WGU Fraud and Forensic Accounting - C254
questions with verified answers
A good way to identify potential frauds BEFORE even interacting with a firm and
its employees? Ans✓✓✓ Focusing on changes in accounts over time and
comparing the changes to industry norms
According to SARBOX, who can (and must) approve any non-audit services
provided by the auditor? Ans✓✓✓ The audit committee
According to the COSO report on fraud, firms that engaged in fraudulent
behavior: Ans✓✓✓ OFTEN changed auditors between the last clean financial
statements and the last fraudulent financial statements.
Accounting or documentary symptoms of fraud Ans✓✓✓ discrepancies in the
record. Missing documents, photocopies instead of originals, out of balance
ledgers, etc.
After the completion of an independent audit of the financial statements, the
____ and the ____ must sign them saying they do not contain fraud (though
errors or mistakes could exist). Ans✓✓✓ Audit committee chairman; CEO
Analytical symptoms of fraud Ans✓✓✓ Unusual activities, relationships, events,
etc, that are unexpected or unexplained
Approximately 20 percent of U.S. public companies backdate stock options for
officers and directors. Which of the following best describes the ethical issue
involved with this practice? Ans✓✓✓ It violates accounting rules, tax laws, and
SEC disclosure rules.
, Auditors attempting to identify potential fraud exposures need to: Ans✓✓✓
Clearly understand the nature of the organization and its industry and even its
competitors.
Before SARBOX auditors reported the executives, and more specifically, the CEO,
of firms. SARBOX changed that. To whom do auditors report now? Ans✓✓✓ The
audit committee
Behavioral and verbal symptoms of fraud Ans✓✓✓ Changes in behavior due to
stress are common in those new to fraud.
Control symptoms exhibit which type of issues? Ans✓✓✓ Breakdowns in the
control environment or accounting system and egregious internal controls
Control symptoms of fraud Ans✓✓✓ Breakdowns in internal controls that are so
bad they hint toward management override.
Cost of goods sold is a plug figure calculated from beginning inventory, ending
inventory, and purchases. Which account (of these three) is most often
manipulated to change cost of goods sold? Ans✓✓✓ Beginning Inventory
How did SAP No. 1 change auditors' responsibilities regarding fraud? Ans✓✓✓ It
recognized that defalcations occur, but auditors don't have any real responsibility
regarding them.
questions with verified answers
A good way to identify potential frauds BEFORE even interacting with a firm and
its employees? Ans✓✓✓ Focusing on changes in accounts over time and
comparing the changes to industry norms
According to SARBOX, who can (and must) approve any non-audit services
provided by the auditor? Ans✓✓✓ The audit committee
According to the COSO report on fraud, firms that engaged in fraudulent
behavior: Ans✓✓✓ OFTEN changed auditors between the last clean financial
statements and the last fraudulent financial statements.
Accounting or documentary symptoms of fraud Ans✓✓✓ discrepancies in the
record. Missing documents, photocopies instead of originals, out of balance
ledgers, etc.
After the completion of an independent audit of the financial statements, the
____ and the ____ must sign them saying they do not contain fraud (though
errors or mistakes could exist). Ans✓✓✓ Audit committee chairman; CEO
Analytical symptoms of fraud Ans✓✓✓ Unusual activities, relationships, events,
etc, that are unexpected or unexplained
Approximately 20 percent of U.S. public companies backdate stock options for
officers and directors. Which of the following best describes the ethical issue
involved with this practice? Ans✓✓✓ It violates accounting rules, tax laws, and
SEC disclosure rules.
, Auditors attempting to identify potential fraud exposures need to: Ans✓✓✓
Clearly understand the nature of the organization and its industry and even its
competitors.
Before SARBOX auditors reported the executives, and more specifically, the CEO,
of firms. SARBOX changed that. To whom do auditors report now? Ans✓✓✓ The
audit committee
Behavioral and verbal symptoms of fraud Ans✓✓✓ Changes in behavior due to
stress are common in those new to fraud.
Control symptoms exhibit which type of issues? Ans✓✓✓ Breakdowns in the
control environment or accounting system and egregious internal controls
Control symptoms of fraud Ans✓✓✓ Breakdowns in internal controls that are so
bad they hint toward management override.
Cost of goods sold is a plug figure calculated from beginning inventory, ending
inventory, and purchases. Which account (of these three) is most often
manipulated to change cost of goods sold? Ans✓✓✓ Beginning Inventory
How did SAP No. 1 change auditors' responsibilities regarding fraud? Ans✓✓✓ It
recognized that defalcations occur, but auditors don't have any real responsibility
regarding them.
