ACTG 474 Exam 2 With Correct
Answers
Fraud - ANNSWER an act committed by an employee/manager/owner for
thier personal gain or to cause harm to their organization
Fraud Techniques - ANNSWER Sabotage
Misappropriation of Funds
Check Forgery(check fake)
Credit Card Fraud(ID theft)
False Invoices
Theft
Industrial Espionage(stealing competitors secrets, products, customer list,
pricing detail, bribe employees for info)
Fraud Main Element - ANNSWER -has to be a false statement about a
provable fact (element)
-intent to deceive (scienter)
-done by insiders due to them knowing the system(employees,
managers/owners/fradulent financial reporting)
Lapping (Fraud Techniques) - ANNSWER temporarily cash collections, get rid
of this scheme by rotating duties
Kiting(Fraud Techniques) - ANNSWER theft from a bank covers up a theft by
, creating cash through the transfer of money between banks (create money,
not necessarily like money laundering) "create cash"
-banks have mandatory leave, to detect any issues or fraud
Corruption (Type of Fraud- Occupational) - ANNSWER use their
position/power inappropriately and to deceive
Asset Misappropriation (Type of Fraud-Occupational) - ANNSWER stealing
cash, assets, inventory, using asset in a way that it shouldn't be
Financial Statement Fraud (Type of Fraud-Occupational) - ANNSWER
increasing our revenues, inflating our asset values to get loans this can be
personal
Red Flags - ANNSWER -warning signs but not equal to actual fraud
-financial pressures (college, sick spouse)
-change in personality or behavior
-inability to manage money or live within their means
-outside business interest (corruption)
-poor internal controls, especially on cash
-rising business cost creates more pressure
-too much control for an employee (no segregation of duties)
-inattentive management
-no pre-screening employees
Fraud Triangle - ANNSWER -an opportunity, a pressure/motive, and a
Answers
Fraud - ANNSWER an act committed by an employee/manager/owner for
thier personal gain or to cause harm to their organization
Fraud Techniques - ANNSWER Sabotage
Misappropriation of Funds
Check Forgery(check fake)
Credit Card Fraud(ID theft)
False Invoices
Theft
Industrial Espionage(stealing competitors secrets, products, customer list,
pricing detail, bribe employees for info)
Fraud Main Element - ANNSWER -has to be a false statement about a
provable fact (element)
-intent to deceive (scienter)
-done by insiders due to them knowing the system(employees,
managers/owners/fradulent financial reporting)
Lapping (Fraud Techniques) - ANNSWER temporarily cash collections, get rid
of this scheme by rotating duties
Kiting(Fraud Techniques) - ANNSWER theft from a bank covers up a theft by
, creating cash through the transfer of money between banks (create money,
not necessarily like money laundering) "create cash"
-banks have mandatory leave, to detect any issues or fraud
Corruption (Type of Fraud- Occupational) - ANNSWER use their
position/power inappropriately and to deceive
Asset Misappropriation (Type of Fraud-Occupational) - ANNSWER stealing
cash, assets, inventory, using asset in a way that it shouldn't be
Financial Statement Fraud (Type of Fraud-Occupational) - ANNSWER
increasing our revenues, inflating our asset values to get loans this can be
personal
Red Flags - ANNSWER -warning signs but not equal to actual fraud
-financial pressures (college, sick spouse)
-change in personality or behavior
-inability to manage money or live within their means
-outside business interest (corruption)
-poor internal controls, especially on cash
-rising business cost creates more pressure
-too much control for an employee (no segregation of duties)
-inattentive management
-no pre-screening employees
Fraud Triangle - ANNSWER -an opportunity, a pressure/motive, and a
