FORENSIC ACCOUNTING AND FRAUD
EXAMINATION TEST BANK COMPLETE
PRACTICE QUESTIONS WITH ACCURATE
ANSWERS PREMIUM REVIEW RESOURCE
●● Fraud Examination
Answer: Involves obtaining documentary evidence, interviewing
witnesses and potential subjects, writing investigative reports, testifying
to findings, and assisting in the general detection and prevention of fraud
●● Fraud (Black's Law Dictionary)
Answer: Intentional perversion of truth for the purpose of inducing
another, in reliance upon perversion of truth, to part with some valuable
thing belonging to him or to surrender a legal right
●● Occupational Fraud and Abuse
Answer: Use of occupation for personal enrichment (even just $1)
through deliberate misuse or misapplication of employer's
resources/assets
●● 1. Material false statement
2. Knowledge that statement was false
3. Reliance on the statement by the victim
,4. Damages
Answer: Four Elements of Fraud
●● Edwin H. Sutherland's definition of "white-collar crime"
Answer: Criminal acts of corporations, individuals in corporate capacity
●● Edwin H. Sutherland's Theory of Differential Association
Answer: Crime is learned from intimate personal groups, not genetic
●● Donald R. Cressey
Answer: - Was Edwin Sutherland's student
- Studied embezzlers (why people become 'trust violators')
- Developed the Fraud Triangle
●● Pressure, perceived opportunity, and rationalization
Answer: Fraud Triangle
●● Pressure, perceived opportunity, rationalization, and capability
(being able to live with the guilt)
Answer: Fraud Diamond
●● 1. Living beyond means
,2. Overwhelming desire for personal gain
3. High personal debt
4. Close association with customers --> collusion?
5. Pay not commensurate with job
6. Wheeler-dealer
7. Strong challenge to beat system
8. Excessive gambling
9. Family/peer pressure
Answer: Steve Albrecht's Nine Motivators of Fraud
●● Fraud Scale (?)
Answer: Situational pressures, opportunity to commit, personal interity
●● 1. Tip (39.1%)
2. Internal audit (16.5%)
3. Management review (13.4%)
4. Accident (5.6%)
5. External audit (3.8%)
Answer: Highest Detection to Lowest
●● 1. Employees (40.9%)
2. Managers (36.8%)
, 3. Owners (18.9%)
Answer: ALL Fraud (not just f/s) rates (by management at the firm):
●● Corruption --> Bribery, conflicts of interest, illegal gratuities, and
extortion
Answer: Corruption part of the fraud tree
●● Asset Misappropriation --> Cash, inventory
Cash --> Larceny, skimming, fraudulent disbursements
Answer: Asset misappropriation part of the fraud tree
●● Fraudulent statements --> Financial, non-financial
Answer: Fraudulent statements part of the fraud tree
●● 1. Asset misappropriation
2. Corruption
3. Fraudulent statements
Answer: Most common fraud schemes
●● 1. Fraudulent statements
2. Corruption
EXAMINATION TEST BANK COMPLETE
PRACTICE QUESTIONS WITH ACCURATE
ANSWERS PREMIUM REVIEW RESOURCE
●● Fraud Examination
Answer: Involves obtaining documentary evidence, interviewing
witnesses and potential subjects, writing investigative reports, testifying
to findings, and assisting in the general detection and prevention of fraud
●● Fraud (Black's Law Dictionary)
Answer: Intentional perversion of truth for the purpose of inducing
another, in reliance upon perversion of truth, to part with some valuable
thing belonging to him or to surrender a legal right
●● Occupational Fraud and Abuse
Answer: Use of occupation for personal enrichment (even just $1)
through deliberate misuse or misapplication of employer's
resources/assets
●● 1. Material false statement
2. Knowledge that statement was false
3. Reliance on the statement by the victim
,4. Damages
Answer: Four Elements of Fraud
●● Edwin H. Sutherland's definition of "white-collar crime"
Answer: Criminal acts of corporations, individuals in corporate capacity
●● Edwin H. Sutherland's Theory of Differential Association
Answer: Crime is learned from intimate personal groups, not genetic
●● Donald R. Cressey
Answer: - Was Edwin Sutherland's student
- Studied embezzlers (why people become 'trust violators')
- Developed the Fraud Triangle
●● Pressure, perceived opportunity, and rationalization
Answer: Fraud Triangle
●● Pressure, perceived opportunity, rationalization, and capability
(being able to live with the guilt)
Answer: Fraud Diamond
●● 1. Living beyond means
,2. Overwhelming desire for personal gain
3. High personal debt
4. Close association with customers --> collusion?
5. Pay not commensurate with job
6. Wheeler-dealer
7. Strong challenge to beat system
8. Excessive gambling
9. Family/peer pressure
Answer: Steve Albrecht's Nine Motivators of Fraud
●● Fraud Scale (?)
Answer: Situational pressures, opportunity to commit, personal interity
●● 1. Tip (39.1%)
2. Internal audit (16.5%)
3. Management review (13.4%)
4. Accident (5.6%)
5. External audit (3.8%)
Answer: Highest Detection to Lowest
●● 1. Employees (40.9%)
2. Managers (36.8%)
, 3. Owners (18.9%)
Answer: ALL Fraud (not just f/s) rates (by management at the firm):
●● Corruption --> Bribery, conflicts of interest, illegal gratuities, and
extortion
Answer: Corruption part of the fraud tree
●● Asset Misappropriation --> Cash, inventory
Cash --> Larceny, skimming, fraudulent disbursements
Answer: Asset misappropriation part of the fraud tree
●● Fraudulent statements --> Financial, non-financial
Answer: Fraudulent statements part of the fraud tree
●● 1. Asset misappropriation
2. Corruption
3. Fraudulent statements
Answer: Most common fraud schemes
●● 1. Fraudulent statements
2. Corruption
