LSU ACCT 4235 MIDTERM EXAM
QUESTIONS AND ANSWERS
When a person commits a crime:
A. he or she usually becomes engulfed by emotions of fear and guilt
B. he or she will experience no changes in behavior
C. he or she usually becomes friendly and nice
D. he or she experiences a lower stress level - Answer- A
Which of the following is not a common internal control fraud symptom or problem?
A. lack of segregation of duties
B. unexplained adjustments to receivables, payables, revenues, or expenses
C. lack of independent checks
D. overriding of existing controls - Answer- B
Which of the following is true regarding fraud?
A. it is easily identified
B. it is seldom observed
C. when a fraud occurs, there is no question whether or not a crime has been
committed
D. many witnesses are usually available when fraud occurs - Answer- B
Horizontal analysis is different from vertical analysis in that:
A. there is no difference between horizontal and vertical analysis
B. horizontal analysis calculates the percentage change in balance sheet and income
statement numbers from one period to the next, while vertical analysis converts
balances in a single period to percentages
C. horizontal analysis converts balances in a single period to percentages, while vertical
analysis calculated the percentage change in balance sheet and income statement
numbers from one period to the next
D. key ratios are compared from one period to the next - Answer- B
When deciding which detection methods to use, it is important to:
A. determine the advantages and disadvantages of each approach
B. identify the costs involved
C. determine which method will meet the client's objectives
D. all of the answer choices are correct - Answer- D
If a search reveals that an employee and a vendor have the same telephone number,
this result may indicate that:
, A. vendors are overcharging for goods purchased
B. employees may be establishing dummy vendors
C. contractors are billing at the wrong rates
D. a vendor is receiving kickbacks or other favors - Answer- B
An advantage of using ODBC to import data into a data warehouse is that:
A. ODBC does not require the use of corporate database server
B. ODBC compresses data when stored on a CD or DVD
C. ODBC automatically retrieves column names and types from the database
D. ODBC keeps the investigator from dealing with difficult SQL language - Answer- C
Which of the following statements is true regarding Benford's Law:
A. is usually unsuccessful as a fraud detection tool
B. predicts that the first digit of random number sets will begin with a 1 more often than
2, a 2 more often than a 3, and so on
C. applies to personal ID numbers
D. is not useful because human generated numbers usually do not match Benford's Law
- Answer- B
The most obvious disadvantage of the data-driven approach is:
A. databases are very large and often cannot be analyzed using analysis packages
B. high cost
C. the decrease in employee morale
D. low cost - Answer- B
Which of the following statements is true about the characteristics of real-time analysis?
A. with real-time analysis in place, there is no need for continual improvement and
updating of indicators
B. it is a distinct technique because it specifically analyzes each transaction for
correctness rather than for fraud
C. it does not allow real-time modifications and deletion of less-effective indicators
D. if indicators are hard-coded into the system, they quickly become outdated or
circumvented - Answer- D
A detection method that focuses on the kinds of frauds that can occur and then uses
technology to determine whether those frauds actually exist is called:
A. fishing fraud detection
B. data mining
C. data-driven fraud detection
D. Benford's Law - Answer- C
When trying to identify outliers, what is one of the best statistical approaches?
A. a pie graph indicating the relative amounts
B. stratification of cases by value
C. time trending using the high-low slope method
D. the z-score calculation - Answer- D
QUESTIONS AND ANSWERS
When a person commits a crime:
A. he or she usually becomes engulfed by emotions of fear and guilt
B. he or she will experience no changes in behavior
C. he or she usually becomes friendly and nice
D. he or she experiences a lower stress level - Answer- A
Which of the following is not a common internal control fraud symptom or problem?
A. lack of segregation of duties
B. unexplained adjustments to receivables, payables, revenues, or expenses
C. lack of independent checks
D. overriding of existing controls - Answer- B
Which of the following is true regarding fraud?
A. it is easily identified
B. it is seldom observed
C. when a fraud occurs, there is no question whether or not a crime has been
committed
D. many witnesses are usually available when fraud occurs - Answer- B
Horizontal analysis is different from vertical analysis in that:
A. there is no difference between horizontal and vertical analysis
B. horizontal analysis calculates the percentage change in balance sheet and income
statement numbers from one period to the next, while vertical analysis converts
balances in a single period to percentages
C. horizontal analysis converts balances in a single period to percentages, while vertical
analysis calculated the percentage change in balance sheet and income statement
numbers from one period to the next
D. key ratios are compared from one period to the next - Answer- B
When deciding which detection methods to use, it is important to:
A. determine the advantages and disadvantages of each approach
B. identify the costs involved
C. determine which method will meet the client's objectives
D. all of the answer choices are correct - Answer- D
If a search reveals that an employee and a vendor have the same telephone number,
this result may indicate that:
, A. vendors are overcharging for goods purchased
B. employees may be establishing dummy vendors
C. contractors are billing at the wrong rates
D. a vendor is receiving kickbacks or other favors - Answer- B
An advantage of using ODBC to import data into a data warehouse is that:
A. ODBC does not require the use of corporate database server
B. ODBC compresses data when stored on a CD or DVD
C. ODBC automatically retrieves column names and types from the database
D. ODBC keeps the investigator from dealing with difficult SQL language - Answer- C
Which of the following statements is true regarding Benford's Law:
A. is usually unsuccessful as a fraud detection tool
B. predicts that the first digit of random number sets will begin with a 1 more often than
2, a 2 more often than a 3, and so on
C. applies to personal ID numbers
D. is not useful because human generated numbers usually do not match Benford's Law
- Answer- B
The most obvious disadvantage of the data-driven approach is:
A. databases are very large and often cannot be analyzed using analysis packages
B. high cost
C. the decrease in employee morale
D. low cost - Answer- B
Which of the following statements is true about the characteristics of real-time analysis?
A. with real-time analysis in place, there is no need for continual improvement and
updating of indicators
B. it is a distinct technique because it specifically analyzes each transaction for
correctness rather than for fraud
C. it does not allow real-time modifications and deletion of less-effective indicators
D. if indicators are hard-coded into the system, they quickly become outdated or
circumvented - Answer- D
A detection method that focuses on the kinds of frauds that can occur and then uses
technology to determine whether those frauds actually exist is called:
A. fishing fraud detection
B. data mining
C. data-driven fraud detection
D. Benford's Law - Answer- C
When trying to identify outliers, what is one of the best statistical approaches?
A. a pie graph indicating the relative amounts
B. stratification of cases by value
C. time trending using the high-low slope method
D. the z-score calculation - Answer- D
