Topic 7 Concealment and Conversion

Question 1

In a fraud investigation, documents:
a. Usually contain extremely valuable information.
b. Are rarely used in court.
c. Are not reliable sources of information.
d. Are only valuable in obtaining a confession.

Answer 1

a)

Question 2

Chain of custody refers to:
a. Marking on a document so it can be identified later.
b. A record of when a document is received and what has happened to it since its receipt.
c. Databases used in trials to assist lawyers.
d. The way in which courts are organized.

Answer 2

b)

Question 3

Marking documentary evidence is important to ensure that:
a. Documents are legal.
b. Databases can be created with valuable information.
c. Documents can be identified later.
d. Marking documentary evidence is not important.

Answer 3

c)

Question 4

Discovery sampling:
a. Is a type of variables sampling.
b. Is one of the more difficult statistical sampling methods to understand.
c. Is never used in conducting a fraud examination.
d. Deals with the probability of discovering at least one error in a given sample size if the population error is a certain percentage.

Answer 4

d)

Question 5

Documentary evidence such as private tax returns can usually be obtained only by:
a. Subpoena.
b. Search warrant.
c. Voluntary consent.
d. All of the above.

Answer 5

d)

Question 6

Which of the following is not true regarding document experts?
a. They can usually determine whether a document was written by the person whose signature the document bears.
b. They can usually determine whether a document has been forged.
c. They can usually determine whether the date the document bears is the date when the document was written.
d. All of the above are true statements.

Answer 6

d)

Question 7

Which of the following is not a benefit of statistical sampling?
a. It allows auditors to be certain that fraud does not exist in a population.
b. It is helpful when populations are large.
c. It allows quantification of risk.
d. It allows inference about a population.

Answer 7

a)

Question 8

Which of the following methods of gathering documents is based primarily on luck?
a. Documents discovered during audits.
b. Hard-to-get private documents that are subpoenaed.
c. Documents discovered through searching public sources.
d. Documents provided by tipsters.

Answer 8

d)

Question 9

Which of the following is true of graphologists?
a. They can only perform their work in laboratory settings.
b. They perform the same type of work as forensic document experts.
c. They study handwriting as a way to interpret and identify personalities.
d. They are required to be members of the ABFDE organization.

Answer 9

c)

Question 10

What can a fraud examiner conclude if one or more instances of fraud are found in a sample taken from a population?
a. There is a slight risk that fraud exists in the population.
b. The population contains fraud.
c. The sample may not have been randomly selected, and thus no conclusions can be drawn.
d. The sample is most likely not representative of the population as a whole.

Answer 10

b)

Question 11

What can a fraud examiner conclude if his or her tests confirm that no instances of fraud are present in a sample taken from a population?
a. There is virtually no risk that fraud exists in the population.
b. The population contains no fraud.
c. Only that no fraud is present in that particular sample.
d. The sample is most likely not representative of the population as a whole.

Answer 11

c)

Question 12

How are most frauds concealed?
a. By shredding source documents.
b. By converting to a paperless office without paper transactions.
c. By creating fictitious documents or altering source documents.
d. By firing employees who will not go along with the fraud.

Answer 12

c)

Question 13

Which of the following is usually the best way to obtain documentary evidence?
a. Computer-based queries of full-population accounting and other databases.
b. A statistically sound sampling approach like discovery sampling.
c. Chance, accident, or tip discovery.
d. None of the above are effective methods of discovering evidence.

Answer 13

a)

Question 14

Programs like CaseMap, CaseCentral, ZANTAZ, Ringtail, and DatiCon are examples of:
a. Software that implements discovery sampling techniques.
b. Link analysis software.
c. Software packages used to index and store evidence.
d. Forensic software used to investigate hard drives and other digital devices.

Answer 14

c)

Question 15

Although most perpetrators begin their thefts because of a perceived critical need, they usually continue to embezzle in order to:
a. Beat the system.
b. Fulfill an inner desire to commit fraud.
c. Improve their lifestyle.
d. Achieve a higher self-esteem.

Answer 15

c)

Question 16

Evidence gathered from public records can be useful in:
a. Identifying with the suspect.
b. Obtaining a confession.
c. Making the suspect feel at ease.
d. None of the above.

