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ACCT 450 > Final > Flashcards

Final Flashcards

1
Q

T/F

Even with the right opportunity or significant pressure, most people would probably not steal or embezzle.

A

False

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2
Q

T/F

Studies show that a positive and honest work culture in a company does little to prevent fraud.

A

False

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3
Q

T/F

An important factor in creating a culture of honesty, openness, and assistance in the workplace is maintaining an employee assistance program(EAP).

A

True

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4
Q

T/F

A good internal control system within a company can ensure the absence of fraud.

A

False

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5
Q

T/F

When fraud is committed, the problem is often not a lack of controls, but the overriding of existing controls by management and others.

A

True

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6
Q

T/F

The two elements in creating a positive work environment are (1) having an open-door policy and (2) having positive personnel and operating procedures.

A

True

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7
Q

T/F

Not prosecuting fraud perpetrators is cost-effective both in the short run and the long run.

A

False

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8
Q

T/F

Even a good system of internal controls will often not be completely effective because of fallibilities of the people applying and enforcing the controls.

A

True

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9
Q

T/F

The increasingly complex nature of business helps to decrease the number of collusive frauds.

A

False

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10
Q

T/F

Tips and complaints are the most common way fraud is detected.

A

True

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11
Q

T/F

The major role of employee assistance programs(EAP) is to help employees recover from the damaging psychological effects of fraud.

A

False

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12
Q

T/F

Not all possible controls should be implemented; rather, one must assess a control’s cost and benefits before implementation.

A

True

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13
Q

T/F

Creating an expectation of punishment causes firm morale to deteriorate and often results in lower productivity.

A

False

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14
Q

People will often be dishonest if they are placed in an environment of:

a. Poor controls
b. High Pressure
c. Low Integrity
d. Loose accountability
e. All the above

A

e

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15
Q

Which of the following factors contribute to creating a corporate culture of honesty and openness?

a. Hiring honest people
b. performing criminal background checks
c. Not having an open-door policy
d. having a well-understood and respected code of ethics
e. both a and d
f. all of the abve

A

e

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16
Q

Which of the following personnel and operating policies contribute to high-fraud environments?

a. management by crisis
b. rigid rules
c. high employee lifestyle expectations
d. poor promotion opportunities
e. all of the above

A

e

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17
Q

The single most effective tool in preventing and detecting fraud is usually:

a. Monitoring employees
b. Having a good system of internal controls
c. Having a well-written company code of ethics
d. Following strict hiring procedures

A

b

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18
Q

A Company’s control environment includes:

a. The tone that management establishes toward what is honest and acceptable behavior
b. Corporate hiring practices
c. having and internal audit department
d. all of the above

A

d

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19
Q

Which of the following factors generally results in a high-fraud environment?

a. Hiring honest people
b. Providing mnagement
c. autocratic management
d. both a and b

A

c

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20
Q

Which of the following aspects of fraud usually results in the largest savings?

a. Fraud prevention
b. Fraud detection
c. Fraud investigation
d. It is impossible to tell

A

a

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21
Q

Which of the following is usually the most effective tool in preventing and detecting fraud?

a. Discouraging collusion between employees and customers or vendors
b. Effective investigations of fraud symptoms
c. Having a good system of internal controls
d. Creating an expectation of punishment in the company

A

c

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22
Q

Which of the following is the typical fraud model that describes most firms?

a. Fraud incident, assessing risk, investigation, reporting
b. Fraud incident, investigation, action, resolution
c. Assessing risk, fraud incident, investigation, resolution
d. Assessing risk, investigation, implementing a fraud program, reporting

A

b

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22
Q

The “tone at the top” is an important element in fighting fraud which involves:

a. Doing a good job of integrity risk assessment
b. Having a positive organization where effective fraud teaching and training is conducted
c. Setting a proper example or modeling appropriate management behavior
d. Both b and c

A

c

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22
Q

Which of the following is not a recognized method of eliminating fraud opportunities?

a. Having good internal controls
b. Monitoring employees
c. Creating an expectation of punishment
d. Engendering employee good will by having lax rules

A

d

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23
Q

Which of the following is not a reason identified by Deloitte why whistle-blowing systems fail?

a. Lack of anonymity
b. Pressure to comply
c. Culture
d. Lack of awareness

A

b

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24
Q

Alerting vendors and contractors to company policies often results in:

a. Loss of interest in the organization by vendors
b. Discovery of current frauds and the prevention of future frauds
c. Strained vendor/purchaser relationships
d. Heightened incidence of recurrent reverse vendor fraud

A

b

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24
Q

T/F

Analytical anomalies are present in every fraud

A

false

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25
Q

T/F

Recording an expense is a possible way to conceal the theft of cash

A

True

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26
Q

T/F

A check is an example of a source document

A

True

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26
Q

T/F

Internal control weaknesses give employees opportunities to commit fraud

A

True

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27
Q

T/F

The internal control system of an organization is comprised of the control environment, the accounting system and control procedures(activities)

A

True

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28
Q

T/F

Analytical fraud symptoms are the least effective way to detect fraud

A

False

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29
Q

T/F

Most people who commit fraud use the embezzled funds to save for retirement

A

False

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30
Q

T/F

As fraud perpetrators become more confident in their fraud schemes, they usually steal and spend increasingly larger amounts

A

True

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31
Q

T/F

First-time offenders usually exhibit no psychological changes

A

False

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32
Q

T/F

Psychopaths feel no guilt because they have no conscience

A

True

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33
Q

T/F

It is safe to assume that fraud has not occurred if one or more elements of the fraud triangle cannot be observed

A

False

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34
Q

T/F

The three elements of a typical fraud consist of concealment, conversion and completion.

