WGU D551 PRE-ASSESSMENT: FRAUD AND
FORENSIC ACCOUNTING ACTUAL EXAM
PAPER 2026 QUESTIONS WITH ANSWERS
GRADED A+
◍ What is the most common method used to commit financial statement fraud,
according to the COSO study?Capitalizing expensesOverstating existing
assetsImproperly recognizing revenueFailing to give complete disclosure.
Answer: Improperly recognizing revenue
◍ How often must the lead audit partner and audit review partner be rotated
under the Sarbanes-Oxley Act?Every yearEvery five yearsEvery two
yearsEvery seven years.
Answer: Every five years
◍ What is considered evidence that a company's products might be
illegitimate?The company's cash balances are notably high.The company's
success depends on high financial leverage.The company's success is
independent of strong sales skills.The company is discouraging investors
from putting money into its company..
Answer: The company's success depends on high financial leverage.
◍ - hidden bank accounts- hidden investment accounts- purchasing assets
through straw men or front organizations - transfer assets or ownership to
another party.
Answer: Assets can be hidden through several methods:
◍ Shell Company Schemes.
Answer: fictitious entities created for the sole purpose of committing fraud
◍ Which statement is true about the detection of disclosure fraud?Disclosure
, fraud is easier to detect than financial fraud.Symptoms of disclosure fraud
are the same as other types of fraud.It is usually easier to detect misleading
disclosures than missing disclosures..
Answer: It is usually easier to detect misleading disclosures than missing
disclosures.
◍ Employee Perception of Control.
Answer: - the stronger the perceptiion that theft would be detected, the less
the likelihood the employee would engage in deviant behavior - increasing
perception of detection may be the best way to deter employee theft
(possibility of sanctions is secondary concern to the employee)
◍ Praud Deterrence.
Answer: refers to creating environments in which people are discouraged
from committing fraud
◍ Why was the Public Company Accounting Oversight Board (PCAOB)
established?To regulate the fees that auditors charge their clientsTo regulate
the number of restatements provided each yearTo regulate the number of
clients that any auditor can serveTo regulate the non-audit services that audit
firms may offer to their audit clients.
Answer: To regulate the non-audit services that audit firms may offer to
their audit clients
◍ What is a stage of a proactive fraud prevention
approach?CompilationInterrogationInvestigationEnumeration.
Answer: Investigation
◍ Mediation.
Answer: - independent 3rd party with no authority to decide case- assists
both sides- works for a mutually agreeable resolution
◍ Why did the Sarbanes-Oxley Act establish the Public Company Accounting
Oversight Board (PCAOB)?To help protect the investing publicTo start
regulating the auditing professionTo create a court system for investor
fraudTo choose audit committee members for companies.
, Answer: To help protect the investing public
◍ the most basic skimming scheme.
Answer: Sales skimming is known as:
◍ What is a power of the Public Company Accounting Oversight Board
(PCAOB) under the Sarbanes-Oxley Act?Conduct inspections of public
accounting firmsConduct investigations of private accounting firmsRegister
any accounting firm that prepares an auditRegister private accounting firms
that prepare audit reports.
Answer: Conduct inspections of public accounting firms
◍ What is a reason why corporate relationships with lawyers pose an even
greater threat than relationships with auditors when evaluating the threat of
fraud?Lawyers usually own stock in the company.Lawyers usually have
insider information from the SE
C. Lawyers usually have a good relationship with the auditors.Lawyers
usually have information about the client's legal difficulties..
Answer: Lawyers usually have information about the client's legal
difficulties.
◍ Which category is a corner of the Fraud Exposure Rectangle?Budgets and
controlsCustomers and vendorsManagement and directorsOrganization and
environment.
Answer: Management and directors
◍ What is a rarely occurring type of financial statement fraud?Inadequate
disclosuresFictitious recording of revenueFailure to record asset
impairmentsOverstatement of ending inventory balances.
Answer: Failure to record asset impairments
◍ Corruption.
Answer: the unlawful or wrongful misuse of influence in a business
transaction to procure personal benefit, contrary to an individuals duty to his
or her employer or the rights of another
◍ What is a specific scheme to commit revenue recognition fraud?Record
, fictitious revenueImproper use of merger resourcesFailure to record asset
impairmentsInappropriate application of purchase methods.
Answer: Record fictitious revenue
◍ typical motivations of fraud perceptions.
Answer: What can M.I.C.E help identify?
◍ the verdict, the sentence, or both.
Answer: After the verdict, the convicted may appeal:
◍ - should maintain and regularly update approved vendors list.
Answer: Preventing and Detecting shell company schemes:
◍ Probation.
Answer: alternative to prison
◍ Receivables Skimming.
Answer: - more difficult then skimming sales- recievable payments aren't
logged into accounting systems
◍ Which action is potentially unethical because it understates cost of goods
sold?Understating purchasesUnderstating purchase returnsUnderstating
ending inventoryUnderstating purchase discounts.
Answer: Understating purchases
◍ Which analytical symptom reflects revenue-related fraud?Reporting sales
discounts balances that appear too highReporting revenue or sales balances
that appear too lowReporting bad debt expense account balances that appear
too highReporting allowance for doubtful account balances that appear too
low.
Answer: Reporting allowance for doubtful account balances that appear too
low
◍ false refunds and false voids.
