Forensic Accounting Questions |Question and Answers| 100% Correct

Forensic Accounting Questions |Question and Answers| 100% Correct What does forensic mean? *Ans* Forensic means generally those things that relate to a legal forum or court Which country was the first to require audits of corporations? *Ans* England What huge bankruptcy in caused forensic accountants to become rising starts within the accounting profession? *Ans* Enron investigative accounting activities in the FBI grew dramatically during what 20th century conflict? *Ans* WWII the modern role of forensic accounting has been defined by Wayne Bresmser to include for elements. What are the four? *Ans* Pretrial support, Trial support, expert witnessing, settlement support Forensic accounting always involves... *Ans* Business valuations, investigating suspected fraud, testifying in a courtroom as an expert witness, using accounting techniques and financial expertise in a legal environment. What was worldcom's main fraud strategy? *Ans* moving expenses into asset accounts What does Lee Seidler say about external auditors? *Ans* Lee Seidler says that external auditors have a poor record of uncovering fraud and that they will continue to miss it. What overcomes the assumption that separations of duties prevent fraud? *Ans* The evidence that separate parties do collude overcomes the assumption of separation of duties What is the key question that an auditor should ask according to the panel on audit effectiveness? *Ans* They should ask is "where is the entity vulnerable to financial statement fraud if management were inclined to perpetuate it?" How does a forensic accountant analyze inventories and receivables? *Ans* Forensic accountants watch how inventories and receivables interact; they should rise and fall directly and should be relatively similar What is wrong with a clerk who is responsible for tallying bank deposit tickets and also is responsible for collecting cash sales? *Ans* the clerk could falsify returns, etc and as a result they could take money unchecked What is meant by the expectation gap? *Ans* An expectation gap is the difference between what the public and financial statement users believe auditors are responsible for and what auditors themselves believe they are responsible for Who is responsible for internal controls? *Ans* Management What is not required by SOX companies? *Ans* CEO may not be chairperson of the BOD Why are banks part of a problem when it comes to money laundering? *Ans* Banks make their money by taking and opening new accounts Why are banks part of the solution to money laundering? *Ans* Banks are used to track and legitimize costs. They most actively track money laundering Why is money laundering considered a serious crime? *Ans* It can be used to evade detection and is often a result of criminal activity. What did the 2010 Wells Report find that would be more effective in detecting fraud? *Ans* Internal audits and management review When may a business take a deduction for money stolen by an employee? *Ans* only when it can be shown that the assets were previously recorded as taxable incom