ACCT 4235 MIDTERM EXAM REVIEW
What are the three elements of the fraud triangle - Answer -1) perceived pressure
2) perceived opportunity
3) rationalization
What is not an element of the fraud triangle? - Answer -intelligence
Which of the following is a common perceived pressure?
a) financial need
b) the ability to outsmart others
c) the ability to "borrow" money by committing fraud
d) opportunity to cheat others - Answer -a) financial need
Which of the following is not true about the ACFE?
a) it has roughly 12,000 members throughout the world
b) it is the premier provider of anti-fraud training
c) the entire organization is dedicated to antifraud-fighting efforts
d) it is the largest anti-fraud organization in the world - Answer -a) it has roughly 12,000
members throughout the world
What refers to the circumstances, taken as a whole, that would lead a reasonable,
prudent professional to believe a fraud has occurred, is occurring, or will occur -
Answer -predication
What are elements of fraud? - Answer -1) damage to a victim
2) intentional or reckless behavior
3) false representation
What is not an element of fraud - Answer -accidental behavior
Corporate employee fraud fighters: - Answer -prevent, detect, and investigate fraud
within a company
Some examples of vendor fraud include... - Answer -1) vendor bills for services not
performed
2) vendor bills for goods not provided
3) a vendor overcharges a contracting job that it completed on time
What is not an example of vendor fraud? - Answer -A vendor has much higher prices
than its competitors
,Because of the ability to override internal controls, it is usually most difficult to prevent
which type of fraud? - Answer -Fraud committed by a company president
What are elements of most frauds? - Answer -1) taking the assets
2) concealment
3) conversion
What is not an element of fraud? - Answer -Breaking/entering
The most effective way to reduce losses from fraud is... - Answer -preventing fraud
from occurring
Which of the following is probably the least common type of fraud pressure? - Answer -
pressure to outsmart peers
What are some more common types of fraud pressures? - Answer -1) Vices
2) Work related pressures
3) Financial pressures
Which of the following is not one of the three elements of the control system of an
organization? - Answer -management
What are the three elements of the control system of an organization - Answer -1) The
control environment
2) The accounting system
3) Control activities or procedures
Opportunities to commit fraud can be eliminated by identifying sources of fraud, by
implementing controls, and through independent checks. One other effective way of
eliminating opportunities is... - Answer -teaching employees to monitor and report fraud
What is true regarding the Sarbanes Oxley Act of 2002 - Answer -Public companies
must have a whistle blower in place
Ways to create a culture of honesty and high ethics: - Answer -1) Having top
management model appropriate behavior
2) Creating a positive work environment
3) Hiring the right kind of employees
Which is not a way to create a culture of honesty and high ethics? - Answer -
Eliminating opportunities for fraud
Fraud is considered to be - Answer -a serious problem that continues to grow
An example of legitimate power - Answer -Your boss telling you to do something
, The tone at the top when related to fraud usually refers to managements attitude about -
Answer -how management models appropriate behavior
Studying fraud will help you... - Answer -1) learn evidence-gathering skills
2) avoid high-risk and fraudulent activities
3) learn valuable interviewing skills
How frequently do most people rationalize - Answer -often
perpetrator - Answer -someone who commits a fraud
Statistics of how much fraud is occurring comes from four basic sources - Answer -1)
Government agencies
2) Researchers
3) Insurance companies
4) Victims of fraud
jurisdictions - Answer -area of legal responsibility
Association of Certified Fraud Examiners (ACFE) - Answer -the worlds largest anti-
fraud organization
For every $1 of fraud, net income is ___________ by $1 - Answer -reduced
fraud - Answer -tricking someone out of their assets
fraud is different from - Answer -unintentional errors
Three major categories of occupational fraud - Answer -1) asset misappropriations
(theft/misuse of org assets)
2) corruption
3) fraudulent financial statements
employee fraud - Answer -victim of fraud is the employee's employer --> fraud
committed against the org
fraud where a company or organization is the victim - Answer -1) employee
embezzlement
2) vendor fraud
3) customer fraud
employee embezzlement - Answer -perpetrator is an employee of the organization
management fraud - Answer -victims are shareholders or debt holders of the org
What are the three elements of the fraud triangle - Answer -1) perceived pressure
2) perceived opportunity
3) rationalization
What is not an element of the fraud triangle? - Answer -intelligence
Which of the following is a common perceived pressure?
