Forensic and Investigative Accounting, 9th Edition

Test Bank: Forensic and Investigative Accounting, 9th Edition
by D Larry Crumbley - Chapters 1-0, 9780808053224 |
Rationals Included


1-3. The scribes of ancient Egypt were the forerunners of today's accountants.

a. True
b. False - ANSWER: a

1-13. Arthur Andersen created a CPA firm that eventually disappeared.
a. True
b. False - ANSWER: a

1-21. Forensic‐type fieldwork refers to an attitudinal shift in an auditor's degree of skepticism.
a. True
b. False - ANSWER: a

1-22. Consulting standards may apply to a forensic accountant.
a. True
b. False - ANSWER: a

1-23. Peremptory refers to the fact that a forensic accountant can be proactive.
a. True
b. False - ANSWER: a

1-24. A forensic audit is generally a sampling activity.
a. True
b. False - ANSWER: b

1-27. The smoking gun to convict Al Capone was a cash receipts journal with Capone's name on it.
a. True
b. False - ANSWER: a

1-29. Plagiarism is considered to be fraud.
a. True
b. False - ANSWER: a

1-30. A forensic accountant uses interviews and leveraging techniques designed to elicit sufficient
information to prove or disapprove a hypothesis.
a. True
b. False - ANSWER: a

1-31. A forensic accountant does not search public records.
a. True
b. False - ANSWER: b

*1-32. Like on television shows, a forensic accountant may have to keep a chain of custody.
a. True
b. False - ANSWER: a

1-47. Which is not one of the six areas of litigation services that the AICPA committee suggested in
1986?
a. Damages.

,b. Valuation.
c. Accounting.
d. Analyses.
e. All the above were suggested. - ANSWER: e

1-50. Peremptory refers to:
a. Be there first.
b. Not requiring any cause to be shown.
c. One who strives to be the best.
d. Take the place of.
e. None of the above. - ANSWER: a

1-51. What was the smoking gun to convict Al Capone?

a. An accountant's cash receipts ledger.
b. Lavish lifestyle.
c. Murdering a competitor.
d. Wholesaling alcoholic beverages.
e. None of the above. - ANSWER: a*

1-53. Which would not be included in the AICPA's definition of forensic accounting?

a. Auditing.
b. Investigative skills.
c. Quantitative methods.
d. Accounting.
e. None of the above. - ANSWER: e

1-61. Which would probably not be an added procedure in a forensic audit?

a. Extensive use of interviews.
b. Not accepting sampling as evidence.
c. Mending evidential matter standards with the rules of evidence.
d. Searching for legal evidence.
e. All would be used. - ANSWER: e

*1-64. Which white‐collar crimes does the FBI investigate?
a. Money laundering.
b. Bank fraud.
c. Health care fraud.
d. Environmental crimes.
e. All of the above. - ANSWER: e

2-3. A forensic accountant can normally assume that the books and records are true and correct.
a. True
b. False - ANSWER: b

2-5. Knowledge of both statute law and case law may be relevant to the goals or objectives of a
forensic accountant.
a. True
b. False - ANSWER: a

2-6. Criminology is one area of the forensic accountant's knowledge base.
a. True
b. False - ANSWER: a

2-8. A psychology course would not be helpful for a forensic accountant.

,a. True
b. False - ANSWER: b*

2-19. Data‐driven forensic techniques will always detect fraud schemes, including bribery and
kickbacks.
a. True
b. False - ANSWER: b

2-28. A kick‐back scheme can normally be caught by a data ‐driven approach.
a. True
b. False - ANSWER: a

2-29. Fraud is much like an iceberg: many of the behavioral factors lurk on top of the water ready to
sink a corporation.

a. True
b. False - ANSWER: b

2-30. A bribery scheme can best be caught by behavioral factors.

a. True
b. False - ANSWER: a

2-31. Just like termites, fraud can destroy an organization.
a. True
b. False - ANSWER: a

2-32. Recessions often increase fraud and abuse.
a. True
b. False - ANSWER: a*

2-35. According to the FBI's definition of fraud, there should be an application or threat of physical
force or violence.

a. True
b. False - ANSWER: b

2-36. One need not be a CPA to obtain the Certified in Financial Forensics (CFF).
a. True
b. False - ANSWER: b

2-37. Forensic accountants need an understanding of:
a. Accounting.
b. Law.
c. Criminology.
d. Investigative auditing.
e. All of the above. - ANSWER: e

2-45. Which task probably would not be required of a Certified Fraud Examiner?
a. Gather evidence.
b. Write reports.
c. Assist in investigating fraud.
d. Testify in the courtroom.
e. All of the above may be required. - ANSWER: e

3-3. The audit committee is one leg of the six‐legged stool of the financial reporting process.
a. True

, b. False - ANSWER: a

3-4. Misrepresentation is one of the three M's of financial reporting fraud.
a. True
b. False - ANSWER: a

3-5. The bill‐and‐hold practice involves selling inventory to customers and holding the merchandise,
with an agreement to deliver the goods later.

a. True
b. False - ANSWER: a

*3-7. A restaurant may reduce income (and expenses) if its lease agreement payments are based
upon restaurant sales.

a. True
b. False - ANSWER: A

*3-8. Booking income before receiving payments is called "channel stuffing" by the SEC.
a. True
b. False - ANSWER: a

*3-10. A KPMG survey breaks fraud into internal and external fraud.
a. True
b. False - ANSWER: a

*3-12. Under the KPMG survey scheme of fraud, check forgery is always an external fraud.

a. True
b. False - ANSWER: b

*3-13. The older fraud pyramid of Edwin Sutherland had these three factors of fraud: motive,
opportunity, and rationalization.
a. True
b. False - ANSWER: a

*3-14. A gambling problem would be considered an example of the rationalization factor in the fraud
pyramid.
a. True
b. False - ANSWER: b

*3-15. Ineffective internal controls are a tempting open door or opportunity for fraud.
a. True
b. False - ANSWER: a

*3-16. Effective internal controls will always stop fraud.
a. True
b. False - ANSWER: b

*3-19. A business in a declining industry would be an example of a motivation risk factor.
a. True
b. False - ANSWER: a

3-20. High turnover of senior management would be an example of a motivation risk factor.
a. True
b. False - ANSWER: b