Answer 16

b)

Question 17

The net worth method of analyzing financial information can help to determine:
a. The suspect’s feelings about the organization.
b. Possible perpetrators of the fraud.
c. The suspect’s personality characteristics.
d. The amount of embezzled funds.

Answer 17

d)

Question 18

Which of the following organizations maintain public information that can be accessed in record searches?
a. Local agencies.
b. State agencies.
c. Federal agencies.
d. All of the above.

Answer 18

d)

Question 19

How useful are local and county records in fraud investigations?
a. Very useful.
b. Not useful.
c. Somewhat useful.
d. Aren’t allowed in the investigation of fraud.

Answer 19

a)

Question 20

Which of the following laws regulates activities of credit, insurance, and employment investigations?
a. Fair Investigation Act of 1980.
b. Fair Credit Reporting Act of 1971 and Fair and Accurate Credit Transactions Act of 2003.
c. Credit, Insurance, and Employment Investigation Act.
d. There is no governing law.

Answer 20

b)

Question 21

The net worth method is effective:
a. As evidence in court.
b. To help obtain a confession.
c. To conduct an interview of suspects.
d. All of the above.

Answer 21

d)

Question 22

Conversion investigations focus on how suspects:
a. Had opportunities to steal.
b. Had motives to commit fraud.
c. Spent stolen money.
d. Committed the actual theft.

Answer 22

c)

Question 23

Which of the following is a possible use of conversion-based investigation techniques?
a. Searching public records to trace purchases of assets and payments of liabilities.
b. Attempting to locate previous spouses’ bank account records.
c. Locating significant amounts of money held by related parties.
d. All of the above.

Answer 23

d)

Question 24

Most conversion investigations involve searching public records and other sources to trace:
a. Purchases of assets.
b. Payments of liabilities.
c. Changes in lifestyle.
d. Net worth.
e. All of the above.

Answer 24

e)

Question 25

A database of criminal records maintained by the FBI is:
a. The CIA.
b. The III.
c. The NCIC.
d. Both a and c.
e. Both b and c.

Answer 25

e)

Question 26

Who among the following are usually some of the best and most helpful federal fraud investigators?
a. Officers of the Secret Service.
b. Employees of the Federal Bureau of Prisons.
c. Officers of the Department of Vital Statistics.
d. Postal inspectors.

Answer 26

d)

Question 27

Which source could be used to access valuable financial information in a fraud investigation?
a. Financial institutions.
b. Internet sites.
c. The former spouse of a suspected fraud perpetrator.
d. Trash.
e. All of the above.

Answer 27

e)

Question 28

The net worth method is a calculation based on a
person’s:
a. Assets, liabilities, equity, and living expenses.
b. Assets, liabilities, equity, and income.
c. Assets, liabilities, income, and living expenses.
d. Assets, income, and living expenses.

Answer 28

c)

Question 29

The formula to calculate funds from unknown sources is:
a. Assets - Liabilities - Prior Year’s Net Worth + Living Expenses -Funds from Known Sources.
b. Assets - Liabilities - Prior Year’s Net Worth - Living Expenses
- Funds from Unknown Sources.
c. Assets - Liabilities -Prior Year’s Net Worth + Living Expenses + Funds from Unknown Sources.
d. Assets - Liabilities - Prior Year’s Net Worth Living Expenses + Funds from Unknown Sources.

Answer 29

a)

Question 30

The Gramm-Leach-Bliley Act allows:
a. Banks to sell customer information.
b. Financial institutions to share information.
c. Customers to “opt out” and ask that their information not be shared.
d. All of the above.

Answer 30

d)

Question 31

Each of these agencies is correctly matched with the type of information the agency provides except:
a. Department of Justice: Maintains records relating to the detection, prosecution, and rehabilitation of offenders.
b. The Secret Service: Deals with counterfeiting, theft of government checks, interstate credit card violations, and some computer crimes.
c. State Attorney General: Maintains birth records and information about people’s SSNs.
d. CIA: Investigates security matters outside the United States.
e. Department of Business Regulation: Maintains licensing information about various professionals.

