Chapter 3-Fraud, Ethics & Internal Control

Question 1

Audit Trail

Answer 1

presents verifiable information about the accuracy of accounting records

Question 2

Availibility

Answer 2

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Question 3

Check Fraud

Answer 3

involve the customer’s use of stolen or fraudulent checks

Question 4

Control Objectives for Information Technology (COBIT)

Answer 4

extremely important guidance for those who design or audit IT systems

Question 5

Collusion

Answer 5

occurs when two or more people work together to commit fraud.

Question 6

Compensating Control

Answer 6

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Question 7

Confidentiality

Answer 7

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Question 8

Control Activities

Answer 8

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Question 9

Control Environment

Answer 9

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Question 10

Committee of Sponsoring Organizations (COSO)

Answer 10

issuer of the Internal Controls Framework

Question 11

Credit Card Fraud

Answer 11

involve the customer’s use of stolen or fraudulent credit cards

Question 12

Customer Fraud

Answer 12

Occurs when a customer improperly obtains cash or property from a company, or avoids a liability through deception.

Question 13

Defalcation

Answer 13

Misappropriation of assets

Question 14

Denial of Service Attack

Answer 14

intended to overwhelm an intended target computer system with so much bogus network traffic that the system is unable to respond to valid network traffic.

Question 15

Employee Fraud

Answer 15

Conducted by non-management employees

Question 16

Foreign Corrupt Practices Act

Answer 16

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Question 17

Fraud

Answer 17

the theft, concealment, and conversion to personal gain of another’s money, physical assets, or information.

Question 18

Fraud Triangle

Answer 18

1. Opportunity 2. Incentive 3. Rationalization

Question 19

General Authorization

Answer 19

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Question 20

Hacking

Answer 20

the term commonly used for computer network break-ins.

Question 21

Independent Checks

Answer 21

Serve as a method to confirm the accuracy and completeness of data in the accounting system

Question 22

Industrial Espionage

Answer 22

The theft of proprietary company information, by digging through the trash of the intended target company or hacking into the target’s computer systems.

Question 23

Information & Communication

Answer 23

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Question 24

Information Criteria

Answer 24

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Question 25

Internal Theft

Answer 25

Misappropriation of assets

Question 26

IT Resources

Answer 26

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Question 27

Kickbacks

Answer 27

a cash payment that the vendor gives the employee in exchange for the sale, it is like a business bribe

Question 28

Larceny

Answer 28

Theft of company cash after it’s been recorded in the accounting records

Question 29

Management Fraud

Answer 29

conducted by one or more upper-level managers within the company. (Usually in the form of financial reporting)

Question 30

Management Override

Answer 30

circumvention of the systems of internal controls that are in place

Question 31

Misappropriation of Assets

Answer 31

theft of any item of value

Question 32

Monitoring

Answer 32

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Question 33

Preventative Controls

Answer 33

designed to avoid errors, fraud, or events not authorized by management.

Question 34

Reasonable Assurance

Answer 34

the controls achieve a sensible balance of reducing risk when compared with the cost of the control

Question 35

Refund Fraud

Answer 35

occurs when a customer tries to return stolen goods to collect a cash refund

Question 36

Salami Technique

Answer 36

alters a program to slice a small amount from several accounts and then credit those small amounts to the perpetrator’s benefit. Think about the movie “Office Space”

Question 37

Skimming

Answer 37

The organization’s cash is stolen before it is entered into the accounting records.

Question 38

Software Piracy

Answer 38

the unlawful copying of software programs

Question 39

Specific Authorization

Answer 39

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Question 40

Spoofing

Answer 40

occurs when a person, through a computer system, pretends to be someone else.

Question 41

Stewardship

Answer 41

The careful and responsible oversight and use of the assets entrusted to management.

Question 42

Trap Door Alteration

Answer 42

a valid programming tool that is misused to commit fraud.

Question 43

Trojan Horse Program

Answer 43

a small, unauthorized program within a larger, legitimate program, used to manipulate the computer system to conduct a fraud.

Question 44

Trust Services Principles

Answer 44

set forth guidance for CPAs who provide assurance services for organizations

Question 45

Vendor Audit

Answer 45

involved the examination of vendor records in support of amounts charged to the company

Question 46

Vendor Fraud

Answer 46

Occurs when vendors obtain payments to which they are not entitled.