522 - Exam 1 - Chapter 1 (6)

Question 1

CFE Certification

Answer 1

Fraud Examiners - Certified Fraud Examiner

Question 2

ACFE

Answer 2

Fraud Examiners - Association of Certified Fraud Examiners - the issue CFE’s

Question 3

CFF

Answer 3

Forensic Accountants - Certification in Financial Forensics (C.F.F.)

Question 4

What is Fraud examination?

Answer 4

Investigation of financial and other documentation for criminal fraud.

Question 5

CFF qualifications

Answer 5

1. AICPA member - good standing
2. at least 5 years experience in accounting
3. CFF Examination
4. Minimum requirements in relevant business experience

Question 6

IFP

Answer 6

Institute for Fraud Prevention

Question 7

CFS

Answer 7

Certified Fraud Specialist

Question 8

NAFA

Answer 8

National Association of Forensic Accountants Certification

Question 9

def: Fraud Examination (vs. forensic accounting)

Answer 9

Prevention and deterrence, detection, investigation;
Applies business, accounting, auditing, legal concepts to facts or hypotheses under consideration;
Identifies & examines fraud (FS & other types)

Question 10

def: Forensic Accounting (vs. Fraud examination)

Answer 10

Litigation matters and investigations:

a. Includes litigation support consulting, expert witnessing, resolution of fraud allegations
b. Work with damage claims, valuations, legal & other issues not involving allegations of fraud

Question 11

Internal and External Auditing

Answer 11

Planning, Risk Assessment, IC, audit evidence

Question 12

Who provides expert testimony?

Answer 12

CFEs & CFFs Provide Expert Witness Testimony

Question 13

Fraud-Related Definitions (3Q)

Answer 13

1. Falsification, alteration, or manipulation of material financial records, supporting documents, or business transactions
2. Material intentional omissions or misrepresentations of events, transactions, accounts, or other significant information from which financial statements are prepared
3. Deliberate misapplication of accounting principles, policies, and procedures used to measure, recognize, report, and disclose economic events and business transactions
4. Intentional omissions of disclosures or presentation of inadequate disclosures regarding accounting principles and policies in addition to related financial amounts

Question 14

Detected and/or Reported

Answer 14

Only a small portion of financial statement fraud is detected (reported), and most cases continue until they are discovered

Question 15

5 Basic Elements of Fraud

Answer 15

1. A false representation of a material nature
2. Scienter
3. Reliance on the false representation by the victim
4. Financial damages are incurred by the victim
5. Was intentional

Question 16

NCFR Definition of Fraud

Answer 16

think N-“reckless”

Intentional or reckless conduct, whether act or omission, that results in materially misleading financial statements”

Question 17

ACFE Definition of Fraud

Answer 17

think A-D (“deliberate”)

Intentional, deliberate, misstatement or omission of material facts, or accounting data which is misleading and, when considered with all the information made available, would cause the reader to change or alter his or her judgment or decision

Question 18

Legal Definition of Fraud

Answer 18

All multifarious means which human ingenuity can devise . . . to get advantage over another by false suggestions by suppression of truth and includes all surprise, trick, cunning, dissembling, and any unfair way by which another is cheated

Question 19

Basic Definitions of Fraud (2)

Answer 19

“Intentional mistakes or irregularities”

“Intentional misstatements or omissions in financial statements.”

Question 20

Scienter

Answer 20

Key words: Knowledge of false representation; reckless disregard

(2nd element of fraud)

def1: Knowledge that the representation is false;
def2: Reckless disregard for the truth