Answer 31

c)

Question 32

Each of these statements is true about the net worth method for determining embezzled amounts except:
a. The net worth method generally understates amounts stolen.
b. Much of the information necessary for determining an individual’s assets, liabilities, living expenses, and income is available through public searches.
c. Courts are generally suspicious of dollar amounts determined by the net worth method because courts realize that the net worth method can only provide approximations of the amount stolen.
d. The net worth method is useful for obtaining confessions from suspects during interviews or interrogations.

Answer 32

c)

Question 33

Under the net worth method, a person who has an increase in net worth of $100,000, known expenses of $80,000, and a salary of $60,000 would have an unknown income of:
a. $0.
b. $110,000.
c. $120,000.
d. $140,000.

Answer 33

c)

Question 34

Known income subtracted from total income gives a reasonable estimate of:
a. Unknown Income.
b. Liabilities.
c. Living expenses.
d. Net worth.

Answer 34

a)

Question 35

____ are used by attorneys involved in litigation to track all documents.
a. Link analyses
b. Bates numbers
c. Bar codes
d. RFID tags

Answer 35

b)

Question 36

The risk that an auditor will examine a fraudulent check and not recognize it as being fraudulent is called:
a. sampling risk.
b. non-sampling risk.
c. systematic risk.
d. systemic risk

Answer 36

b)

Question 37

During a concealment investigation, an investigator fails to recognize that an invoice had been forged. This represents
a:
a. sampling risk.
b. non-sampling risk.
c. systematic risk.
d. systemic risk.

Answer 37

b)

Question 38

A traditional audit that includes discovery sampling is LEAST appropriate for:
a. canceled checks.
b. confirmation letters.
c. accounting databases.
d. printed delivery receipts.

Answer 38

b) A traditional audit that includes discovery sampling is especially appropriate
with nonelectronic evidence like canceled checks or confirmation letters.

Question 39

Methods for concealment investigation include all of the following EXCEPT:
a. document examination.
b. searching public records.
c. audits.
d. computer searches.

Answer 39

b) Searching public records is a conversion investigative method.

Question 40

Which of the following statements is true?
a. Most concealment investigative procedures involve accessing and accumulating documentary evidence.
b. Most concealment investigation techniques focus on obtaining eyewitness accounts as evidence.
c. Honesty testing is considered a concealment investigation technique.
d. Concealment investigation is dependent on employee cooperation to gather evidence.

Answer 40

a)

Question 41

Which of the following is the term for keeping a record of when a document is received and what has happened to it
since its receipt?
a. Organization of custody
b. Evidence chain
c. Coordination of custody
d. Chain of custody

Answer 41

d)

Question 42

What is the term for the risk that the sample was not representative of the population?
a. Systematic risk
b. Non-sampling risk
c. Sampling risk
d. Compliance risk

Answer 42

c)

Question 43

An audit is part of which type of investigative method?
a. Theft
b. Conversion
c. Concealment
d. Inquiry

Answer 43

c)

Question 44

When the document is in the custody of a public office:
a. it is permissible to obtain photocopies, which are considered secondary evidence in a court of law.
b. copies of the document should be made but kept separate from the original document.
c. the document (or a copy) cannot be used as evidence in a court of law.
d. a summary of the document will suffice

Answer 44

a) The original in the custody of a public office is one of four situations in which
a court will permit photocopies as secondary evidence

Question 45

Which statistical sampling allows an auditor to generalize and make inferences from the sample to the population?
a. Probability sampling
b. Random sampling
c. Discovery sampling
d. Quota sampling

Answer 45

c. . Using discovery (statistical) sampling allows an auditor to generalize and
make inferences from the sample to the population.

Question 46

Which aspect of documentary evidence should be kept in mind to ensure that the documents can be identified later
and accessible for trial?
a. Organization of evidence
b. Coordination of evidence
c. Marking of evidence
d. Chain of custody of documents

Answer 46

c)

Question 47

Which of the following is a popular program used to index and store evidence?
a. CaseMap
b. IDEA
c. TANZAN
d. SQL

Answer 47

a)

Question 48

________ is a simple, statistically based method of analyzing a subset of transactions from a larger pool.
a. Structured sampling
b. Probability sampling
c. Cluster sampling
d. Discovery sampling

Answer 48

d)

Question 49

Which of the following products can be useful to coordinate the evidence in large cases that involve investigators,
legal counsel, accountants, expert witnesses, and management representatives?
a. DatiCon
b. Analyst’s Notebook
c. CaseMap
d. Ringtail

