Principle of Fraud Examination Ch1-6 Questions and Complete Solutions.

Principle of Fraud Examination Ch1-6 Questions and Complete Solutions What is the least common type of cash misappropriation? - Ans: Cash Larceny Is cash larceny always the least expensive? - Ans: NO What is cash larceny? - Ans: The taking of cash without the consent of employer. What are the two types of cash receipt frauds? - Ans: Skimming and Cash Larceny Which cash receipt fraud is "on-the-books"? - Ans: Cash Larceny Which cash receipt fraud is "off-the-books"? - Ans: Skimming What are the three scenarios under which cash larceny can occur? - Ans: At point of sale, incoming receivables,and back deposit What type of cash larceny scenario creates an imbalance between register tape and drawer? - Ans: At point of sale What are the 4 different ways "at point of sale" scenarios occur? - Ans: Steal from other's drawers, alter cash counts, reversing transactions, and by thousand cuts How can cash larceny be prevented? - Ans: Segregation of duties What type of cash larceny scenerio occurs after the payment has been recorded? - Ans: Incoming receivables What are the three different ways "incoming receivable" scenario can be concealed? - Ans: Force balance, reverse entries, destruction of records What are the two ways "direct deposit" cash larceny can be concealed? - Ans: Lapping, in transit Which of the three cash larceny scenerios is most common? - Ans: at point of sale What is a billing scheme? - Ans: Issuance of fraudulent disbursements for ficticious goods/service What is the most common form of occupational fraud/fruadulent disbursement? - Ans: Billing schemes What are the three forms of Billing Schemes? - Ans: Shell company, non-accomplice vendor, personal purchase What is a Shell Company - Ans: Ficticious company created for the sole purpose of commiting fraud What form of service do Shell companies most commonly do? - Ans: Service/consulting What is a pass-through scheme? - Ans: Goods purchased by perp, resold to victim at inflated price What are non-accomplice vendors? - Ans: The use of legit vendors What are some forms of non-accomplice vendor schemes? - Ans: pay and return, over billing What are some forms of pay and return scheme - Ans: Double pay, over pay, pay wrong vendor, purchase excessive merchandise Pass through schemes are associated with what? - Ans: Shell Company pay and return schemes are associated with what? - Ans: non- accomplice vendors What are 4 ways fraudulent invoices are approved? - Ans: perp has authority, rubber stamp, Forge approval, reliance on false document (w/o approval) What is check tampering? - Ans: perp converts organization's funds for personal use What are 2 types of fradulent disbursements? - Ans: Billing schemes and check tampering Which is the most expensive fraud disbursment? - Ans: Check tampering What are the 5 check tampering schemes? - Ans: forged maker, authorized maker, forged endorsement, altered payee, and concealed check What is a forged maker scheme? - Ans: Perp forges an authorized signitature What is the 3rd most common form of fraud disbursement? - Ans: check tampering Who is a forge maker check usually payable to? - Ans: perp, third party, or accomplice Who usually competes a forged maker scheme? - Ans: Someone with acess to blank checks What is positive pay banking? - Ans: Company notifies bank of checks issued by company, only those can be cleared How are forged endorsements commited? - Ans: Intercept a check intended for vendor and forge intended payee's name(rubber stamp) How do forged endorsement and alter payee differ - Ans: Forge endorsement is payable to person being endorsed, altered payee alters the person being endorsed What is an authorized maker scheme - Ans: person with authority to sign abuses authority What is a concealed check scheme - Ans: Falsified check is concealed with large stack of legit checks Methods of altered payee scheme - Ans: Prepared by perp- blank check. Not prepared by perp-check washing, whit-out payee, taking on What are payroll schemes - Ans: Frad disbursements to an individual who is or isnt on payroll What are the three catagoies of payroll schemes - Ans: ghost employees, falsified hrs, commision schemes What are ghost employees - Ans: either real or ficticious person who DO NOT work for company What is the most common payroll scheme - Ans: false hrs worked recorded What is commision fraud - Ans: falsifying amount of sales made Whàt are the 4 steps to creating a ghost employee? - Ans: add to payroll, document time worked, issue payroll and deliver payroll what are the 3 ways to add ghost employee - Ans: fake person,relative, leave former employee who invented white collar crime - Ans: Edwin Sutherland who invented the differential association - Ans: Edwin Sutherland what is the differential association - Ans: Crime is learned not genetic who invented the Fraud Triangle - Ans: Donald Cressey who studied embezzlers and trusted violators - Ans: Donald Cressey what three things does the fraud triangle consist of - Ans: unshareable financial need, opportunity, rationalization who invented the fraud scale - Ans: W. Steve Albrecht what three things make up the fraud scale - Ans: pressure, opportunity, personal integrity what is the old definition for white collar crime - Ans: criminal acts by individual or corporation acting in corp capacity what is the new definition for white collar crime - Ans: any financial or economic crime what four elements make up fraud - Ans: material false statement, knowledge of misstatement, reliance on misstatement, and damage hollinger and Clark developed - Ans: theft is caused by job dissatisfaction Mice model stands for - Ans: motivation reasons: money,ideology,coercion, ego what four things make up the fraud diamond - Ans: incentive, opportunity, rationalization, capability