Fraud Prevention UPDATED KEY EXAM
Questions And CORRECT Answers
All frauds that are detected by organizations are made public. - CORRECT
ANSWERS FALSE.
In many cases, companies merely hide the frauds to avoid public relations issues and quietly
terminate or transfer perpetrators rather than make them public.
Perpetrators use trickery, confidence, and deception to commit fraud. - CORRECT
ANSWERS TRUE
One of the most common responses to fraud is disbelief by those around the fraud. - CORRECT
ANSWERS TRUE
Manufacturing companies with a profit margin of 10% must usually generate about 10 times as
much revenue as the dollar amount of the fraud in order to restore net income to its pre-fraud
level. - CORRECT ANSWERS TRUE
Fraud involves using physical force to take something from someone. - CORRECT
ANSWERS FALSE.
Using physical force to take something from someone is robbery. Fraud involves debit or
trickery, not force.
When perpetrators are criminally convicted of fraud, they often serve jail sentences and/or pay
fines. - CORRECT ANSWERS TRUE
Identity theft is an example of employee embezzlement. - CORRECT ANSWERS FALSE.
Identity theft is stealing someone's personal information so the thief can pretend to be that
person.
,Management fraud is deception perpetrated by an organization's top management. - CORRECT
ANSWERS TRUE
A Ponzi Scheme is considered to be a type of investment scam. - CORRECT
ANSWERS TRUE
Most people agree that fraud-related careers will be in demand in the future. - CORRECT
ANSWERS TRUE
In civil cases, fraud experts are rarely used as expert witnesses. - CORRECT
ANSWERS FALSE.
In civil cases, fraud experts often serve as expert witnesses.
Many companies try to hide their losses from fraud rather than make them public. - CORRECT
ANSWERS TRUE.
The only group/business that must report employee embezzlement is the federal government. -
CORRECT ANSWERS FALSE.
Banks are required to report their frauds to the government because of their FDIC Insurance.
Advances in technology have had no effect either on size or frequency of fraud or on the
detection or investigation of fraud. - CORRECT ANSWERS FALSE.
Technology has tended to increase the size and frequency of frauds committed.
Fraud losses generally reduce a firm's income on a dollar-for-dollar basis. - CORRECT
ANSWERS TRUE.
, The single most critical element for a fraud to be successful is opportunity. - CORRECT
ANSWERS FALSE.
Confidence is the single most critical element for a fraud to be successful.
Fraud perpetrators are often those who are least suspected and most trusted. - CORRECT
ANSWERS TRUE.
Unintentional errors in financial statement are a form of fraud. - CORRECT
ANSWERS FALSE.
Unintentional errors in the financial statements are not considered fraud. There must always be
"intent" for something to be fraud.
Occupational fraud is fraud committed on behalf of an organization. - CORRECT
ANSWERS FALSE.
Occupational fraud is usually committed against an organization.
Companies that commit financial statement fraud are often experiencing net losses or have
profits that are significantly lower than expectations. - CORRECT ANSWERS TRUE.
Indirect fraud occurs when a company's assets go directly into the perpetrator's pockets
without the involvement of third parties. - CORRECT ANSWERS FALSE.
Direct fraud does not involve third parties; indirect fraud DOES involve third parties.
In vendor fraud, customers don't pay for goods purchased. - CORRECT ANSWERS FALSE.
Customer Fraud involves a customer who does not pay for goods or services. Vendor fraud
involves a vendor who provides inferior goods, overcharges, or pays bribes to get favored
treatment.
Questions And CORRECT Answers
All frauds that are detected by organizations are made public. - CORRECT
ANSWERS FALSE.
In many cases, companies merely hide the frauds to avoid public relations issues and quietly
terminate or transfer perpetrators rather than make them public.
Perpetrators use trickery, confidence, and deception to commit fraud. - CORRECT
ANSWERS TRUE
One of the most common responses to fraud is disbelief by those around the fraud. - CORRECT
ANSWERS TRUE
Manufacturing companies with a profit margin of 10% must usually generate about 10 times as
much revenue as the dollar amount of the fraud in order to restore net income to its pre-fraud
level. - CORRECT ANSWERS TRUE
Fraud involves using physical force to take something from someone. - CORRECT
ANSWERS FALSE.
Using physical force to take something from someone is robbery. Fraud involves debit or
trickery, not force.
When perpetrators are criminally convicted of fraud, they often serve jail sentences and/or pay
fines. - CORRECT ANSWERS TRUE
Identity theft is an example of employee embezzlement. - CORRECT ANSWERS FALSE.
Identity theft is stealing someone's personal information so the thief can pretend to be that
person.
,Management fraud is deception perpetrated by an organization's top management. - CORRECT
ANSWERS TRUE
A Ponzi Scheme is considered to be a type of investment scam. - CORRECT
ANSWERS TRUE
Most people agree that fraud-related careers will be in demand in the future. - CORRECT
ANSWERS TRUE
In civil cases, fraud experts are rarely used as expert witnesses. - CORRECT
ANSWERS FALSE.
In civil cases, fraud experts often serve as expert witnesses.
Many companies try to hide their losses from fraud rather than make them public. - CORRECT
ANSWERS TRUE.
The only group/business that must report employee embezzlement is the federal government. -
CORRECT ANSWERS FALSE.
Banks are required to report their frauds to the government because of their FDIC Insurance.
Advances in technology have had no effect either on size or frequency of fraud or on the
detection or investigation of fraud. - CORRECT ANSWERS FALSE.
Technology has tended to increase the size and frequency of frauds committed.
Fraud losses generally reduce a firm's income on a dollar-for-dollar basis. - CORRECT
ANSWERS TRUE.
, The single most critical element for a fraud to be successful is opportunity. - CORRECT
ANSWERS FALSE.
Confidence is the single most critical element for a fraud to be successful.
Fraud perpetrators are often those who are least suspected and most trusted. - CORRECT
ANSWERS TRUE.
Unintentional errors in financial statement are a form of fraud. - CORRECT
ANSWERS FALSE.
Unintentional errors in the financial statements are not considered fraud. There must always be
"intent" for something to be fraud.
Occupational fraud is fraud committed on behalf of an organization. - CORRECT
ANSWERS FALSE.
Occupational fraud is usually committed against an organization.
Companies that commit financial statement fraud are often experiencing net losses or have
profits that are significantly lower than expectations. - CORRECT ANSWERS TRUE.
Indirect fraud occurs when a company's assets go directly into the perpetrator's pockets
without the involvement of third parties. - CORRECT ANSWERS FALSE.
Direct fraud does not involve third parties; indirect fraud DOES involve third parties.
In vendor fraud, customers don't pay for goods purchased. - CORRECT ANSWERS FALSE.
Customer Fraud involves a customer who does not pay for goods or services. Vendor fraud
involves a vendor who provides inferior goods, overcharges, or pays bribes to get favored
treatment.
