) Social Security fraud
C) immigration fraud
D) insurance fraud

Question 13

A criminal offense is a violation of local, state, or federal law that prohibits certain conduct.

Question 14

External locus of control is a characteristic of a typical white-collar fraudster.

Question 15

Which of the following factors is true of circumstantial evidence?

A) It provides "proof certain" of the actual intent of the subject.
B) It is a collection of fragmented evidence that supports one inference over another.
C) It is deemed highly reliable if alternative explanations do exist.
D) Its reliability is not affected by the degree of impact.

Question 16

Which of the following is the most common type of financial statement fraud?

A) understatement of losses
B) overvaluation of reserves
C) overstatement of revenues
D) undervaluation of liabilities

Question 17

White-collar crime offenders commonly receive light or no detention and rarely make full restitution.

Question 18

Which financial crimes are prosecuted is determined by the local prosecuting attorney.

Question 19

Which of the following is required to establish fraudulent intent in the absence of a direct confession?

A) documentary evidence
B) character evidence
C) demonstrative evidence
D) circumstantial evidence

Question 20

An indictment is a statement of fact.

Question 21

Which of the following explains is the underlying proposition of fraud diamond?

A) Integrity, reflected in one's decisions, influences deviant behavior.
B) If incentive is present in an act, the suspect's capacity does not matter.
C) A suspect's capacity, not incentive, should be considered by the forensic accountant.
D) In addition to pressure, opportunity, and rationalization, offenders also need the capability to commit the act.

Question 22

Which of the following is a process by which a person attempts to make his or her actual or intended behavior more logical or justified?

A) rationalization
B) justification
C) validation
D) corroboration

Question 23

As per Cressey, which of the following is a need or nonshareable problem that precedes the criminal violation of financial trust?

A) opportunity
B) rationalization
C) pressure
D) capability

Question 24

Which of the following elements is present in a fraud diamond but not in a fraud triangle?

A) integrity
B) capability
C) pressure
D) rationalization

Question 25

Which of the following propositions is reflected by the calculus of fraud?

A) Individuals will commit fraud when the reward is lower than the product of the probability of getting caught and the perceived gravity of the loss.
B) Individuals will commit fraud when the product of the probability of getting caught and the perceived gravity of the loss is greater than the reward.
C) Individuals will commit fraud when the product of the probability of getting caught and the perceived gravity of the loss is lesser than the reward.
D) Individuals will commit fraud when the perceived gravity of the loss is greater than the product of the probability of getting caught and the reward.

Question 26

Which of the following is a term used to describe an effort to neutralize one's actions by shifting blame to those who condemn the behavior?

A) defamation
B) accusation
C) denunciation
D) condemnation

Question 27

Under the knucklehead defense, an attorney argues that

A) even though the client has the ability to commit the crime, he or she did not have the intent to do it.
B) even if the client was motivated to commit the crime and had the ability to carry it out, he or she did not have the opportunity for it.
C) even if the client had the opportunity to commit the crime, he or she did not have an incentive to do it.
D) even if the client was motivated to commit the crime and had the opportunity, he or she did not have the ability to carry it out.

Question 28

Which of the following are the three factors of the fraud triangle?

A) pressure, opportunity, and capability
B) opportunity, capability, and rationalization
C) pressure, opportunity, and rationalization
D) pressure, capability, and rationalization

Question 29

Which of the following is a characteristic of a typical white-collar fraudster?

A) uneducated
B) lacks feelings of anxiety and empathy
C) below-average intelligence
D) risk averse

Question 30

According to the traditional economic theory, which of the following motivates smart, talented, well-educated, and seemingly respectable individuals to commit fraud?

A) self-interest
B) incentive
C) pressure
D) desire

Question 31

Which of the following is true of the fraud scale?

A) Fraud is more likely to occur when there is high pressure, greater opportunity, and low personal integrity.
B) Fraud is more likely to occur when there is low pressure, lesser opportunity, and low personal integrity.
C) Fraud is more likely to occur when there is high pressure, lesser opportunity, and low personal integrity.
D) Fraud is more likely to occur when there is low pressure, greater opportunity, and low personal integrity.

Question 32

Which of the following is true of the general theory of crime?

A) It states that individuals with low self-control consider the long-term consequences of their behavior.
B) It suggests that criminal motivation in and of itself results in a crime.
C) It is applicable to all types of crime, except white-collar crime.
D) It explains crime as a natural consequence of uncontrolled human desire to seek pleasure and avoid pain.

Question 33

Which of the following is suggested by the rational choice theory with regard to the criminal decision-making process?

A) Offenders choose courses of action such as fraud that produce optimal rewards regardless of the effort.
B) Specific crime is chosen through an analysis of opportunities and the cost-benefit trade-off.
C) Cost-benefit assessments are objective and rigid.
D) Objectivity of the decision process allows criminal behavior to be considered rational.

Question 34

Which of the following is a technique of neutralization used by offenders?

A) acceptance of authority
B) organizational misconduct
C) higher loyalty
D) criticism

Question 35

According to the general theory of crime, which of the following is also necessary in addition to criminal motivation to produce a crime?

A) high rewards
B) opportunity
C) justifiable reason
D) capability

Question 36

Which of the following components of the fraud triangle was replaced with integrity in the fraud scale?

A) capability
B) pressure
C) rationalization
D) opportunity

Question 37

Which of the following is a factor in the fraud triangle?

A) incentive
B) pressure
C) capability
D) expectation

Question 38

Which of the following is a red flag of personal fraud characteristics?

A) difficulty in controlling anger
B) excessive gambling habits
C) impulsive behavior
D) depression

Question 39

Which of the following is true of neutralization?

A) It proposes rationale as a technique of rationalization.
B) Its techniques can only be used in combination, not singly.
C) It proposes condemnation as a technique of rationalization.
D) It opposes the rational choice theory.

Question 40

Which of the following is true of organizational misconduct?

A) It is defined as the misconduct performed by individuals on behalf of an organization.
B) It is generally not influenced by an organization's "tone at the top."
C) It is perpetrated by an organization's rivals or competitors to hinder the growth or success of its business.
D) It is perpetrated by the lower-level management out of loyalty to the organization.

Question 41

Which of the following scenarios indicate post-conviction strategies used by white-collar offenders?

A) Laviler, Inc. filed for bankruptcy after the banks refused to reschedule the repayment of loan dues.
B) Shay does not own any bank account or assets and keeps all his cash in his cupboard.
C) Kuriten, Inc. pays all her expenditures and debts in cash but insists on bank checks for all receipts.
D) Gisselle does not believe in accumulating assets and invests all her cash in mutual funds.

Question 42

List any six characteristics of a typical white-collar fraudster.

Question 43

Explain rationalization with respect to Cressey's fraud theory.

Question 44

Which of the following is true of typical white-collar fraudsters?

A) They have an internal locus of control.
B) They hold a lower management position.
C) They have below-average intelligence.
D) They are relatively well-educated.

Question 45

Define the term prosecutorial misconduct.

Question 46

List the six attributes of white-collar crime.

Question 47

Which of the following statements is true of white-collar crime?

A) There are often easy and inexpensive to prove.
B) These are mostly victimless acts.
C) These are not committed by organizational agents.
D) These are often a low priority for law enforcement.

Question 48

Which of the following is the goal of post-conviction strategies used by white-collar offenders?

A) to make oneself judgment-proof
B) to ensure that no further legal actions are faced
C) to protect oneself from being financially sued in the future
D) to avoid payment of restitution

Question 49

Write a short note on techniques of rationalization (neutralization).