Forensic Accounting Mid-term Exam
Prep |100% Correct Answers|
financial auditing *Ans* sampling process based on providing periodic assurances that
account balances are statistically and materially accurate, internal controls are adequate, and
accounting rules are followed
two areas of forensic accounting *Ans* investigative accounting
litigation services
forensic accounting *Ans* the action of identifying, recording, settling, extracting, sorting,
reporting, and verifying past financial data or other accounting activities
areas of forensic accounting *Ans* fraud investigation
business disputes consulting
characteristics of forensic accountants *Ans* analytical
detail oriented
ethical
most important skills (according to attorneys/clients) *Ans* effective oral communication
ability to simplify accounting information
,important skills (according to forensic accountants) *Ans* ability to identify key issues
investigative intuitiveness
general standards *Ans* professional competence- take on projects you can reasonably do
due professional care
planning and supervision- do most of work yourself
sufficient relevant data
consulting standards *Ans* serve the client
understand the client
communicate with the client
conflicts of interest *Ans* avoid completely
do not take on a case that you would have a conflict of interest with
paper overalls case *Ans* -fuel oil spill where a trucking company hired environmental
cleanup specialists. Trucking company was overcharged- all the accountants had was a lot of
invoices. What did they do? found that most invoices were for paper overalls at an outrageous
mark-up. They wore paper overalls to court to prove their point
point: clarify and simplify accounting
, gas refinery in the Middle East *Ans* construction damages case- 3 countries, 60 million in
damage claims, found ways to allocate and calculate estimates to prove that the cost was absurd
point: get experts in other areas if you need (technicians/ engineers), clarify and simplify the
accounting
Le Nature's *Ans* financial statement fraud case-
overstated revenues and understated liabilities on fake set of books, auditors looked at fake
books and gave clean audit opinions, with those the company was able to borrow millions from
banks which they embezzled for personal use
-mis-classified info to hide debt
-3 employees resigned, EY sent letter to board, Le Nature's fired EY, hired BDO, law firm
investigated, found nothing
-everyone was making money
-in the end: supplier called bank about transfer of money, and bank thought supplier had already
been paid----> led to crash
fraudulent financial reporting *Ans* the intentional misstatements or omissions of amounts
or disclosures in financial statements to deceive financial statement users
Prep |100% Correct Answers|
financial auditing *Ans* sampling process based on providing periodic assurances that
account balances are statistically and materially accurate, internal controls are adequate, and
accounting rules are followed
two areas of forensic accounting *Ans* investigative accounting
litigation services
forensic accounting *Ans* the action of identifying, recording, settling, extracting, sorting,
reporting, and verifying past financial data or other accounting activities
areas of forensic accounting *Ans* fraud investigation
business disputes consulting
characteristics of forensic accountants *Ans* analytical
detail oriented
ethical
most important skills (according to attorneys/clients) *Ans* effective oral communication
ability to simplify accounting information
,important skills (according to forensic accountants) *Ans* ability to identify key issues
investigative intuitiveness
general standards *Ans* professional competence- take on projects you can reasonably do
due professional care
planning and supervision- do most of work yourself
sufficient relevant data
consulting standards *Ans* serve the client
understand the client
communicate with the client
conflicts of interest *Ans* avoid completely
do not take on a case that you would have a conflict of interest with
paper overalls case *Ans* -fuel oil spill where a trucking company hired environmental
cleanup specialists. Trucking company was overcharged- all the accountants had was a lot of
invoices. What did they do? found that most invoices were for paper overalls at an outrageous
mark-up. They wore paper overalls to court to prove their point
point: clarify and simplify accounting
, gas refinery in the Middle East *Ans* construction damages case- 3 countries, 60 million in
damage claims, found ways to allocate and calculate estimates to prove that the cost was absurd
point: get experts in other areas if you need (technicians/ engineers), clarify and simplify the
accounting
Le Nature's *Ans* financial statement fraud case-
overstated revenues and understated liabilities on fake set of books, auditors looked at fake
books and gave clean audit opinions, with those the company was able to borrow millions from
banks which they embezzled for personal use
-mis-classified info to hide debt
-3 employees resigned, EY sent letter to board, Le Nature's fired EY, hired BDO, law firm
investigated, found nothing
-everyone was making money
-in the end: supplier called bank about transfer of money, and bank thought supplier had already
been paid----> led to crash
fraudulent financial reporting *Ans* the intentional misstatements or omissions of amounts
or disclosures in financial statements to deceive financial statement users
