FRAUD EXAM 1-3 EXAM WITH
CORRECT QUESTIONS AND ANSWERS
2026
Which of the following men was the lead investigator who reconstructed Al Capone's income
based on his lifestyle?
1) Elliot Ness.
2) J Edgar Hoover.
3) Frank Wilson.
4) James Wilkerson.
5) Michael Ahern. - correct answer3) Frank Wilson.
Who is considered the "father of accounting"?
1) Leonardo da Vinci.
2) Luca Pacioli.
3) Leo the Mathematician.
4) Nicolas Cauquet.
5) None of the above. - correct answer2) Luca Pacioli.
When did audits of financial statements become required in England?
1) 1856 Corporations Act.
2) 1066 as the result of the Norman Conquest of England.
,3) 1086 as a result of the Doomsday Book Survey used for taxation.
4) 1880 with the establishment of Charted Accountants. - correct answer1) 1856 Corporations
Act.
Not including the Civil War era, in what year was the Federal Income Tax passed in the U.S.?
1) 1974.
2) 1921.
3) 1913.
4) 1902. - correct answer3) 1913.
Accounting predated writing?
1) True.
2) False - correct answer1) True.
According to Donald Creesey, the elements of fraud DO NOT include which of the following?
1) Pressure.
2) Opportunity.
3) Rationalization.
4) Motivation. - correct answer4) Motivation.
Ariail and Crumbley's diagram of fraud does NOT include Creesey's three elements.
1) True.
2) False. - correct answer2) False
The description of public accountants as the "public watchdog" was used to describe the
public's perception that CPAs are charged with more than just assuring that the financial
statements are fairly presented. Which of the following jurists conveyed this view?
1) Chief Justice Burger.
,2) Chief Justice John Marshall.
3) Chief Justice Roger B. Taney.
4) Chief Justice Earl Warren.
5) Chief Justice William Rehnquist. - correct answer1) Chief Justice Burger.
Which certification did Dr. Ariail indicate was a valuable and respected designation that could
be earned without earning the CPA and that he recommended students interested in forensic
accounting should pursue immediately after completing the Fraud and Forensic Accounting
course?
1) CMA.
2) CVA.
3) CRFAC.
4) CFF.
5) CFE. - correct answer5) CFE.
Premature recognition of revenue is the number one reason that financial statements are
restated.
1) True.
2) False. - correct answer1) True.
Earnings management, which is the purposeful intervention in the external reporting process, is,
by its very nature, always a fraudulent activity.
1) True.
2) False. - correct answer2) False.
Which of the following are considered preventive internal controls?
1) Training personnel.
, 2) Taking legal action in order to set an example.
3) Securing assets.
4) Preparing monthly bank reconciliations.
5) Agreeing perpetual inventory amounts to actual counts of the inventory. - correct answer3)
Securing assets.
The fraud model created by Drs. Ariail and Crumbley include which of the following items?
1) Capacity.
2) Employee Disenfranchisement.
3) Integrity.
4) Motivations.
5) All of the above.
6) None of the above. - correct answer4) Motivations.
Internal controls are supposed to minimize the incidence of fraud. However, management can
commit frauds by overriding internal controls. Examples given in SAS 99 of ways that
management might override internal controls include all of the following except:
1) Fictitious journal entries made at year end.
2) Manipulating the year end count of inventory.
3) Biasing assumptions used in making estimates.
4) After the fact changing of records and terms of important transactions. - correct answer2)
Manipulating the year end count of inventory.
As explained in class by Dr. Ariail, frauds concerning lapping often occur with which type of
account or activities?
1) Accounts receivable.
CORRECT QUESTIONS AND ANSWERS
2026
Which of the following men was the lead investigator who reconstructed Al Capone's income
based on his lifestyle?
1) Elliot Ness.
2) J Edgar Hoover.
3) Frank Wilson.
4) James Wilkerson.
5) Michael Ahern. - correct answer3) Frank Wilson.
Who is considered the "father of accounting"?
1) Leonardo da Vinci.
2) Luca Pacioli.
3) Leo the Mathematician.
4) Nicolas Cauquet.
5) None of the above. - correct answer2) Luca Pacioli.
When did audits of financial statements become required in England?
1) 1856 Corporations Act.
2) 1066 as the result of the Norman Conquest of England.
,3) 1086 as a result of the Doomsday Book Survey used for taxation.
4) 1880 with the establishment of Charted Accountants. - correct answer1) 1856 Corporations
Act.
Not including the Civil War era, in what year was the Federal Income Tax passed in the U.S.?
1) 1974.
2) 1921.
3) 1913.
4) 1902. - correct answer3) 1913.
Accounting predated writing?
1) True.
2) False - correct answer1) True.
According to Donald Creesey, the elements of fraud DO NOT include which of the following?
1) Pressure.
2) Opportunity.
3) Rationalization.
4) Motivation. - correct answer4) Motivation.
Ariail and Crumbley's diagram of fraud does NOT include Creesey's three elements.
1) True.
2) False. - correct answer2) False
The description of public accountants as the "public watchdog" was used to describe the
public's perception that CPAs are charged with more than just assuring that the financial
statements are fairly presented. Which of the following jurists conveyed this view?
1) Chief Justice Burger.
,2) Chief Justice John Marshall.
3) Chief Justice Roger B. Taney.
4) Chief Justice Earl Warren.
5) Chief Justice William Rehnquist. - correct answer1) Chief Justice Burger.
Which certification did Dr. Ariail indicate was a valuable and respected designation that could
be earned without earning the CPA and that he recommended students interested in forensic
accounting should pursue immediately after completing the Fraud and Forensic Accounting
course?
1) CMA.
2) CVA.
3) CRFAC.
4) CFF.
5) CFE. - correct answer5) CFE.
Premature recognition of revenue is the number one reason that financial statements are
restated.
1) True.
2) False. - correct answer1) True.
Earnings management, which is the purposeful intervention in the external reporting process, is,
by its very nature, always a fraudulent activity.
1) True.
2) False. - correct answer2) False.
Which of the following are considered preventive internal controls?
1) Training personnel.
, 2) Taking legal action in order to set an example.
3) Securing assets.
4) Preparing monthly bank reconciliations.
5) Agreeing perpetual inventory amounts to actual counts of the inventory. - correct answer3)
Securing assets.
The fraud model created by Drs. Ariail and Crumbley include which of the following items?
1) Capacity.
2) Employee Disenfranchisement.
3) Integrity.
4) Motivations.
5) All of the above.
6) None of the above. - correct answer4) Motivations.
Internal controls are supposed to minimize the incidence of fraud. However, management can
commit frauds by overriding internal controls. Examples given in SAS 99 of ways that
management might override internal controls include all of the following except:
1) Fictitious journal entries made at year end.
2) Manipulating the year end count of inventory.
3) Biasing assumptions used in making estimates.
4) After the fact changing of records and terms of important transactions. - correct answer2)
Manipulating the year end count of inventory.
As explained in class by Dr. Ariail, frauds concerning lapping often occur with which type of
account or activities?
1) Accounts receivable.
