LSU ACCT 4235 Final Exam Questions and Answers
.______ are executed only by law enforcement officials and are generally used
only in criminal cases.
a. Subpoenas
b. Voluntary consent
c. Search warrants
d. Interviews - ANSWER-c. Search warrants
.A form 1099 with missing withholdings (where they should be reported) may
be a fraud symptom for which liability account?
a. Contingent liabilities.
b. Unearned revenues.
c. Accrued liabilities.
d. Accounts payable. - ANSWER-c. Accrued liabilities.
.A Wall Street bond trader turned on the television one day and saw a news
report accusing him of committing a large securities scam. This trader learned
that his employer had accused him of creating $300 million of phony profits
and, as a result, getting bogus bonuses of $8 million. He claimed he was
innocent, and it took about three years for him to prove his innocence. In the
months that followed the accusations, he was investigated by the SEC, the
National Association of Securities Dealers, and the Justice Department. Three
years later, the bond trader was cleared of all major charges brought against
him.
,Assume that you are the employer who accused the trader of this fraud. You
would most like seek civil action only against the trader.
a. True
b. False - ANSWER-b. False
.All of the following are indicators of financial statement fraud except:
a. Unusually rapid growth of profitability
b. Large amounts of available cash
c. Dependence on one or two products
d. Threat of a hostile takeover - ANSWER-b. Large amounts of available cash
.All of the following ratios are useful in detecting large revenue frauds except:
a. Accounts receivable turnover
b. Current ratio
c. Gross profit margin
d. Working capital turnover - ANSWER-b. Current ratio
.As the recently hired controller for Hatfield Corporation, you have observed
that the company's audit committee is composed mainly of inside directors. In
addition, it appears that the committee rarely holds a meeting.
Based on your observations regarding the audit committee, which fraud risk
exposure group is represented in this case?
a. Organization and industry
b. Relationships with others
c. Financial results and operating characteristics
d. Management and directors - ANSWER-a. Organization and industry
,.Bid rigging involves establishing a predetermined amount of money that
bidders will have to exceed in order to win a bid.
a. True
b. False - ANSWER-b. False
.Bobby Jones, an accountant for ABC Corporation, has been suspected of
committing fraud. Some information already gathered about the fraud points to
Bobby Jones as the most likely perpetrator. In his scheme, Bobby supposedly
stole more than $5 million over the past three years. Due to the magnitude of
the fraud and to set an example in the company, ABC decides to prosecute
Bobby both civilly and criminally.
In what stage of the civil litigation process will each side's attorneys try to find
out information about the other side's case?
a. Motion practice and negotiation stage
b. Investigations and pleadings stage
c. Discovery stage
d. Trial and appeal stage - ANSWER-c. Discovery stage
.Check tampering is unique among the disbursement frauds because it is the
one group of schemes in which the perpetrator actually prepares the check or
takes physical control of the check and converts it for his or her own benefit.
a. True
b. False - ANSWER-a. True
.Dan Jones is the new CIO of Ricochet Systems, an Internet securities broker.
After assessing the e-commerce risks in his company, he determines that
passwords are a weak link that need additional protection. At your monthly golf
, outing, Dan asks you—knowing your background in computer forensics—what
checks and policies should be in place on passwords in his company. You tell
Dan that while passwords are a vital part of the security of any electronic
system, other, more secure, alternatives also are available for providing
authorization of transactions and activities.
Which of these methods of providing authorization reassures users that
transactions are valid?
a. Biometrics
b. Firewalls
c. Encryption
d. Digital signatures and certificates - ANSWER-d. Digital signatures and
certificates
.During a concealment investigation, an investigator fails to recognize that an
invoice had been forged. This represents a:
a. sampling risk.
b. nonsampling risk.
c. systematic risk.
d. systemic risk. - ANSWER-b. nonsampling risk.
.During a trial or deposition, expert witnesses should:
a. Respond aggressively.
b. Bring notes and work papers to cite.
c. Memorize well-crafted responses to say what they think sounds effective.
d. Answer questions convincingly, without hedging their answers. - ANSWER-d.
