Question 1

Customer fraud is a common problem for companies that sell merchandise online.

Accepted Answer

A) True 
 B)False

Question 2

Independent checks on the performance of others is one of the categories of internal control.These independent checks would include all of the following, except:

Accepted Answer

A) Reviewing batch totals 
B) Reconciliation 
C) Comparison of physical assets with records 
D) Use of appropriate ID to enter restricted areas

Question 3

The COSO report is also known as:

Accepted Answer

A) Fraud Triangle 
B) Internal Control Integrated Framework 
C) Code of Ethical Behavior 
D) Report to the Nation

Question 4

When discussing the security of assets and documents, there are many actions that can be taken.Which of the following would not be related to this category of internal control?

Accepted Answer

A) Securing the assets and records so that they are not misused or stolen. 
B) Limiting access to certain assets to the extent that is practical. 
C) Identifying sources of risk and estimating the possibility of that risk. 
D) Enacting physical safeguards, such as security cameras, to protect some assets.

Question 5

The types of concepts commonly found in a code of ethics would not include:

Accepted Answer

A) Obeying applicable laws and regulations that govern business. 
B) Avoiding all conflicts of interest. 
C) Operating at a profit in all reporting periods. 
D) Creating and maintaining a safe work environment.

Question 6

Auditing, a monitoring activity, takes place only on a periodic basis.

Accepted Answer

A) True 
 B)False

Question 7

The difference between a general authorization and a specific authorization is that with a general authorization, a transaction is allowed if it falls within specified parameters, whereas with a specific authorization, explicit authorization is needed for that singe transaction to be completed.

Accepted Answer

A) True 
 B)False

Question 8

The most difficult type of misstatement to discover is fraud that is concealed by:

Accepted Answer

A) Over-recording the transactions 
B) Nonrecorded transactions 
C) Recording the transactions in subsidiary records 
D) Related parties

Question 9

Collusion between employees is one of the easiest frauds to detect and prevent.

Accepted Answer

A) True 
 B)False

Question 10

The accounting profession has accepted this report as the standard definition and description of internal control.

Accepted Answer

A) Sarbanes-Oxley Report 
B) FCPA Report 
C) ERI Report 
D) COSO Report

Question 11

When a person, using a computer system, pretends to be someone else, it is termed:

Accepted Answer

A) DoS Attack 
B) Hacking 
C) Spoofing 
D) Phishing

Question 12

The range of actions that make up the component of internal control referred to as control activities includes each of the following, except:

Accepted Answer

A) Segregation of duties 
B) Risk assessment 
C) Independent checks and reconciliations 
D) Authorization of transactions

Question 13

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.

Question 14

The most effective measure to prevent management fraud is to establish a professional internal audit staff that periodically checks up on management and reports directly to the audit committee of the board of directors.

Accepted Answer

A) True 
 B)False

Question 15

A good system of internal control includes many types of documentation.Which of the following types of documentation is not part of the adequate records and documents category of internal control?

Accepted Answer

A) Schedules and analyses of financial information 
B) Supporting document for all significant transactions 
C) Accounting cycle reports 
D) All of the following are types of documentation

Question 16

If an accounting supervisor were allowed to hire employees, approve the hours worked, prepare the paychecks, and deliver the paychecks, which of the categories of control activities would be violated?

Accepted Answer

A) Adequate records 
B) Segregation of duties 
C) Authorization of transactions 
D) Independent checks

Question 17

According to the COSO report, there are five different interrelated components of internal control.Which of the following is not one of those five components?

Accepted Answer

A) Code of Ethics 
B) Control Environment 
C) Information and Communication 
D) Monitoring

Question 18

Which of the following would be considered a vendor fraud?

Accepted Answer

A) The submission of duplicate or incorrect invoices. 
B) A customer tries to return stolen goods to collect a cash refund. 
C) The use of stolen or fraudulent credit cards. 
D) Inflating hours worked.

Question 19

The AICPA and the Canadian Institute of Chartered Accountants worked together to develop IT guidelines, commonly referred to as COBIT.

Accepted Answer

A) True 
 B)False

Question 20

The acronym COBIT stands for Control Objectives for Information Technology, an extensive framework of information technology controls developed by Information Systems Audit and Control Association.

Accepted Answer

A) True 
 B)False

Exam 3: Fraud, Ethics, and Internal Control

Customer fraud is a common problem for companies that sell merchandise online.

Independent checks on the performance of others is one of the categories of internal control.These independent checks would include all of the following, except:

The COSO report is also known as:

When discussing the security of assets and documents, there are many actions that can be taken.Which of the following would not be related to this category of internal control?

The types of concepts commonly found in a code of ethics would not include:

Auditing, a monitoring activity, takes place only on a periodic basis.

The difference between a general authorization and a specific authorization is that with a general authorization, a transaction is allowed if it falls within specified parameters, whereas with a specific authorization, explicit authorization is needed for that singe transaction to be completed.

The most difficult type of misstatement to discover is fraud that is concealed by:

Collusion between employees is one of the easiest frauds to detect and prevent.

The accounting profession has accepted this report as the standard definition and description of internal control.

When a person, using a computer system, pretends to be someone else, it is termed:

The range of actions that make up the component of internal control referred to as control activities includes each of the following, except:

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

The most effective measure to prevent management fraud is to establish a professional internal audit staff that periodically checks up on management and reports directly to the audit committee of the board of directors.

A good system of internal control includes many types of documentation.Which of the following types of documentation is not part of the adequate records and documents category of internal control?

If an accounting supervisor were allowed to hire employees, approve the hours worked, prepare the paychecks, and deliver the paychecks, which of the categories of control activities would be violated?

According to the COSO report, there are five different interrelated components of internal control.Which of the following is not one of those five components?

Which of the following would be considered a vendor fraud?

The AICPA and the Canadian Institute of Chartered Accountants worked together to develop IT guidelines, commonly referred to as COBIT.

The acronym COBIT stands for Control Objectives for Information Technology, an extensive framework of information technology controls developed by Information Systems Audit and Control Association.