A

False

35
Q

T/F

Auditors can best help detect fraud at the conversion stage

A

False

36
Q

T/F

Some complaints and tips turn out to be unjustified

A

True

37
Q

T/F

Fraud is a crime that is seldom observed

A

True

38
Q

T/F

Because of the nature of fraud, auditors are often in the best position to detect its occurrence

A

False

39
Q

T/F

Most people who commit fraud feel a perceived financial pressure

A

True

40
Q

T/F

Studies have found that the most common internal control problem when frauds occur is having lack of proper authorizations

A

False

41
Q

T/F

Fraud perpetrators who manipulate accounting records to conceal embezzlements often attempt to balance the accounting equation by recording expenses

A

True

42
Q

T/F

Employee transfers, audits, and mandatory vacations are all ways to provide independent checks on employees.

A

True

43
Q

T/F

New whistle-blowing laws have helped make tips and complaints more effective.

A

True

44
Q

T/F

Co-workers are usually in the best position to detect fraud.

A

True

45
Q

T/F

Fraud perpetrators often live beyond their means since their income does not support their lifestyle.

A

True

46
Q

T/F

Nearly all individuals and organizations are subject to real or perceived pressures and can rationalize.

A

True

47
Q

Which of the following is true regarding fraud?

a. It is easily identified
b. It is seldom observed
c. When a fraud occurs, there is no question whether or not a crime is committed
d. Many witnesses are usually available when a fraud occurs

A

b

48
Q

Which of the following is not a fraud symptom related to source documents?

a. Duplicate payments
b. Missing documents
c. A tip from and employee
d. Photocopied documents

A

c

49
Q

Which of the following is a fraud symptom related to an internal control weakness?

a. Lack of proper authorization
b. Lack of independent checks
c. Inadequate accounting system
d. Lack of physical safeguards
e. All of the above

A

e

50
Q

In the three elements of fraud(theft act, concealment, conversion), who is usually in the best position to detect the fraud?

a. Co-workers and managers
b. Customers
c. Owners
d. Vendors

A

a

51
Q

When a person commits a crime:

a. He or she usually becomes engulfed by emotions of fear and guilt
b. He or she will experience no changes in behavior
c. He or she usually becomes friendly and nice
d. He or she experiences a lower stress level

A

a

52
Q

Most people who commit fraud:

a. Use the embezzled funds to increase their savings accounts
b. give the embezzled funds to charity
c. Experience no change in their lifestyle
d. Use the embezzled funds to improve their lifestyle

A

d

53
Q

Which of the following is not a reason why people are hesitant to come forward with knowledge or suspicions of fraud?

a. They often thing that squealing on someone is wrong
b. They fear reprisal for being a whistle-blower
c. It is usually impossible to know for sure that a fraud is taking place
d. People who report fraud are not rewarded monetarily

A

d

54
Q

Which of the following is not one of the categories of employee fraud symptoms?

a. Accounting anomalies
b. Analytical anomalies
c. Tips and complaints
d. Firm structure

A

d

55
Q

Embezzlement of assets reduces the left side of the accounting equation. To conceal the theft, the embezzler must find a way to reduce the right side of the accounting equation. A perpetrator would most likely reduce the right side of the equation by:

a. Reducing accounts payable
b. Paying dividends
c. increasing expenses
d. Altering stock accounts

A

c

56
Q

Which of the following is not a fraud symptom related to journal entries?

a. Unexplained adjustments to receivables, pay-ables, revenues or expenses
b. Journal entries that do not balance
c. journal entries without documentary support
d. journal entries made near the beginning of the accounting periods

A

d

57
Q

Which of the following is not a common internal control fraud symptom or problem?

a. Lack of segregation of duties
b. Unexplained adjustments to receivables, pay-ables, revenues or expenses
c. Lack of independent checks
d. Overriding existing controls

A

b

58
Q

Once in a while, someone commits fraud or another crime and does not feel stress. Such people are referred to as:

A

Psychopathic

59
Q

Fraud is usually detected by recognizing and pursuing:

A

Symptoms

60
Q

A letter is most likely to be fraudulent if:

a. It is signed by one person
b. it is addressed to an individual, rather than a department
c. It is a photocopy of an original letter
d. It is written on outdated company letterhead

A

c

61
Q

If a perpetrator has stolen assets, which of the following is the easiest method for concealing the theft?

a. Reduce liabilities
b. Manipulate dividend or stock accounts
c. Increase other assets(receivables)
d. Increase expenses

A

d

62
Q

Which of the following is a common fraud symptom relating to ledgers?

a. A ledger that does not balance
b. A Ledger that balances too perfectly
c. Master account balances that do not equal the sum of the individual customer or vendor balances
d. both b and c

A

d

63
Q

What are the common elements of fraud?

