exam 1 Flashcards
Manufacturing companies with a profit margin of 10 percent must usually generate about 10 times as much revenue as the dollar amount of the fraud in order to restore net income to its pre-fraud level.
True
When perpetrators are criminally convicted of fraud, they often serve jail sentences and/or pay fines.
True
A Ponzi scheme is considered to be a type of investment scam.
True
A fraud may be perpetrated through an unintentional mistake.
False
One of the seven elements of a fraud is that the deception must be intentional.
All frauds that are detected by organizations are made public.
False
In many cases, companies merely hide the frauds to avoid public relations issues and quietly terminate or transfer perpetrators rather than make them public.
In civil cases, fraud experts are rarely used as expert witnesses.
False
In civil cases, fraud experts often serve as expert witnesses.
Many companies try to hide their losses from fraud rather than make them public.
True
The single most critical element for a fraud to be successful is opportunity.
False
Confidence is the single most critical element for a fraud to be successful.
When fraud is committed, criminal prosecution usually proceeds before civil litigation.
True
There is no difference between a Certified Fraud Examiner (CFE) and a Certified Public Accountant (CPA).
False
A Certified Fraud Examiner (CFE) is considered to be a leader in the antifraud community. A CFE focuses on the prevention and detection of fraud. A Certified Public Accountant, on the other hand, focuses on all aspects of accounting.
Which of the following is not an important element of fraud?
a. Confidence.
b. Deception.
c. Trickery.
d. Intelligence.
d. Intelligence.
People who commit fraud are usually:
a. New employees
b. Not well groomed and have long hair and tattoos.
c. People with strong personalities.
d. Trusted individuals.
d. Trusted individuals.
“The use of one’s occupation for personal enrichment through the deliberate misuse or misapplication of the employing organization’s resources or assets” is the definition of which of the following types of fraud?
a. Employee embezzlement or occupational fraud.
b. Investment sarcasm.
c. Management fraud.
d. Vendor Fraud
a. Employee embezzlement or occupational fraud.
Investment scams most often include:
a. An action by top management against employees.
b. Worthless investments or assets sold to unsuspecting investors.
c. An overcharge for purchased goods
d. Nonpayment of invoices for goods purchased by customers.
b. Worthless investments or assets sold to unsuspecting investors.
Future careers in fraud will most likely be:
a. In low demand.
b. In moderate demand.
c. Low paying.
d. In high demand and financially rewarding.
d. In high demand and financially rewarding.
Which of the following is the least reliable resource for fraud statistics?
a. FBI agencies.
b. Health agencies.
c. Insurances organizations.
d. Fraud perpetrators.
d. Fraud perpetrators.
Which of the following statements is true?
a. On a per-incident basis, bank robberies are more costly than frauds.
b. Fraud is often labeled the fastest-growing type of crime.
c. FBI agencies usually investigate frauds that occur within organizations.
d. None of the above statements is true.
b. Fraud is often labeled the fastest-growing type of crime.
Which of the following is not an element of fraud?
a. False representation.
b. Accidental behavior
c. Damage to a victim
d. Intentional or reckless behavior.
b. Accidental behavior
What is the best way to minimize fraud expense within an organization?
a. Effective early detection of fraud.
b. Effective investigation of fraudulent behavior
c. Effective prevention of fraud
d. Effective research of fraud.
c. Effective prevention of fraud
What is the most important element in successful fraud schemes?
a. Promised benefits
b. Confidence in the perpetrator.
c. Profitable activates.
d. Complexity.
b. Confidence in the perpetrator.
Which of the following characters is least likely to be involved in a fraud?
a. A middle-aged person with a middle management position.
b. A long-haired teenager wearing leather pants.
c. A recent college graduate
d. A senior executive who has significant stock options.
b. A long-haired teenager wearing leather pants.
Which of the following is not a common type of fraud?
a. Direct employee embezzlement
b. Employee bribes
c. Executives embezzling from petty cash
d. Investment scams
c. Executives embezzling from petty cash
Fraud fighting can include which of the following type(s) of careers?
a. Professors
b. Lawyers
c. CPA firms
d. All of the above
d. All of the above
Which of the following is not an example of vendor fraud?
a. A vendor overcharges a contracting job that it completed on time
b. A vendor bills for services not performed
c. A vendor bills for goods not provided
d. A vendor has much higher prices than its competitors.
d. A vendor has much higher prices than its competitors.
In vendor fraud, customers don’t pay for goods purchased.
False
Customer fraud involves a customer who does not pay for goods or services. Vendor fraud involves a vendor who provides inferior goods, overcharges, or pays bribes to get favored treatment.
Fraud is considered to be.
a. A serious problem that continues to grow.
b. A problem that affects very few individuals.
c. A mild problem that most businesses need not worry about.
d. A problem under control
a. A serious problem that continues to grow.
“Intentional manipulation of financial statements” describes which kind of fraud?
a. Management fraud
b. Criminal fraud
c. Stock market fraud
d. Bookkeeping fraud
a. Management fraud
