ACCT 450 - Fraud Examination FINAL
1. Which of the following best describes the objective of a fraud examination?
a. To make recommendations to management about how to prevent fraud
b. To determine whether financial statements are free of misstatements due to fraud
c. To express an opinion on the guilt or innocence of a suspect
d. To determine whether a crime has been committed, and if so, who is responsible - correct answer
✔✔d. To determine whether a crime has been committed, and if so, who is responsible
2. Which of the following is not a part of the fraud theory approach?
a. Analyze available data.
b. Develop "what-if" scenarios.
c. Identify who committed the fraud.
d. Refine the hypothesis. - correct answer ✔✔c. Identify who committed the fraud.
3. Once sufficient predication has been established, what is the first step a fraud examiner following the
fraud theory approach should take?
a. Create a hypothesis.
b. Analyze data.
c. Interview witnesses.
d. Interview the suspect. - correct answer ✔✔b. Analyze data.
4. The discipline of fraud examination includes all of the following except:
a. Writing investigative reports
,b. Determining the guilt of the suspect
c. Testifying to findings
d. Interviewing witnesses - correct answer ✔✔b. Determining the guilt of the suspect
5. Fraud examination differs from auditing in that fraud examination is:
a. Recurring
b. Adversarial
c. General in scope
d. All of the above - correct answer ✔✔b. Adversarial
6. Predication, although important, is not required in a fraud examination.
a. True
b. False - correct answer ✔✔b. False
7. In a fraud examination, evidence is usually gathered in a manner that moves from general to specific.
a. True
b. False - correct answer ✔✔a. True
8. Which of the following is the correct order for a fraud examiner to interview witnesses?
a. Corroborative witnesses, neutral third-parties, co-conspirators, suspect
b. Suspect, co-conspirators, corroborative witnesses, neutral third-parties
c. Neutral third-parties, corroborative witnesses, co-conspirators, suspect
d. Suspect, corroborative witnesses, co-conspirators, neutral third-parties - correct answer ✔✔c. Neutral
third-parties, corroborative witnesses, co-conspirators, suspect
,9. In order to prove that fraud occurred, four elements must be present. Which of the following is not
one of those elements?
a. A material false statement
b. Knowledge that the statement was false
c. Reliance on the false statement by the victim
d. Intent to cause the victim damages - correct answer ✔✔d. Intent to cause the victim damages
10. The basic tenet of Edwin Sutherland's theory of differential association is that crime is passed on
genetically; that is, the offspring of criminals commit crimes because their parents did.
a. True
b. False - correct answer ✔✔b. False
11. Who developed the Fraud Scale?
a. Joseph T. Wells
b. W. Steve Albrecht
c. Richard C. Hollinger
d. Donald R. Cressey - correct answer ✔✔b. W. Steve Albrecht
12. Which of the following is not one of the legs of the Fraud Triangle?
a. Situational environment
b. Perceived non-sharable financial need
c. Perceived opportunity
d. Rationalization - correct answer ✔✔a. Situational environment
13. According to Cressey, the perceived opportunity to commit fraud consists of two elements: general
information and technical skill.
, a. True
b. False - correct answer ✔✔a. True
In a study by Steve Albrecht, Marshall Romney, and Keith Howe, participants were asked to rank personal
characteristics as motivating factors that contributed to fraud. The highest ranked factor was:
a. Undue family or peer pressure
b. Lack of recognition of job performance
c. Living beyond one's means
d. Lack of appreciation by management - correct answer ✔✔c. Living beyond one's means
15. In a study by Steve Albrecht, Marshall Romney, and Keith Howe, participants were asked to rank
characteristics of the organizational environment that contributed to fraud. The highest ranked factor
was:
a. Lack of clear lines of authority
b. Inadequate attention to detail
c. Lack of an internal audit function
d. Placing too much trust in key employees - correct answer ✔✔d. Placing too much trust in key
employees
16. Research in the Hollinger-Clark study suggests that the best way to deter employee theft is by:
a. Increasing sanctions imposed on occupational fraudsters
b. Increasing the perception of detection
c. Strengthening internal controls
d. Communicating the organization's fraud policies to employees - correct answer ✔✔b. Increasing the
perception of detection
1. Which of the following best describes the objective of a fraud examination?
a. To make recommendations to management about how to prevent fraud
b. To determine whether financial statements are free of misstatements due to fraud
c. To express an opinion on the guilt or innocence of a suspect
d. To determine whether a crime has been committed, and if so, who is responsible - correct answer
✔✔d. To determine whether a crime has been committed, and if so, who is responsible
2. Which of the following is not a part of the fraud theory approach?
a. Analyze available data.