A

Theft Act
Conversion
Concealment

64
Q

T/F

Paper-and-pencil honesty tests are most frequently used to determine whether someone has committed a crime

A

False

65
Q

T/F

Failure to pass a polygraph test means certain guilt

A

False

66
Q

T/F

Interviews during the rationalization stage are often not objective and can be harmful to the potential prosecution efforts.

A

True

67
Q

T/F

The general tone of a fraud report should be neither accusatory nor conclusive as to guilt, even if the suspect has confessed his or her involvement in the crime.

A

True

68
Q

T/F

An interviewer should always be sympathetic and respectful during an interview

A

True.

69
Q

T/F

Confrontational Interviews should always be conducted even if there is no evidence that can be obtained from the suspect.

A

False

70
Q

T/F

Telling a significant lie and getting away with it during an interview is usually very difficult if the interviewer is well trained.

A

True

71
Q

T/F

If a suspect continually repeats phrases, words, or your questions, it could be a verbal cue that he or she is lying

A

True

72
Q

T/F

The Fraud report should include recommendations for disciplinary action.

A

False

73
Q

T/F

The interview should always take place at the interviewee’s place of work.

A

False

74
Q

T/F

Fraud reports should only list findings that do not negatively impact the company.

A

False

75
Q

T/F

The first reaction to crisis is denial

A

True

76
Q

Which of the following is not a method of honestly testing?

a. Graphology
b. Voice Stress analysis
c. Body Language test
d. Pencil-and-paper test

A

c

77
Q

Interviews should not be conducted with:

a. suspects
b. Co-workers
c. clients
d. Interviews can be conducted with all the above

A

d

78
Q

People in the rationalization stage of reaction to a fraud:

a. Make great interviewees because they want to punish the subject
b. want to give the suspect one more chance
c. believe without a doubt that the suspect is guilty
d. Have no sympathy for the subject

A

b

79
Q

Planning for interviews should not involve:

a. Judging the guilt of the suspect based on the available documents
b. Establishing a location and time for the interview
c. Ascertaining in advance as many facts as possible about the offense
d. Understanding the attitude of the interviewee

A

a

80
Q

Confrontational interviews should usually be conducted when:

a. Police decide that the suspect is guilty
b. The examiner is starting the investigation
c. All other investigative procedures have been completed
d. The investigation is taking too long

A

c

81
Q

Which of the following is not an inquiry technique that should be used by interviewers?

a. Use short questions, confined to one topic
b. Maintain full control of the interview
c. Point out some, but not all, of the circumstantial evidence
d. All of the above are good inquiry techniques in an interview

A

d

82
Q

Which of the following honestly testing techniques deals with the study of handwriting for the purpose of character analysis?

a. Polygraph
b. Graphology
c. Pencil-and-paper test
d. Voice stress
e. None of the above

A

b

83
Q

Which of the following traits do polygraphs not measure when testing for stress?

a. Pulse rate
b. Blood pressure
c. Galvanic skin response
d. Respiration
e. All of the above

A

e

84
Q

Interviewing is

A

The systematic questioning of individuals who have knowledge of events, people, and evidence involved in a case under investigation and the most common technique used in investigating and resolving fraud

85
Q

What is the typical sequence of reactions to a crisis?

A

Denial
Anger
Rationalization
Depression
Acceptance

86
Q

Each of the following is a clue that an interviewee is dishonest except:

a. Upon repeated accusations, a dishonest person’s denials become more vehement
b. In order to add credibility to false statement, liars request that the interviewer obtain character testimony from other people
c. Liars often refuse to implicate possible suspects - or in other words, honest people are more willing to name others involved in misdeeds
d. Dishonest people frequently cover their mouths with their hands or fingers during deception.

A

a

87
Q

Which of the following is something that an interviewee might do or feel while in the denial phase?

a. Insult, harm or slander
b. Attempt to justify the act
c. Become sad, withdraw,, or lose interest
d. Not comprehend what has been said

A

d

88
Q

Which of the following is not a good thing to do during an interview

a. conduct the interview in private
b. Establish the purpose of the interview
c. Interview more than one person at once
d. Do not invade body space

A

c

89
Q

A signed statement should include all of the following except

a. A statement that the fraudster knew the conduct was wrong and intended to commit the act
b. the date the fraudster was hired by the company
c. Approximate mount of the losses
d. Approximate date of the offense

A

b

90
Q

Nonverbal cues of deception include all of the following except

a. repetition of the question
b. dilated pupils
c. raised chin
d. decreased foot and leg movements

A

a

ACCT 450 (2 decks)

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