a) financial need
b) the ability to outsmart others
c) the ability to "borrow" money by committing fraud
d) opportunity to cheat others - Answer -a) financial need
Which of the following is not true about the ACFE?
a) it has roughly 12,000 members throughout the world
b) it is the premier provider of anti-fraud training
c) the entire organization is dedicated to antifraud-fighting efforts
d) it is the largest anti-fraud organization in the world - Answer -a) it has roughly 12,000
members throughout the world
What refers to the circumstances, taken as a whole, that would lead a reasonable,
prudent professional to believe a fraud has occurred, is occurring, or will occur -
Answer -predication
What are elements of fraud? - Answer -1) damage to a victim
2) intentional or reckless behavior
3) false representation
What is not an element of fraud - Answer -accidental behavior
Corporate employee fraud fighters: - Answer -prevent, detect, and investigate fraud
within a company
Some examples of vendor fraud include... - Answer -1) vendor bills for services not
performed
2) vendor bills for goods not provided
3) a vendor overcharges a contracting job that it completed on time
What is not an example of vendor fraud? - Answer -A vendor has much higher prices
than its competitors
,Because of the ability to override internal controls, it is usually most difficult to prevent
which type of fraud? - Answer -Fraud committed by a company president
What are elements of most frauds? - Answer -1) taking the assets
2) concealment
3) conversion
What is not an element of fraud? - Answer -Breaking/entering
The most effective way to reduce losses from fraud is... - Answer -preventing fraud
from occurring
Which of the following is probably the least common type of fraud pressure? - Answer -
pressure to outsmart peers
What are some more common types of fraud pressures? - Answer -1) Vices
2) Work related pressures
3) Financial pressures
Which of the following is not one of the three elements of the control system of an
organization? - Answer -management
What are the three elements of the control system of an organization - Answer -1) The
control environment
2) The accounting system
3) Control activities or procedures
Opportunities to commit fraud can be eliminated by identifying sources of fraud, by
implementing controls, and through independent checks. One other effective way of
eliminating opportunities is... - Answer -teaching employees to monitor and report fraud
What is true regarding the Sarbanes Oxley Act of 2002 - Answer -Public companies
must have a whistle blower in place
Ways to create a culture of honesty and high ethics: - Answer -1) Having top
management model appropriate behavior
2) Creating a positive work environment
3) Hiring the right kind of employees
Which is not a way to create a culture of honesty and high ethics? - Answer -
Eliminating opportunities for fraud
Fraud is considered to be - Answer -a serious problem that continues to grow
An example of legitimate power - Answer -Your boss telling you to do something
, The tone at the top when related to fraud usually refers to managements attitude about -
Answer -how management models appropriate behavior
Studying fraud will help you... - Answer -1) learn evidence-gathering skills
2) avoid high-risk and fraudulent activities
3) learn valuable interviewing skills
How frequently do most people rationalize - Answer -often
perpetrator - Answer -someone who commits a fraud
Statistics of how much fraud is occurring comes from four basic sources - Answer -1)
Government agencies
2) Researchers
3) Insurance companies
4) Victims of fraud
jurisdictions - Answer -area of legal responsibility
Association of Certified Fraud Examiners (ACFE) - Answer -the worlds largest anti-
fraud organization
For every $1 of fraud, net income is ___________ by $1 - Answer -reduced
fraud - Answer -tricking someone out of their assets
fraud is different from - Answer -unintentional errors
Three major categories of occupational fraud - Answer -1) asset misappropriations
(theft/misuse of org assets)
2) corruption
3) fraudulent financial statements
employee fraud - Answer -victim of fraud is the employee's employer --> fraud
committed against the org
fraud where a company or organization is the victim - Answer -1) employee
embezzlement
2) vendor fraud
3) customer fraud
employee embezzlement - Answer -perpetrator is an employee of the organization
management fraud - Answer -victims are shareholders or debt holders of the org