Answer questions convincingly, without hedging their answers.
.______ are executed only by law enforcement officials and are generally used
only in criminal cases.
a. Subpoenas
b. Voluntary consent
c. Search warrants
d. Interviews - ANSWER-c. Search warrants
.A form 1099 with missing withholdings (where they should be reported) may
be a fraud symptom for which liability account?
a. Contingent liabilities.
b. Unearned revenues.
c. Accrued liabilities.
d. Accounts payable. - ANSWER-c. Accrued liabilities.
.A Wall Street bond trader turned on the television one day and saw a news
report accusing him of committing a large securities scam. This trader learned
that his employer had accused him of creating $300 million of phony profits
and, as a result, getting bogus bonuses of $8 million. He claimed he was
innocent, and it took about three years for him to prove his innocence. In the
months that followed the accusations, he was investigated by the SEC, the
National Association of Securities Dealers, and the Justice Department. Three
years later, the bond trader was cleared of all major charges brought against
him.
,Assume that you are the employer who accused the trader of this fraud. You
would most like seek civil action only against the trader.
a. True
b. False - ANSWER-b. False
.All of the following are indicators of financial statement fraud except:
a. Unusually rapid growth of profitability
b. Large amounts of available cash
c. Dependence on one or two products
d. Threat of a hostile takeover - ANSWER-b. Large amounts of available cash
.All of the following ratios are useful in detecting large revenue frauds except:
a. Accounts receivable turnover
b. Current ratio
c. Gross profit margin
d. Working capital turnover - ANSWER-b. Current ratio
.As the recently hired controller for Hatfield Corporation, you have observed
that the company's audit committee is composed mainly of inside directors. In
addition, it appears that the committee rarely holds a meeting.
Based on your observations regarding the audit committee, which fraud risk
exposure group is represented in this case?
a. Organization and industry
b. Relationships with others
c. Financial results and operating characteristics
d. Management and directors - ANSWER-a. Organization and industry
,.Bid rigging involves establishing a predetermined amount of money that
bidders will have to exceed in order to win a bid.
a. True
b. False - ANSWER-b. False
.Bobby Jones, an accountant for ABC Corporation, has been suspected of
committing fraud. Some information already gathered about the fraud points to
Bobby Jones as the most likely perpetrator. In his scheme, Bobby supposedly
stole more than $5 million over the past three years. Due to the magnitude of
the fraud and to set an example in the company, ABC decides to prosecute
Bobby both civilly and criminally.
In what stage of the civil litigation process will each side's attorneys try to find
out information about the other side's case?
a. Motion practice and negotiation stage
b. Investigations and pleadings stage
c. Discovery stage
d. Trial and appeal stage - ANSWER-c. Discovery stage
.Check tampering is unique among the disbursement frauds because it is the
one group of schemes in which the perpetrator actually prepares the check or
takes physical control of the check and converts it for his or her own benefit.
a. True
b. False - ANSWER-a. True
.Dan Jones is the new CIO of Ricochet Systems, an Internet securities broker.
After assessing the e-commerce risks in his company, he determines that
passwords are a weak link that need additional protection. At your monthly golf
, outing, Dan asks you—knowing your background in computer forensics—what
checks and policies should be in place on passwords in his company. You tell
Dan that while passwords are a vital part of the security of any electronic
system, other, more secure, alternatives also are available for providing
authorization of transactions and activities.
Which of these methods of providing authorization reassures users that
transactions are valid?
a. Biometrics
b. Firewalls
c. Encryption
d. Digital signatures and certificates - ANSWER-d. Digital signatures and
certificates
.During a concealment investigation, an investigator fails to recognize that an
invoice had been forged. This represents a:
a. sampling risk.
b. nonsampling risk.
c. systematic risk.
d. systemic risk. - ANSWER-b. nonsampling risk.
.During a trial or deposition, expert witnesses should:
a. Respond aggressively.
b. Bring notes and work papers to cite.
c. Memorize well-crafted responses to say what they think sounds effective.
d. Answer questions convincingly, without hedging their answers. - ANSWER-d.
Answer questions convincingly, without hedging their answers.
