Deck 12: Special Topics

Question 1

In computer forensics, the chain of custody describes the route evidence takes from the time it is collected until the investigation is completed and identifies everyone that had access to it along the way.

Answer 1

True

Question 2

The net worth method is used when the subject-individual or business-consumes income rather than accumulates assets.

Answer 2

False

Question 3

Methods of proof employed by forensic accountants can be either direct or indirect, but a combination of the two is not acceptable.

Answer 3

False

Question 4

Relevant damage categories for compensatory damages include damages that are compensable by law and are measurable within the realm of economics.

Question 5

Bezone Corp. is being alleged of tax fraud for the financial year 2015-2016. The ending net worth for the period was $2.285m and beginning net worth was $1.595m. Expenditures (consumption) during the period amounted to $0.725m. The reported income in Bezone's tax return amounted to $0.69. Other legitimate sources of funds in the tax return reported an income of $0.31. Calculate the inferred unreported income using the net worth method of indirect proof.

A) $0
B) $0.725m
C) $0.415m
D) $0.075m

Question 6

Compensatory damages are meant to compensate a negligence of defendant, while punitive damages are meant to punish intentional nonperformance of duties by a defendant.

Question 7

Which of the following statements best defines economic damages in civil litigation?

A) It refers to the economic loss suffered by businesses as a result of lack of knowledge or ignorance of law.
B) It refers to the intentional nonperformance of duties which results in economic losses to the claimant.
C) It refers to the monetary compensation that is awarded in civil litigation against losses.
D) It refers to the economic loss suffered by businesses as a result of the negligence of a defendant.

Question 8

While calculating economic damages, application of a risk-free rate allows the plaintiff to replicate the lost earnings stream by reinvesting the damages award in safe investments.

Question 9

Which of the following statements is true of indirect methods of proof?

A) The cash method, which has limited application, is feasible only when the number of units and price can be determined easily.
B) When there is an accumulation of assets without a corresponding source of funds the unit and volume method is most commonly used.
C) The bank deposit method is used when the subject (individual or business) consumes income rather than accumulates assets.
D) Successful use of the net worth method requires a complete reconstruction of the subject's financial history, including all assets, liabilities, expenditures, and sources of funds.

Question 10

Which of the following statements is true of the methods of proof?

A) Unlike the indirect method of proof, the direct method of proof is based on inference rather than personal knowledge.
B) The indirect method of proof provides a lesser level of uncertainty compared to the direct method of proof.
C) Unlike the indirect method of proof, the direct method of proof is built on circumstantial evidence.
D) The indirect method of proof is easier to refute compared to the direct method of proof.

Question 11

________ of indirect proof is generally limited to retail establishments rather than illegal businesses.

A) Cash method
B) Gross margin method
C) Expenditures method
D) Bank deposits method

Question 12

The direct method of proof is always preferable to the indirect method because it

A) provides a lesser level of uncertainty.
B) is generally more dissuasive.
C) is easier to refute.
D) uses more circumstantial evidence.

Question 13

Indirect methods of proof are founded on logic, common sense, critical thinking, and deductive reasoning.

Question 14

Unlike the interest rate, which is determined by an economic expert, the applicable discount rate for past damages is the risk-free rate.

Question 15

Bezone Corp. is being alleged of tax fraud for the financial year 2015-2016. The ending net worth for the period was $2.285m and beginning net worth was $1.595m. Expenditures (consumption) during the period amounted to $0.725m. The reported income in Bezone's tax return amounted to $0.69. Other legitimate sources of funds in the tax return reported an income of $0.31. Which of the following statements is true of Bezone?

A) Bezone has committed tax fraud as its reported other income is less than the expenditures during the period.
B) Bezone has not committed tax fraud as its reported income and expenditures during the period are the same.
C) Bezone has committed tax fraud even though its reported income and change in net worth during the period are the same.
D) Bezone has committed tax fraud as its reported income is less than the expenditures during the period.

Question 16

The indirect method of proof ________ compared to the direct method of proof.

A) provides a greater level of certainty
B) is harder to refute in court
C) is generally less persuasive
D) is more easily understood

Question 17

Which of the following statements is true of the percentage markup method of indirect proof?

A) It extends the concept of application of funds to include the accumulation of assets and employs a balance sheet formula of sales minus costs equal net worth.
B) It is generally limited to wholesale establishments rather than retail establishments.
C) It requires reliable information regarding opening and closing inventories and the appropriate gross margin.
D) It focuses exclusively on expenditures made in bank deposits.

Question 18

Although high-quality municipal bonds are the most common proxy for a risk-free rate, Treasury bonds are another alternative.

Question 19

Although both paper and witness testimony can serve as evidence, paper is the more critical of the two in a direct method case because a witness

A) provides a greater level of objectivity.
B) can be self-serving.
C) cannot change his/her mind.
D) is more persuasive.

Question 20

Digital evidence can be time sensitive, because some data are intended for only temporary storage and may be overwritten on a regular basis.