Answer: 2 basic fraudulent register reimbursement schemes:
◍ What level of assurance must an auditor provide regarding the absence of
fraud after the issuance of SAS 53?Minimal assuranceAbsolute
FORENSIC ACCOUNTING ACTUAL EXAM
PAPER 2026 QUESTIONS WITH ANSWERS
GRADED A+
◍ What is the most common method used to commit financial statement fraud,
according to the COSO study?Capitalizing expensesOverstating existing
assetsImproperly recognizing revenueFailing to give complete disclosure.
Answer: Improperly recognizing revenue
◍ How often must the lead audit partner and audit review partner be rotated
under the Sarbanes-Oxley Act?Every yearEvery five yearsEvery two
yearsEvery seven years.
Answer: Every five years
◍ What is considered evidence that a company's products might be
illegitimate?The company's cash balances are notably high.The company's
success depends on high financial leverage.The company's success is
independent of strong sales skills.The company is discouraging investors
from putting money into its company..
Answer: The company's success depends on high financial leverage.
◍ - hidden bank accounts- hidden investment accounts- purchasing assets
through straw men or front organizations - transfer assets or ownership to
another party.
Answer: Assets can be hidden through several methods:
◍ Shell Company Schemes.
Answer: fictitious entities created for the sole purpose of committing fraud
◍ Which statement is true about the detection of disclosure fraud?Disclosure
, fraud is easier to detect than financial fraud.Symptoms of disclosure fraud
are the same as other types of fraud.It is usually easier to detect misleading
disclosures than missing disclosures..
Answer: It is usually easier to detect misleading disclosures than missing
disclosures.
◍ Employee Perception of Control.
Answer: - the stronger the perceptiion that theft would be detected, the less
the likelihood the employee would engage in deviant behavior - increasing
perception of detection may be the best way to deter employee theft
(possibility of sanctions is secondary concern to the employee)
◍ Praud Deterrence.
Answer: refers to creating environments in which people are discouraged
from committing fraud
◍ Why was the Public Company Accounting Oversight Board (PCAOB)
established?To regulate the fees that auditors charge their clientsTo regulate
the number of restatements provided each yearTo regulate the number of
clients that any auditor can serveTo regulate the non-audit services that audit
firms may offer to their audit clients.
Answer: To regulate the non-audit services that audit firms may offer to
their audit clients
◍ What is a stage of a proactive fraud prevention
approach?CompilationInterrogationInvestigationEnumeration.
Answer: Investigation
◍ Mediation.
Answer: - independent 3rd party with no authority to decide case- assists
both sides- works for a mutually agreeable resolution
◍ Why did the Sarbanes-Oxley Act establish the Public Company Accounting
Oversight Board (PCAOB)?To help protect the investing publicTo start
regulating the auditing professionTo create a court system for investor
fraudTo choose audit committee members for companies.
, Answer: To help protect the investing public
◍ the most basic skimming scheme.
Answer: Sales skimming is known as:
◍ What is a power of the Public Company Accounting Oversight Board
(PCAOB) under the Sarbanes-Oxley Act?Conduct inspections of public
accounting firmsConduct investigations of private accounting firmsRegister
any accounting firm that prepares an auditRegister private accounting firms
that prepare audit reports.
Answer: Conduct inspections of public accounting firms
◍ What is a reason why corporate relationships with lawyers pose an even
greater threat than relationships with auditors when evaluating the threat of
fraud?Lawyers usually own stock in the company.Lawyers usually have
insider information from the SE
C. Lawyers usually have a good relationship with the auditors.Lawyers
usually have information about the client's legal difficulties..
Answer: Lawyers usually have information about the client's legal
difficulties.
◍ Which category is a corner of the Fraud Exposure Rectangle?Budgets and
controlsCustomers and vendorsManagement and directorsOrganization and
environment.
Answer: Management and directors
◍ What is a rarely occurring type of financial statement fraud?Inadequate
disclosuresFictitious recording of revenueFailure to record asset
impairmentsOverstatement of ending inventory balances.
Answer: Failure to record asset impairments
◍ Corruption.
Answer: the unlawful or wrongful misuse of influence in a business
transaction to procure personal benefit, contrary to an individuals duty to his
or her employer or the rights of another
◍ What is a specific scheme to commit revenue recognition fraud?Record
, fictitious revenueImproper use of merger resourcesFailure to record asset
impairmentsInappropriate application of purchase methods.
Answer: Record fictitious revenue
◍ typical motivations of fraud perceptions.
Answer: What can M.I.C.E help identify?
◍ the verdict, the sentence, or both.
Answer: After the verdict, the convicted may appeal:
◍ - should maintain and regularly update approved vendors list.
Answer: Preventing and Detecting shell company schemes:
◍ Probation.
Answer: alternative to prison
◍ Receivables Skimming.
Answer: - more difficult then skimming sales- recievable payments aren't
logged into accounting systems
◍ Which action is potentially unethical because it understates cost of goods
sold?Understating purchasesUnderstating purchase returnsUnderstating
ending inventoryUnderstating purchase discounts.
Answer: Understating purchases
◍ Which analytical symptom reflects revenue-related fraud?Reporting sales
discounts balances that appear too highReporting revenue or sales balances
that appear too lowReporting bad debt expense account balances that appear
too highReporting allowance for doubtful account balances that appear too
low.
Answer: Reporting allowance for doubtful account balances that appear too
low
◍ false refunds and false voids.
Answer: 2 basic fraudulent register reimbursement schemes:
◍ What level of assurance must an auditor provide regarding the absence of
fraud after the issuance of SAS 53?Minimal assuranceAbsolute
