Test Bank For Forensic Accounting And
Fraud Examination, 3rd Edition By Mary-
Jo Kranacher
1 of 11
,TABLE OF CONTENT
Section i Introduction to Forensic Accounting and Fraud Examination 1
1 Core Foundation Related to Forensic Accounting and Fraud Examination 3
2 Who Commits Fraud and Why: The Profile and Psychology of the Fraudster 48
3 Legal, Regulatory, and Professional Environment 74
Section ii Fraud Schemes 109
4 Cash Receipt Schemes and Other Asset Misappropriations 111
5 Cash Disbursement Schemes 142
6 Corruption and the Human Factor 193
7 Financial Statement Fraud 217
Section iii Detection and Investigative Tools and Techniques 257
8 Fraud Detection: Red Flags and Targeted Risk Assessment 259
9 Evidence-Based Fraud Examinations 287
10 Effective Interviewing and Interrogation 323
11 Using Information Technology for Fraud Examination and Financial Forensics 354
Section iv Advanced Topics in Forensic Accounting and Fraud Examination 377
12 Complex Frauds and Financial Crimes 379
13 Cybercrime: Fraud in a Digital World 410
14 Antifraud and Compliance Efforts: Ethics, Prevention, and Deterrence 433
Section v Litigation Advisory Services and Remediation 457
15 Consulting, Litigation Support, and Expert Witnessing: Damages, Valuations, and
Other Engagements 459
16 Remediation and Litigation Advisory Services 518
2 of 11
,Test Bank For Forensic Accounting And
Fraud Examination, 3rd Edition By
Mary-Jo Kranacher
Chapter 1
Module 1
1. Which Of The Following Is Not One Of The Four Essential Elements Of Fraud Under
Common Law?
A. A Material False Statement
B. Reliance On The False Statement By The Victim
C. Knowledge That The Statement Was False When It Was Spoken
D. Use Of Email, Wire, Or Telephone With A Criminal Intent To Deceive
2. The “Felonious Stealing, Taking And Carrying, Leading, Riding, Or Driving Away
With Another’s Property, With The Intent To Convert It Or Deprive The Owner
Thereof” Is The Legal Definition Of:
A. Embezzlement
B. Tort
C. Larceny
D. Fraud
3. A Fiduciary Is Someone Who:
A. Swears An Oath Before Taking Office
B. Acts For The Benefit Of Another
C. Betrays The Trust Of Another
D. Controls Access To An Organization’s Cash Or Assets
4. An Unauthorized Assumption And Exercise Of The Right Of Ownership Over Goods Or
Personal Chattels Belonging To Another, To The Alteration Of Their Condition Or The
Exclusion Of The Owner’s Rights Is The Definition Of:
A. Collusion
B. Concealment
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, C. Capital Misappropriation
D. Conversion
5. The Intentional, Deliberate Misstatement, Or Omission Of Material Facts Or Accounting
Data That Is Misleading And, When Considered With All The Information Made
Available, That Would Cause The Reader To Change Or Alter His Or Her Judgment Or
Decision Is Defined By The Association Of Certified Fraud Examiners As:
A. Financial Statement Fraud
B. Financial Statement Misstatement
C. Financial Statement Concealment
D. Financial Statement Re-Statement
6. which of the following is an example of financial statement and reporting fraud?
A. failing to post audit results on the company’s website
B. debt ratio is materially higher than industry standards
C. improper timing of revenue and expense recognition
D. net income for any quarterly filing is 17% or more below analyst predictions
7. the essential characteristics of financial statement fraud are:
A. the misstatement is material and intentional and the users of the financial
statements are investors in publicly traded companies.
B. this misstatement is material and intentional and the preparers of the financial
statements have a fiduciary obligation to the organization.
C. the misstatement is material and intentional and the preparers of the financial
statements fail to report the misstatement to the sec or other applicable authority.
D. the misstatement is material and intentional and the users of the financial
statements have been misled.
8. as a result of the sarbanes-oxley act (2002), which of the following became part of the
business landscape?
A. assessment of internal controls, preservation of evidence, whistleblower protection
and increased penalties for securities fraud
B. mandatory separation of duties, two-factor authentication for online transactions,
and prohibition of fraudulent financial reporting
C. mandatory quarterly reporting of shell company beneficial ownership, mandatory
criminal background checks on all publicly traded company officers and directors,
and annual review of internal controls by the sec
D. auditing firm competence certification, annual disclosure of conflicts of interest by
the board of directors, prohibition of illegal gratuities and penalties for
whistleblowers
9. the occupational fraud and abuse classification system (fraud tree) arranges
organizational frauds in which three categories?