Answer 49

b)

Question 50

Which of the following items is NOT included on a subpoena?
a. The location of the documents being requested
b. The identity of who is making the request for the documents
c. The exact information being requested
d. The signature of a judge or court commissioner

Answer 50

a)

Question 51

Which of the following statements regarding documents versus eyewitnesses is NOT accurate?
a. When faced with a choice between an eyewitness and a good document as evidence, most fraud experts choose the document.
b. Unlike eyewitnesses, documents are almost always available to the fraud investigator who knows where to find them.
c. In today’s interconnected financial world, it is nearly impossible to transfer money without creating a document trail.
d. Unlike witnesses, documents never tell inconsistent stories on two different occasions.

Answer 51

a)

Question 52

Which of the following is an example of secondary evidence?
a. Testimony of recipient of stolen assets
b. Confession of outside vendors who paid bribes
c. Testimony of witnesses of the fraud act
d. Photocopies of documentary evidence

Answer 52

d)

Question 53

When is searching through someone’s garbage considered a legal activity?
a. When the trash is left unattended inside the suspect’s home
b. When the trash is in the possession of the suspect
c. When the trash has left the suspect’s home or sidewalk
d. Searching through a person’s trash is never considered as a legal activity

Answer 53

Correct. Once the trash leaves the suspect’s home, sidewalk, or fenced area,
investigators can usually freely and legally search the trash.

Question 54

From the following, identify an item that does NOT go into current net worth calculations?
a. Preliminary expenses
b. Prior year’s net worth
c. Funds from known sources
d. Assets

Answer 54

a)

Question 55

Which of the following does NOT constitute a federal source of information?
a. County clerk
b. Central Intelligence Agency
c. Secret Service
d. Department of Justice

Answer 55

a)

Question 56

Mandy calls a local newspaper and pretends to be a neighbor who is away for the winter. She obtains account history
and orders the newspaper for six months. Has Mandy committed a fraud? If yes, under which act?
a. No, the newspaper has not yet been delivered or paid.
b. Yes, she is in violation of the Gramm-Leach-Bliley Act of 1999.
c. No, as the neighbor has not served any written notice to keep the information private.
d. Yes, she is in violation of Fair and Accurate Credit Transactions Act of 2003.

Answer 56

b)

Question 57

Which of the following will be useful in ascertaining whether a doctor is legitimate?
a. Department of Business Regulation
b. Secretary of State
c. State Medical Registry
d. County Clerk

Answer 57

a)

Question 58

What is the main objective of the net worth method?
a. To determine the income and expenditures of an individual
b. To determine the extent of stolen funds
c. To determine the financial position of the organization
d. To determine the change in net worth

Answer 58

b)

Question 59

Which of the following is a primary reason for conducting conversion searches?
a. To find out the suspect’s feelings about the organization
b. To understand the suspect’s reaction to crisis
c. To check the extent of the suspect’s debt
d. To gather evidence that can be used in interrogations to obtain a confession

Answer 59

d)

Question 60

What is meant by the term “opting out”?
a. Serving a written notice, denying the bank the right to sell your personal information
b. Withdrawing from a fraud being perpetrated by a colleague
c. A bidder denying to pay the proceeds of the bid on becoming bankrupt
d. Whistle-blowing by a person who was part of a fraud

Answer 60

a)

Question 61

What is meant by the term “trashing” in relation to fraud investigation?
a. A broad search on the Internet to obtain valuable information
b. Looking through a suspect’s garbage for possible evidence
c. Destroying hard copies of important documents, so as to leave no evidence
d. Gaining financial information through previous acquaintances

Answer 61

b)

Question 62

Which of the following is NOT a form of database access?
a. Subscription-based fees apply before access is granted
b. There is a per-use fee charged
c. A set number of searches are free followed by a daily charge for use thereafter
d. Unlimited free access to search is granted

Answer 62

c)

Question 63

Which of the following is NOT a publicly available means of fine tuning a Google search?
a. By entering specific phrases
b. By placing a minus sign before unique terms
c. By utilizing domain restrictions
d. By utilizing internal database restrictions

Answer 63

b) The minus sign filters out unwanted results.