Question 21

Which of the following is an example of data stored in "the clouds"?

A) Blu-ray disks
B) USB flash drives
C) Google Docs
D) tape cartridges

Question 22

Which of the following statements is true of the calculation of economic damages in a civil litigation?

A) All future economic damages must be reduced to present value, which requires the application of a discount rate.
B) Calculations of economic damages are often based on a set of foundational assumptions rather than facts.
C) Interest on past economic damages is always calculated by a forensic accountant.
D) Worklife expectancy is the period of time a person is expected to live past retirement.

Question 23

Which of the following statements is a valid reason for inconsistencies in opinions of damages experts?

A) A large component of economic damages is past damages, the calculation of which relies on projections of inherently uncertain past events.
B) Economic damages calculations require the application of logic, which allows for multiple interpretations.
C) Damages are calculated for specific individuals or entities, with many unique attributes that are universally perceived or evaluated.
D) All past economic damages must be reduced to present value, which requires the application of a discount rate.

Question 24

Which of the following statements is true of projected earnings in a damages claim?

A) Calculating lost wages requires the projection of two separate earnings streams: past lost earnings and recoverable lost earnings.
B) Lost earnings constitutes the difference between pre-injury earnings and post-injury earnings.
C) Pre-injury earnings and post-injury earnings are the two subcomponents of lost earnings in a civil litigation claiming damages.
D) Post-injury earnings is what the plaintiff would have earned if not for the injury.

Question 25

Which of the following statements is true of static forensics?

A) It is the analysis of static data in which extraction processes are performed against live data rather than a copy.
B) It is the analysis of live data in which extraction processes are performed against dynamic data rather than a copy.
C) It is the analysis of static data which involves creating a copy of all the data stored on the subject device and analyzing the copy in a secure environment.
D) It is the analysis of static data on devices usually maintained by others that can be accessed through the Internet.

Question 26

Which of the following is an example of a writable optical media?

A) Blu-ray disks
B) USB flash drives
C) external solid-state disk (SSD) drives
D) tape cartridges

Question 27

Which of the following statements best differentiates compensatory and punitive damages in civil litigation?

A) Compensatory damages are meant to reward a plaintiff, while punitive damages are meant to reward a defendant.
B) Compensatory damages are meant to compensate a plaintiff's loss, while punitive damages are meant to deter similar misconduct by the same defendant or other parties in the future.
C) Compensatory damages are meant to reward a defendant, while punitive damages are meant to punish a claimant.
D) Compensatory damages are benefit streams the plaintiff would have received if not for the injury, while punitive damages are the benefit streams the plaintiff will receive for future damages.

Question 28

The primary role of an economic expert in a damages claim is to

A) prepare a reviewing and critiquing the opposing expert's report.
B) place a dollar value on the various damages components that have been identified.
C) establish the facts of the damages claim to define the nature and extent of the injury.
D) establish the parameters of the damages determine the impact of the injury on the plaintiff.

Question 29

Which of the following statements is true of the calculation of economic damages in a civil litigation?

A) In economic damages calculations, risk is not an issue, since the discount rate is supposed to represent a risk-free rate.
B) All past economic damages must be reduced to present value, which requires the application of a discount rate.
C) Calculations of economic damages are often based on a set of foundational facts rather than assumptions.
D) An economic expert must convert future losses to present value using the applicable interest rate.

Question 30

Which of the following statements is true of a testifying economic expert in civil litigation?

A) The expert is responsible for preparing or reviewing a report and critiquing the opposing expert's report when engaged by the defendant's counsel.
B) The primary role of an economic expert in a damages claim is to punish a defendant's intentional or reckless behavior.
C) An economic expert can be engaged by counsel for the plaintiff but not for the defendant in a damages claim.
D) An economic expert will usually prepare a report that sets forth his or her opinion of damages when engaged by the plaintiff's counsel.

Question 31

Which of the following statements is true of magnetic media?

A) Data are recorded by a laser in this type of media that alters light-sensitive dyes within the disk.
B) The absence of moving parts or sensitive surfaces makes it relatively less vulnerable to damage.
C) Magnetic media on devices is usually maintained by others that can be accessed through the internet.
D) The recording process requires rotation of the disk or tape, which introduces the possibility of mechanical failure in magnetic media.

Question 32

Which of the following statements is true of electronically stored information?

A) Deleting electronically stored information destroys it, just like burning or shredding a paper document would.
B) The volume of electronically stored information is usually much lesser than paper information but it is difficult to see how communication records quickly accumulate compared to paper information.
C) Unlike paper information, electronically stored information cannot be easily altered or damaged.
D) Few features of electronically stored information like metadata have no counterpart in paper form.

Question 33

Which of the following statements is true of the cloud storage media?

A) Data are recorded by a laser in this type of media that alters light-sensitive dyes within the disk.
B) Data are stored by altering the magnetic polarity of disks or tapes in this type of media.
C) Cloud storage media on devices is usually maintained by others that can be accessed through the Internet.
D) The recording process requires rotation of the disk or tape, which introduces the possibility of mechanical failure in cloud storage media.

