ACCT 4235 MODULE 1 &2 QUESTIONS AND
ANSWERS
statistics of fraud are... - Answer -hard to obtain (often goes undetected and
unreported)
Who conducts one of the most comprehensive fraud studies? - Answer -Association of
Certified Fraud Examiners
Report to the Nations - Answer -published every 2 years, based on actual fraud cases
How can frauds be classified? - Answer -by the victim, the perpetrator, or by the
scheme
detrimental fraud - Answer -impact on the organization
beneficial fraud - Answer -committed on behalf of the organization
sources of fraud statistics - Answer -government agencies, researchers, insurance
companies, and victims of fraud
fraud - Answer -tricking someone out of their assets
elements of fraud - Answer -a representation
about a material point
which is false
and intentionally or recklessly so
which is believed
and acted upon by the victim
to the victim's damage
occupational fraud - Answer -asset misappropriation, corruption, financial statement
fraud (usually most expensive)
fraud according to victims - Answer -employee embezzlement, vendor fraud, customer
fraud, investment scams
how to prepare to be a fraud-fighting professional - Answer -analytical, communication,
and technological skills, understanding of accounting/business
the fraud triangle - Answer -perceived pressure, perceived opportunity, rationalization
, control environment - Answer -work atmosphere that an organization establishes for its
employees (managers should be good role models, appropriate hiring, clear
organizational structure, internal audit department)
control system:
1) good accounting system
2) control activities and procedures
3) the control environment
reward power - Answer -the ability of a fraud perpetrator to convince a potential victim
that they will receive a benefit
coercive power - Answer -ability of the fraud perpetrator to make an individual perceive
punishment if he or she does not participate in the fraud
expert power - Answer -ability of the fraud perpetrator to influence another person
because of expertise or knowledge
legitimate power - Answer -ability of the fraud perpetrator to convince a potential
perpetrator that he or she truly has power over him or her
referent power - Answer -ability of the perpetrator to relate to the potential co-
conspirator
how do organizations fight fraud? - Answer -fraud prevention, early fraud detection,
fraud investigation, follow-up legal action/resolution
fraud prevention - Answer -the most cost-effective way to reduce fraud
fraud investigation - Answer -should only occur when fraud predication exists
most important element in successful fraud schemes - Answer -confidence in the
perpetrator
eliminating opportunities to commit fraud - Answer -identifying sources of fraud,
implementing controls, independent checks, teaching employees to monitor and report
fraud
Which of the following is not a recognized method of eliminating fraud opportunities?
a. Creating an expectation of punishment.
b. Having good internal controls.
c. Monitoring employees.
d. Engendering employee goodwill by having lax rules. - Answer -d. Engendering
employee goodwill by having lax rules.
ANSWERS
statistics of fraud are... - Answer -hard to obtain (often goes undetected and
unreported)
Who conducts one of the most comprehensive fraud studies? - Answer -Association of
Certified Fraud Examiners
Report to the Nations - Answer -published every 2 years, based on actual fraud cases
How can frauds be classified? - Answer -by the victim, the perpetrator, or by the
scheme
detrimental fraud - Answer -impact on the organization
beneficial fraud - Answer -committed on behalf of the organization
sources of fraud statistics - Answer -government agencies, researchers, insurance
companies, and victims of fraud
fraud - Answer -tricking someone out of their assets
elements of fraud - Answer -a representation
about a material point
which is false
and intentionally or recklessly so
which is believed
and acted upon by the victim
to the victim's damage
occupational fraud - Answer -asset misappropriation, corruption, financial statement
fraud (usually most expensive)
fraud according to victims - Answer -employee embezzlement, vendor fraud, customer
fraud, investment scams
how to prepare to be a fraud-fighting professional - Answer -analytical, communication,
and technological skills, understanding of accounting/business
the fraud triangle - Answer -perceived pressure, perceived opportunity, rationalization
, control environment - Answer -work atmosphere that an organization establishes for its
employees (managers should be good role models, appropriate hiring, clear
organizational structure, internal audit department)
control system:
1) good accounting system
2) control activities and procedures
3) the control environment
reward power - Answer -the ability of a fraud perpetrator to convince a potential victim
that they will receive a benefit
coercive power - Answer -ability of the fraud perpetrator to make an individual perceive
punishment if he or she does not participate in the fraud
expert power - Answer -ability of the fraud perpetrator to influence another person
because of expertise or knowledge
legitimate power - Answer -ability of the fraud perpetrator to convince a potential
perpetrator that he or she truly has power over him or her
referent power - Answer -ability of the perpetrator to relate to the potential co-
conspirator
how do organizations fight fraud? - Answer -fraud prevention, early fraud detection,
fraud investigation, follow-up legal action/resolution
fraud prevention - Answer -the most cost-effective way to reduce fraud
fraud investigation - Answer -should only occur when fraud predication exists
most important element in successful fraud schemes - Answer -confidence in the
perpetrator
eliminating opportunities to commit fraud - Answer -identifying sources of fraud,
implementing controls, independent checks, teaching employees to monitor and report
fraud
Which of the following is not a recognized method of eliminating fraud opportunities?
a. Creating an expectation of punishment.
b. Having good internal controls.
c. Monitoring employees.
d. Engendering employee goodwill by having lax rules. - Answer -d. Engendering
employee goodwill by having lax rules.
