Forensic Accounting Midterm Exam
Questions and Accurate Answers
Forensic accounting - ✔✔Te action of identifying, recording, settling, extracting, sorting,
reporting, and verifying past financial data or other accounting activities for settling current
prospective legal disputes or using such past financial data for projecting future financial data
to settle legal disputes
Auditing - ✔✔Checking different aspects of finances, required by law for public companies do
not look at every financial statement
Forensic accountant - ✔✔Has a working knowledge of the legal system and excellent
quantitative analysis and communication skills to carry out expert testimony in the courtroom
and to aid in other litigation support engagements
Fraud triangle - ✔✔Opportunity
Motive pressures
Rationalization
Fraud - ✔✔Wrongful or criminal deception result in financial or personal gain
Materiality - ✔✔The measure of whether something is significant enough to change an
investors investment decision
Control risk - ✔✔Risk that a material error in the slander or transaction class will not be
prevented or detected
Inherent risk - ✔✔Risk that an account or transaction contains material misstatements before
the effects of the controls
, Detection risk - ✔✔Risk that audit procedures will not turn up a material error when it exists
Professional skepticism - ✔✔An attitude that includes a questioning mind and a critical
assessment of audit evidence
Laboratory analysis - ✔✔Analyzing fingerprints, forged signatures, analyzing documents for
potential alteration, carbon dating paper and signatures, mirror imaging or copying hard
drives/company servers
Timeline analysis - ✔✔Used to show the chronology of the dispute
Tracing schedule - ✔✔Used to show the flow of funds
Link analysis - ✔✔Shows associations between people and data
Interview - ✔✔Could involve a possible suspect, witness or victim, no Miranda rights, general
information, less demanding, casual, information not known, scattershot approach
Interrogation - ✔✔Involves a suspect, involves custody, requires Miranda rights, specific facts,
more demanding, highly structured, confirm known information, pin-down approach
Upjohn warning - ✔✔Attorney tells employee that the attorney represents the company, not
the employee
Employee should be clearly told that the attorney-client privilege belongs to the company
Employee fraud - ✔✔When an employee acts with deceptive, dishonest, corrupt, or unethical
behavior. Employee fraud can lead to the failure of businesses and end of careers. Here must
be an offender, a victim, and an absence of safeguards
Questions and Accurate Answers
Forensic accounting - ✔✔Te action of identifying, recording, settling, extracting, sorting,
reporting, and verifying past financial data or other accounting activities for settling current
prospective legal disputes or using such past financial data for projecting future financial data
to settle legal disputes
Auditing - ✔✔Checking different aspects of finances, required by law for public companies do
not look at every financial statement
Forensic accountant - ✔✔Has a working knowledge of the legal system and excellent
quantitative analysis and communication skills to carry out expert testimony in the courtroom
and to aid in other litigation support engagements
Fraud triangle - ✔✔Opportunity
Motive pressures
Rationalization
Fraud - ✔✔Wrongful or criminal deception result in financial or personal gain
Materiality - ✔✔The measure of whether something is significant enough to change an
investors investment decision
Control risk - ✔✔Risk that a material error in the slander or transaction class will not be
prevented or detected
Inherent risk - ✔✔Risk that an account or transaction contains material misstatements before
the effects of the controls
, Detection risk - ✔✔Risk that audit procedures will not turn up a material error when it exists
Professional skepticism - ✔✔An attitude that includes a questioning mind and a critical
assessment of audit evidence
Laboratory analysis - ✔✔Analyzing fingerprints, forged signatures, analyzing documents for
potential alteration, carbon dating paper and signatures, mirror imaging or copying hard
drives/company servers
Timeline analysis - ✔✔Used to show the chronology of the dispute
Tracing schedule - ✔✔Used to show the flow of funds
Link analysis - ✔✔Shows associations between people and data
Interview - ✔✔Could involve a possible suspect, witness or victim, no Miranda rights, general
information, less demanding, casual, information not known, scattershot approach
Interrogation - ✔✔Involves a suspect, involves custody, requires Miranda rights, specific facts,
more demanding, highly structured, confirm known information, pin-down approach
Upjohn warning - ✔✔Attorney tells employee that the attorney represents the company, not
the employee
Employee should be clearly told that the attorney-client privilege belongs to the company
Employee fraud - ✔✔When an employee acts with deceptive, dishonest, corrupt, or unethical
behavior. Employee fraud can lead to the failure of businesses and end of careers. Here must
be an offender, a victim, and an absence of safeguards