Question 34

The two components of lost earnings in a civil litigation claiming damages are

A) expected lost earnings and unexpected lost earnings.
B) past lost earnings and recoverable lost earnings.
C) past lost earnings and future lost earnings.
D) past lost earnings and unexpected lost earnings.

Question 35

Which of the following statements is true of flash memory media?

A) Data are recorded by a laser in this type of media that alters light-sensitive dyes within the disk.
B) The absence of moving parts or sensitive surfaces makes this type of media relatively less vulnerable to damage.
C) Data are stored by altering the magnetic polarity of chips.
D) The recording process introduces the possibility of mechanical failure in this type of media.

Question 36

Which of the following is an example of a flash memory media?

A) external solid-state disk (SSD) drives
B) blu-ray disks
C) DVDs which are not rewritable
D) tape cartridges

Question 37

Which of the following statements is true of a computer forensics engagement?

A) The type, make, or model of the subject storage devices must be identified because if the devices are not readily visible or perhaps stored out of sight, an expert can easily access the data.
B) Privacy rights related to confidential personal information must be observed, because improperly accessing data stored on electronic devices may constitute a violation of federal laws.
C) The location of the subject devices is not so important because even if the devices are not readily visible or perhaps stored out of sight, an expert can easily access the data.
D) The number of subject devices is a not primary factor in estimating the time necessary to complete the analysis.

Question 38

Which of the following statements is true of forensic accountants in litigations involving computer forensics?

A) In cases where a computer expert is needed, the forensic accountant may rely on the computer expert's opinions in forming his or her own opinions but should not assist the court in selecting the expert.
B) In cases where a computer expert is needed, the forensic accountant may assist the court in selecting the expert but should not rely on the computer expert's opinions in forming his or her own opinions.
C) Although forensic accountants are not expected to evaluate a computer expert's analysis, they should have sufficient knowledge of the subject matter to identify any gross errors or failures.
D) Although forensic accountants are not expected to have sufficient knowledge of the subject matter to identify any gross errors or failures, they should evaluate a computer expert's analysis.

Question 39

Which of the following statements is true of the damages experts in litigation?

A) An economic expert relies on the opinions of those who establish the facts of the damages claim, who in turn relies on the opinions of those who establish the parameters of the damages.
B) The primary role of an economic expert in a damages claim is to establish the facts of the damages claim to define the nature and extent of the injury.
C) The economic expert has to rely solely on his own technical knowledge and skills in determining the damages as other experts can be biased by personal interests.
D) An economic expert is often the last witness to testify in a damages claim.

Question 40

Which of the following statements is true of digital data in computer forensics?

A) Latent data can be immediately seen, such as data files, program files, and files used by the operating system.
B) When deception or other wrongdoing is suspected, active data is often the primary focus.
C) Because archival data are not intended to be viewed, their recovery requires expertise and specialized tools.
D) Unlike a backup copy, a forensic copy is a bit-by-bit copy of the original drive, or an exact duplicate.

Question 41

Under prevailing Rule 26 of the Federal Rules of Civil Procedure, an expert report

A) is expected to be logically precise and short in length.
B) must contain a complete statement of all opinions to be expressed even if the basis and reason for them are absent.
C) must contain an expert's draft report and related disclosures.
D) must contain facts and data considered by the witness in forming the opinions.

Question 42

Which of the following statements is true of a forensic accountant's summary report?

A) It is structured to provide a comprehensive discussion of the assignment, allowing the reader to develop a greater understanding of the data, reasoning, and analyses leading to the conclusions stated.
B) A summary report usually mentions methodologies considered but not used.
C) When presenting a summary report, the objective is to provide a credible and legally sufficient communication within the time and cost limitations.
D) A summary report usually presents calculation of a range of values, given certain facts and assumptions and the result is shown as a calculated value.

Question 43

"Uniformity of opinions among damages experts in a damages claim is not to be expected for three primary reasons." Briefly explain the reasons for inconsistencies in expert opinions.

Question 44

What is a method of proof? Briefly explain the difference between a direct and an indirect method of proof.

Question 45

The purpose of a ________ in computer forensics is to detect and recover data that has been concealed on a computer system.

A) file analysis
B) timeframe analysis
C) hidden data analysis
D) active data analysis

Question 46

What are the greatest technology-related threats to organizations that forensic accounting practitioners should be aware of?

Question 47

After the December 2010 amendment of Rule 26 of the Federal Rules of Civil Procedure, ________ is protected from discovery.

A) communications regarding the expert's compensation
B) an expert's draft report and related disclosures
C) communications regarding the facts and data to be relied on by the expert in forming his or her opinions
D) the qualifications of the expert witness

Question 48

Briefly explain the defenses established by the courts to protect against abuse of evidence from net worth, source and application of funds and percentage markup methods of proof.

Question 49

What are the key considerations to be considered in computer forensics to ensure that the evidence is collected and stored safely throughout the entirety of the investigation?