ACCT 4235 MIDTERM STUDY GUIDE
Employee Embezzlement - Answer -most common type of occupational fraud, when
employees deceive their employers by taking company assets. Can be direct or indirect
Miscellaneous Fraud - Answer -A fraud that may have been committed for reasons
other than financial gain and does not include employee embezzlement, vendor fraud,
customer fraud, management fraud, investment scams, and other consumer frauds
Jurisdiction - Answer -The limit or territory over which an organization has authority.
Perpetrators - Answer -Persons who commit a fraud
Victims - Answer -A person or organization deceived by the perpetrator
Vendor Fraud - Answer -Extremely common in the United States and comes in two
common forms 1) fraud perpetrated by vendors acting alone and 2) fraud perpetrated
through collusion between buyers and vendors
Revenue - Answer -Increases in a company's resources from the sale of goods and
services
Fraud - Answer -All the multifarious means which human ingenuity can devise, which
are resorted to by one individual, to get an advantage over another by false
representations
Profit Margin - Answer -Net Income divided by total revenues, also known as return on
sales, profit margin percentage, profit margin ratio, and operating performance ratio
Net Income - Answer -an overall measure of the performance of a company, equal to
revenues minus expenses for a period
Physical safeguards - Answer -used to protect assets from theft by fraud or other
means
Real Pressure - Answer -pressure that is not perceived
Accounting System - Answer -an organization of policies and procedures for recording
economic transactions
Segregation of Duties - Answer -The division of a task into two parts so that one person
does not have complete control of the task
, Perceived opportunity - Answer -A situation where someone believes he or she has a
favorable or promising combination of circumstances to commit fraud and not be
detected
Coercive Power - Answer -the ability of a fraud perpetrator to make an individual
perceive punishment if he or she does not participate in the fraud
Referent Power - Answer -the ability of the perpetrator to relate to the potential co-
conspirator
Expert Power - Answer -the ability of the fraud perpetrator to influence another person
because of expertise and knowledge
Control environment - Answer -sets the tone of an organization, influencing the control
consciousness of its people
Documents and Records - Answer -documentary evidence of all transactions that
create an audit trail
Perceived - Answer -A situation where someone perceives he or she needs to commit
fraud, a constraining influence on the will or mind, as a moral force
Power - Answer -the probability that a person can carry out his or her own will despite
resistance
Modeling - Answer -setting an example
Personal Observation - Answer -involves evidence that is sensed (seen, heardm felt,
etc. by the investigators themselves. Invesitgative techniques involve invigilation,
surveillance, and covert operations, among others
Testimonial Evidence - Answer -evidence gathered from individuals
Codes of Conduct - Answer -written statements that convey expectations about what is
and is not appropiate in an organization
Concealment - Answer -an investigative method that involves focusing on records,
documents, computer programs and servers, and other places where perpetrators might
try to conceal or hide their dishonest acts
Fraud Prevention - Answer -Involves 1.) taking steps to create and maintain a culture of
honesty and high ethics and 2.) assessing the risks for fraud and developing concrete
responses to mitigate the risks and eliminate the opportunities for fraud
Physical Evidence - Answer -Includes fingerprints, tire marks, weapons, stolen
property, and other tangible evidence that can be associated with dishonest acts.
Employee Embezzlement - Answer -most common type of occupational fraud, when
employees deceive their employers by taking company assets. Can be direct or indirect
Miscellaneous Fraud - Answer -A fraud that may have been committed for reasons
other than financial gain and does not include employee embezzlement, vendor fraud,
customer fraud, management fraud, investment scams, and other consumer frauds
Jurisdiction - Answer -The limit or territory over which an organization has authority.
Perpetrators - Answer -Persons who commit a fraud
Victims - Answer -A person or organization deceived by the perpetrator
Vendor Fraud - Answer -Extremely common in the United States and comes in two
common forms 1) fraud perpetrated by vendors acting alone and 2) fraud perpetrated
through collusion between buyers and vendors
Revenue - Answer -Increases in a company's resources from the sale of goods and
services
Fraud - Answer -All the multifarious means which human ingenuity can devise, which
are resorted to by one individual, to get an advantage over another by false
representations
Profit Margin - Answer -Net Income divided by total revenues, also known as return on
sales, profit margin percentage, profit margin ratio, and operating performance ratio
Net Income - Answer -an overall measure of the performance of a company, equal to
revenues minus expenses for a period
Physical safeguards - Answer -used to protect assets from theft by fraud or other
means
Real Pressure - Answer -pressure that is not perceived
Accounting System - Answer -an organization of policies and procedures for recording
economic transactions
Segregation of Duties - Answer -The division of a task into two parts so that one person
does not have complete control of the task
, Perceived opportunity - Answer -A situation where someone believes he or she has a
favorable or promising combination of circumstances to commit fraud and not be
detected
Coercive Power - Answer -the ability of a fraud perpetrator to make an individual
perceive punishment if he or she does not participate in the fraud
Referent Power - Answer -the ability of the perpetrator to relate to the potential co-
conspirator
Expert Power - Answer -the ability of the fraud perpetrator to influence another person
because of expertise and knowledge
Control environment - Answer -sets the tone of an organization, influencing the control
consciousness of its people
Documents and Records - Answer -documentary evidence of all transactions that
create an audit trail
Perceived - Answer -A situation where someone perceives he or she needs to commit
fraud, a constraining influence on the will or mind, as a moral force
Power - Answer -the probability that a person can carry out his or her own will despite
resistance
Modeling - Answer -setting an example
Personal Observation - Answer -involves evidence that is sensed (seen, heardm felt,
etc. by the investigators themselves. Invesitgative techniques involve invigilation,
surveillance, and covert operations, among others
Testimonial Evidence - Answer -evidence gathered from individuals
Codes of Conduct - Answer -written statements that convey expectations about what is
and is not appropiate in an organization
Concealment - Answer -an investigative method that involves focusing on records,
documents, computer programs and servers, and other places where perpetrators might
try to conceal or hide their dishonest acts
Fraud Prevention - Answer -Involves 1.) taking steps to create and maintain a culture of
honesty and high ethics and 2.) assessing the risks for fraud and developing concrete
responses to mitigate the risks and eliminate the opportunities for fraud
Physical Evidence - Answer -Includes fingerprints, tire marks, weapons, stolen
property, and other tangible evidence that can be associated with dishonest acts.
