2024 Forensic Accounting Exam Review
|Question and Answer| 100% Correct
Discipline of Fraud Examination *Ans* Resolving allegations of fraud from tips, complaints,
or accounting clues
- Documentary evidence
- Interviewing witnesses
- Writing investigative reports
- Testifying
- Assisting in the detection and prevention of fraud
Typically performed by accountants, but could be performed by law enforcement officials, etc.
Forensic Accounting vs. Fraud Examination *Ans* Forensic Accounting: Use of accounting
knowledge or skill for courtroom purposes
- Fraud, bankruptcy, business valuations, divorce, etc.
Fraud Examination Methodology: Predication *Ans* Totality of circumstances that would
lead a reasonable, professionally trained, and prudent individual to believe a fraud has occurred,
is occurring, and/or will occur
- Most common method: tip (generally sufficient predication)
,- Suspicion only without underlying circumstantial evidence (not sufficient)
Fraud Theory Approach *Ans* 1. Analyze available data
2. Create a hypothesis
3. Test the hypothesis
4. Refine and amend the hypothesis
Tools Used in Fraud Examination *Ans* - Skilled in examination of financial statements,
books and records and supporting documents (also must know legal ramifications and how to
maintain custody of documents)
- Interview: process of obtaining relevant info
- Observation: behavior, displays of wealth, etc.
Video: How to spot a liar with different behaviors
Tools Used in Fraud Examination *Ans* Outer ring of circle to inner ring: Neutral third-
parties, corroborative witnesses, co-conspirators, suspect
Occupational Fraud and Abuse *Ans* The use of one's occupation for personal enrichment
through the deliberate misuse or misapplication of the employing organization's resources or
assets
, Elements of Fraud *Ans* - A material false statement
- Knowledge that the statement was false when it was uttered
- Reliance on the false statement by the victim
- Damages resulting from the victim's reliance on the false statement
Occupational Fraud and Abuse Research: Edward Sutherland *Ans* - Sutherland is to the
world of white-collar criminality what Freud is to psychology.
- He coined the term "white-collar crime", in 1939. He intended the definition to mean criminal
acts of corporations and individuals acting in their corporate capacity, but since that time the
term has come to mean almost any financial or economic crime.
- Developed the "theory of differential association"
a) Crime is learned
b) This learning usually occurs
within inmate personal
groups
Occupational Fraud and Abuse Research: Donald R. Cressey *Ans* Concentrated on
embezzlers- interviewed about 200 incarcerated inmates at prisons in the Midwest
Cressey's Hypothesis: Embezzler's, whom he called "trust violators," intrigued Cressey. He
developed the model for the occupational offender which is better known as the "fraud triangle".
|Question and Answer| 100% Correct
Discipline of Fraud Examination *Ans* Resolving allegations of fraud from tips, complaints,
or accounting clues
- Documentary evidence
- Interviewing witnesses
- Writing investigative reports
- Testifying
- Assisting in the detection and prevention of fraud
Typically performed by accountants, but could be performed by law enforcement officials, etc.
Forensic Accounting vs. Fraud Examination *Ans* Forensic Accounting: Use of accounting
knowledge or skill for courtroom purposes
- Fraud, bankruptcy, business valuations, divorce, etc.
Fraud Examination Methodology: Predication *Ans* Totality of circumstances that would
lead a reasonable, professionally trained, and prudent individual to believe a fraud has occurred,
is occurring, and/or will occur
- Most common method: tip (generally sufficient predication)
,- Suspicion only without underlying circumstantial evidence (not sufficient)
Fraud Theory Approach *Ans* 1. Analyze available data
2. Create a hypothesis
3. Test the hypothesis
4. Refine and amend the hypothesis
Tools Used in Fraud Examination *Ans* - Skilled in examination of financial statements,
books and records and supporting documents (also must know legal ramifications and how to
maintain custody of documents)
- Interview: process of obtaining relevant info
- Observation: behavior, displays of wealth, etc.
Video: How to spot a liar with different behaviors
Tools Used in Fraud Examination *Ans* Outer ring of circle to inner ring: Neutral third-
parties, corroborative witnesses, co-conspirators, suspect
Occupational Fraud and Abuse *Ans* The use of one's occupation for personal enrichment
through the deliberate misuse or misapplication of the employing organization's resources or
assets
, Elements of Fraud *Ans* - A material false statement
- Knowledge that the statement was false when it was uttered
- Reliance on the false statement by the victim
- Damages resulting from the victim's reliance on the false statement
Occupational Fraud and Abuse Research: Edward Sutherland *Ans* - Sutherland is to the
world of white-collar criminality what Freud is to psychology.
- He coined the term "white-collar crime", in 1939. He intended the definition to mean criminal
acts of corporations and individuals acting in their corporate capacity, but since that time the
term has come to mean almost any financial or economic crime.
- Developed the "theory of differential association"
a) Crime is learned
b) This learning usually occurs
within inmate personal
groups
Occupational Fraud and Abuse Research: Donald R. Cressey *Ans* Concentrated on
embezzlers- interviewed about 200 incarcerated inmates at prisons in the Midwest
Cressey's Hypothesis: Embezzler's, whom he called "trust violators," intrigued Cressey. He
developed the model for the occupational offender which is better known as the "fraud triangle".
