1 promax - Stuvia US 2025/2026
BMGT 422 Questions with Detailed Verified Answers
(100% Correct Answers) /Already Graded A+
fraud triangle
Ans: consist of: Incentive, opportunity, and rationalization
red flags
Ans: factors associated with the fraud triangle
The Great Oil Salad Swindle of 1963
Ans: overstated their financial position by claiming that it had more
Exampromax - Stuvia US
inventory than it actually had. Overstated assets provide the company the
Approved By:
opportunity to understate expenses and to overstate income.(Placed little oil
in tanks with a lot of water to accomplish this.
Enron Scandal(2001)
Ans: Keep huge debts of balance sheets
World com Scandal(2002)
Ans: Inflated assets by as much as $11 billion. Under reported line costs by
capitalizing, and inflated revenue with fake accounting entries.
Freddie Mac Scandal(2003)
Ans: $ 5 billion in earnings were misstated. Intentionally misstated and
understated earnings
American Insurance Group Scandal(2003)
, 2 promax - Stuvia US 2025/2026
Ans: Massive accounting fraud to the tune of $3.9 billion was alleged,
along with bid rigging and stock price manipulation
Lehman Borthers Scandel(2008)
Ans: Hid over $ 50 billion in loans disguised as sales. Sold toxic assets to
Cayman Island banks with the understanding that they would be bought
back eventually.
Professional Skepticism
Ans: Skepticism involves the validation of information through probing
questions, the critical assessment of evidence, and attention to
Exampromax - Stuvia US
inconsistencies
Approved By:
Three ways to mitigate fraud(CAQ)
Ans: needs to be an ethical culture promoted and practiced by upper
management, professional skepticism, communication
Professional auditing standards for detecting fraud
Ans: auditors should begin an audit with a brainstorming session that
focuses on how and where fraud could occur within the organization.
Auditors also need to communicate with the audit committee and
management about the risks of fraud and how they are addressed. The
auditor should then plan the audit to be responsive to an organization's
susceptibility to fraud.
Condensations regarding fraud for management (PCAOB AU 316,
AICPA AU-c 240 IAASB ISA 240)
BMGT 422 Questions with Detailed Verified Answers
(100% Correct Answers) /Already Graded A+
fraud triangle
Ans: consist of: Incentive, opportunity, and rationalization
red flags
Ans: factors associated with the fraud triangle
The Great Oil Salad Swindle of 1963
Ans: overstated their financial position by claiming that it had more
Exampromax - Stuvia US
inventory than it actually had. Overstated assets provide the company the
Approved By:
opportunity to understate expenses and to overstate income.(Placed little oil
in tanks with a lot of water to accomplish this.
Enron Scandal(2001)
Ans: Keep huge debts of balance sheets
World com Scandal(2002)
Ans: Inflated assets by as much as $11 billion. Under reported line costs by
capitalizing, and inflated revenue with fake accounting entries.
Freddie Mac Scandal(2003)
Ans: $ 5 billion in earnings were misstated. Intentionally misstated and
understated earnings
American Insurance Group Scandal(2003)
, 2 promax - Stuvia US 2025/2026
Ans: Massive accounting fraud to the tune of $3.9 billion was alleged,
along with bid rigging and stock price manipulation
Lehman Borthers Scandel(2008)
Ans: Hid over $ 50 billion in loans disguised as sales. Sold toxic assets to
Cayman Island banks with the understanding that they would be bought
back eventually.
Professional Skepticism
Ans: Skepticism involves the validation of information through probing
questions, the critical assessment of evidence, and attention to
Exampromax - Stuvia US
inconsistencies
Approved By:
Three ways to mitigate fraud(CAQ)
Ans: needs to be an ethical culture promoted and practiced by upper
management, professional skepticism, communication
Professional auditing standards for detecting fraud
Ans: auditors should begin an audit with a brainstorming session that
focuses on how and where fraud could occur within the organization.
Auditors also need to communicate with the audit committee and
management about the risks of fraud and how they are addressed. The
auditor should then plan the audit to be responsive to an organization's
susceptibility to fraud.
Condensations regarding fraud for management (PCAOB AU 316,
AICPA AU-c 240 IAASB ISA 240)
