chapt 1

Question 1

fraud is always

Answer 1

intentional

Question 2

fraud causes victim

Answer 2

to suffer an economic loss

Question 3

fraud is not

Answer 3

a mistake or error

Question 4

4 essential legal elements of fraud

Answer 4

1. material false statement
2. knowledge
3. reliance
4. damages

Question 5

related financial crimes

Answer 5

larceny
conversion
embezzlement
breach of fiduciary duty

Question 6

larceny is

Answer 6

stealing

Question 7

need to prove 4 things for committing larceny

Answer 7

1. taking or carrying away
2. money or property of another
3. without consent
4. with intent to deprive owner

Question 8

conversion

Answer 8

taking possession or property that does not belong to them

Question 9

embezzlement

Answer 9

acquired possession of money or property lawfully at time of theft

Question 10

breach of fiduciary duty is between

Answer 10

plaintiff and defendant

Question 11

3 major categories of fraud

Answer 11

1. asset misappropriation
2. corruption
3. financial statement fraud

Question 12

asset misappropriation

Answer 12

theft or misuse of org assets

Question 13

examples of asset misappropriation

Answer 13

skimming cash, stealing inv

Question 14

corruption

Answer 14

unlawful or wrongful use of influence in a business transaction for personal benefit

Question 15

ex of corruption

Answer 15

conflict of interest

Question 16

financial statement fraud

Answer 16

intentional misery of financial info to mislead others relying on it

Question 17

audit

Answer 17

to make sure financial statements don’t have mistakes

Question 18

forensic accounting

Answer 18

provide litigation advisory services
calcs of economic damages, business valuation

Question 19

fraud examination

Answer 19

resolving allegation of fraud from tips, complaints, or accounting clues

Question 20

fraud examination called in …

Answer 20

after fraud has occurred or currently going on

Question 21

Forensic accounting and fraud examination require at least 3 major skill types:

Answer 21

Technical competence
Investigative
Communication

Question 22

professional skepticism (investigation)

Answer 22

drives forensic accounting engagements

Question 23

3 things that drive forensic accounting engagements

Answer 23

recognition
attitude
commitment

Question 24

in investigation look for …

Answer 24

red flags

Question 25

fraud risk factors

Answer 25

motivational situational behavioural

Question 26

evidence is important in

Answer 26

Investigation

Question 27

__________ helps to prove intent

Answer 27

demonstrating concealment

Question 28

elements of fraud triangle

Answer 28

act concealment conversion

Question 29

hypothesis evidence matrix

Answer 29

Testing alternative hypotheses in an organized, summary manner Evidence gathered from general to specific target like

Question 30

hypothesis evidence matrix topics

Answer 30

document analysis neutral third party witnesses corroborative witnesses co-conspirators target

Question 31

neutral third party

Answer 31

may have some knowledge about the fraud but who are not involved in the offense

Question 32

corroborative witnesses

Answer 32

Involved in incident but can give information

Question 33

co-conspirators

Answer 33

in cahoots with perp

Question 34

3 key investigative tools

Answer 34

review of financial records interviews use of graphic tools

Question 35

3 types of witnesses

Answer 35

neutral third party corroborative witnesses co-conspirators

Question 36

preventing fraud is more ____ than detecting and investigating

Answer 36

cost effective

Question 37

fraud prevention

Answer 37

creating environments to minimize risk, victims avoid costs with detection and investigation

Question 38

3 things in fraud prevention

Answer 38

creating policies and controls to limit employee training to promote ethical behaviour segaration of duties

Question 39

fraud detection

Answer 39

discovering fraud

Question 40

signs of fraud in fraud detection

Answer 40

unusual accounting trans internal control weaknesses extravagant lifestyles of employees

Question 41

fraud investigation

Answer 41

indicators of fraud that require investigation to determine loss and identity of perp

Question 42

fraud can be ....

Answer 42

civil or criminal cases

Question 43

3 legal outcomes of fraud

Answer 43

criminal charges civil lawsuits remediation efforts

Question 44

remediation (strengthen internal controls) 3 prong process

Answer 44

1. recover losses 2. support the legal process 3. modification of operational processes and procedures

Question 45

internal controls designed to

Answer 45

prevent fraud detect fruad ensure financial accuracy

Question 46

common controls

Answer 46

seg of duties authorization procedures physical security