A. the act, concealment, and conversion
4 of 11
Fraud Examination, 3rd Edition By Mary-
Jo Kranacher
1 of 11
,TABLE OF CONTENT
Section i Introduction to Forensic Accounting and Fraud Examination 1
1 Core Foundation Related to Forensic Accounting and Fraud Examination 3
2 Who Commits Fraud and Why: The Profile and Psychology of the Fraudster 48
3 Legal, Regulatory, and Professional Environment 74
Section ii Fraud Schemes 109
4 Cash Receipt Schemes and Other Asset Misappropriations 111
5 Cash Disbursement Schemes 142
6 Corruption and the Human Factor 193
7 Financial Statement Fraud 217
Section iii Detection and Investigative Tools and Techniques 257
8 Fraud Detection: Red Flags and Targeted Risk Assessment 259
9 Evidence-Based Fraud Examinations 287
10 Effective Interviewing and Interrogation 323
11 Using Information Technology for Fraud Examination and Financial Forensics 354
Section iv Advanced Topics in Forensic Accounting and Fraud Examination 377
12 Complex Frauds and Financial Crimes 379
13 Cybercrime: Fraud in a Digital World 410
14 Antifraud and Compliance Efforts: Ethics, Prevention, and Deterrence 433
Section v Litigation Advisory Services and Remediation 457
15 Consulting, Litigation Support, and Expert Witnessing: Damages, Valuations, and
Other Engagements 459
16 Remediation and Litigation Advisory Services 518
2 of 11
,Test Bank For Forensic Accounting And
Fraud Examination, 3rd Edition By
Mary-Jo Kranacher
Chapter 1
Module 1
1. Which Of The Following Is Not One Of The Four Essential Elements Of Fraud Under
Common Law?
A. A Material False Statement
B. Reliance On The False Statement By The Victim
C. Knowledge That The Statement Was False When It Was Spoken
D. Use Of Email, Wire, Or Telephone With A Criminal Intent To Deceive
2. The “Felonious Stealing, Taking And Carrying, Leading, Riding, Or Driving Away
With Another’s Property, With The Intent To Convert It Or Deprive The Owner
Thereof” Is The Legal Definition Of:
A. Embezzlement
B. Tort
C. Larceny
D. Fraud
3. A Fiduciary Is Someone Who:
A. Swears An Oath Before Taking Office
B. Acts For The Benefit Of Another
C. Betrays The Trust Of Another
D. Controls Access To An Organization’s Cash Or Assets
4. An Unauthorized Assumption And Exercise Of The Right Of Ownership Over Goods Or
Personal Chattels Belonging To Another, To The Alteration Of Their Condition Or The
Exclusion Of The Owner’s Rights Is The Definition Of:
A. Collusion
B. Concealment
3 of 11
, C. Capital Misappropriation
D. Conversion
5. The Intentional, Deliberate Misstatement, Or Omission Of Material Facts Or Accounting
Data That Is Misleading And, When Considered With All The Information Made
Available, That Would Cause The Reader To Change Or Alter His Or Her Judgment Or
Decision Is Defined By The Association Of Certified Fraud Examiners As:
A. Financial Statement Fraud
B. Financial Statement Misstatement
C. Financial Statement Concealment
D. Financial Statement Re-Statement
6. which of the following is an example of financial statement and reporting fraud?
A. failing to post audit results on the company’s website
B. debt ratio is materially higher than industry standards
C. improper timing of revenue and expense recognition
D. net income for any quarterly filing is 17% or more below analyst predictions
7. the essential characteristics of financial statement fraud are:
A. the misstatement is material and intentional and the users of the financial
statements are investors in publicly traded companies.
B. this misstatement is material and intentional and the preparers of the financial
statements have a fiduciary obligation to the organization.
C. the misstatement is material and intentional and the preparers of the financial
statements fail to report the misstatement to the sec or other applicable authority.
D. the misstatement is material and intentional and the users of the financial
statements have been misled.
8. as a result of the sarbanes-oxley act (2002), which of the following became part of the
business landscape?
A. assessment of internal controls, preservation of evidence, whistleblower protection
and increased penalties for securities fraud
B. mandatory separation of duties, two-factor authentication for online transactions,
and prohibition of fraudulent financial reporting
C. mandatory quarterly reporting of shell company beneficial ownership, mandatory
criminal background checks on all publicly traded company officers and directors,
and annual review of internal controls by the sec
D. auditing firm competence certification, annual disclosure of conflicts of interest by
the board of directors, prohibition of illegal gratuities and penalties for
whistleblowers
9. the occupational fraud and abuse classification system (fraud tree) arranges
organizational frauds in which three categories?
A. the act, concealment, and conversion
4 of 11