b. Develop "what-if" scenarios.
c. Identify who committed the fraud.
d. Refine the hypothesis. - correct answer ✔✔c. Identify who committed the fraud.
3. Once sufficient predication has been established, what is the first step a fraud examiner following the
fraud theory approach should take?
a. Create a hypothesis.
b. Analyze data.
c. Interview witnesses.
d. Interview the suspect. - correct answer ✔✔b. Analyze data.
4. The discipline of fraud examination includes all of the following except:
a. Writing investigative reports
,b. Determining the guilt of the suspect
c. Testifying to findings
d. Interviewing witnesses - correct answer ✔✔b. Determining the guilt of the suspect
5. Fraud examination differs from auditing in that fraud examination is:
a. Recurring
b. Adversarial
c. General in scope
d. All of the above - correct answer ✔✔b. Adversarial
6. Predication, although important, is not required in a fraud examination.
a. True
b. False - correct answer ✔✔b. False
7. In a fraud examination, evidence is usually gathered in a manner that moves from general to specific.
a. True
b. False - correct answer ✔✔a. True
8. Which of the following is the correct order for a fraud examiner to interview witnesses?
a. Corroborative witnesses, neutral third-parties, co-conspirators, suspect
b. Suspect, co-conspirators, corroborative witnesses, neutral third-parties
c. Neutral third-parties, corroborative witnesses, co-conspirators, suspect
d. Suspect, corroborative witnesses, co-conspirators, neutral third-parties - correct answer ✔✔c. Neutral
third-parties, corroborative witnesses, co-conspirators, suspect
,9. In order to prove that fraud occurred, four elements must be present. Which of the following is not
one of those elements?
a. A material false statement
b. Knowledge that the statement was false
c. Reliance on the false statement by the victim
d. Intent to cause the victim damages - correct answer ✔✔d. Intent to cause the victim damages
10. The basic tenet of Edwin Sutherland's theory of differential association is that crime is passed on
genetically; that is, the offspring of criminals commit crimes because their parents did.
a. True
b. False - correct answer ✔✔b. False
11. Who developed the Fraud Scale?
a. Joseph T. Wells
b. W. Steve Albrecht
c. Richard C. Hollinger
d. Donald R. Cressey - correct answer ✔✔b. W. Steve Albrecht
12. Which of the following is not one of the legs of the Fraud Triangle?
a. Situational environment
b. Perceived non-sharable financial need
c. Perceived opportunity
d. Rationalization - correct answer ✔✔a. Situational environment
13. According to Cressey, the perceived opportunity to commit fraud consists of two elements: general
information and technical skill.
, a. True
b. False - correct answer ✔✔a. True
In a study by Steve Albrecht, Marshall Romney, and Keith Howe, participants were asked to rank personal
characteristics as motivating factors that contributed to fraud. The highest ranked factor was:
a. Undue family or peer pressure
b. Lack of recognition of job performance
c. Living beyond one's means
d. Lack of appreciation by management - correct answer ✔✔c. Living beyond one's means
15. In a study by Steve Albrecht, Marshall Romney, and Keith Howe, participants were asked to rank
characteristics of the organizational environment that contributed to fraud. The highest ranked factor
was:
a. Lack of clear lines of authority
b. Inadequate attention to detail
c. Lack of an internal audit function
d. Placing too much trust in key employees - correct answer ✔✔d. Placing too much trust in key
employees
16. Research in the Hollinger-Clark study suggests that the best way to deter employee theft is by:
a. Increasing sanctions imposed on occupational fraudsters
b. Increasing the perception of detection
c. Strengthening internal controls
d. Communicating the organization's fraud policies to employees - correct answer ✔✔b. Increasing the
perception of detection
