Vocabulary-Financial T

Question 1

Symbols that help search engines better understand exactly what the user is looking for, and improve a search and return relevant links faster. Thus users can employ search operators to conduct more effective searches.

Answer 1

Boolean operators (or search operators)

Question 2

Indirect method of locating assets or tracing illicit funds. Indirect since the subject’s books and records are not made available.

Answer 2

Net worth analysis or bank deposit analysis method to prove income

Question 3

Using asset method vs expenditure method

Answer 3

Asset method used to prove income circumstantially by showing that a subject’s assets for a given period exceed those that can be accounted for from known or admitted sources.

Expenditure method (aka sources and application of funds) compares the suspect’s known expenditures and known sources of fund during a given period of time. Used to quantify the cost of subject’s lifestyle against subject’s reported income. Often used when subject spends illicit income on consumables (such as travel and entertainment) that would not cause increase in net worth.

Question 4

Loan proceeds

Answer 4

Net amount a lender disburses to a borrower under the terms of a loan agreement

Question 5

Alternative question

Answer 5

Forces the accused to make one of two choices m, both of which imply guilt. One alternative provides the accused with a morally acceptable reason for the misdeed; the other paints the accused in a negative light. Regardless of which answer the accused chooses, he is acknowledging guilt.

Example: did you deliberately plan this or did it just happen?

Question 6

If a fraud suspect confessed to committing fraud and he admitted to smuggling drugs in a unrelated case. How should these admissions statements be handled?

Answer 6

When taking signed statement from a suspect, there should not be more than one written statement for each offense.

Question 7

Forged maker scheme

Answer 7

A check tampering scheme in which an employee misappropriates a check and fraudulently affixes the signature of an authorized maker.

Question 8

Forged endorsement fraud

Answer 8

Is a check tampering scheme in which employees intercepts a company check intended for a third party and converts the check by signing the third party’s name on the endorsement line of the check.

Question 9

Pay and return scheme

Answer 9

Instead of shell company, a person might intentionally pay an invoice twice and than call the vendor and request that one of the checks be returned. The clerk than intercepts the return check

Question 10

Authorized maker scheme

Answer 10

Is a type of check tampering fraud in which an employee with signature authority on a company account writes fraudulent checks for his own benefits and signs his own name as the maker. Most common example occurs when a majority owner or sole shareholder uses his company as a sort of am alter ego, paying personal expenses directly out of company accounts.

Question 11

Pass through scheme

Answer 11

Usually undertaken by employees in charge of purchasing on the victim company’s behalf. Instead of buying merchandise directly from the vendor , the employee sets up a shell company and purchases the merchandise through that fictitious entity. He than resells the merchandise to his employer at an inflated price, therefore making an unauthorized profit on the transaction.

Question 12

Quick ratio

Answer 12

Compares most liquid assets to current liabilities. Total of cash, securities and receivables by current liabilities to measure a company’s ability to meet sudden cash requirements.

Question 13

Asset turnover ratio

Answer 13

Efficiency with which asset resources are used by the entity.
Net sales /average total assets or net sales/average operating assets

Question 14

Types of accounting change that must be disclosed in an organization’s financial statement

Answer 14

EAR
Changes in estimates (ex: useful life, salvage value)
Changes in accounting principles
Changes in reporting entities

Question 15

What is financial statement fraud?

Answer 15

Deliberate misrepresentation of the financial condition of an enterprise accomplished through the misstatement or omission of amounts or disclosures in the financial statement to deceive financial statement users.
Intentional is key. Misstatements can arise from either fraud or error.

Question 16

Early revenue recognition is classified as what type of financial fraud scheme?

Answer 16

Timing differences

Also known as income smoothing.

Question 17

Debt to equity is computed by

Answer 17

Total liabilities by total equity

(Not current liabilities but total liabilities)

Used by lending institutions

Question 18

Means of measuring the relationship between two financial statement amounts?

Answer 18

Ratio analysis
Means of measuring the relationship between two different financial statement amounts. The relationship and comparison are the keys to the analysis, which allows for internal evaluations using financial statement data. Traditionally, financial statement ratios are used in comparison to an entity’s industry average.

Question 19

Vertical analysis: what is assigned 100% in
Income statement;
Balance sheet

Answer 19

Net sales for income statement

Total asset, total liability and equity for balance sheet

Question 20

What is statement of owner’s equity?

Answer 20

It shows how the amount on the income statement flow through the balance sheet.
It acts as the connecting link between the balance sheet and income statement.
It serves a similar purpose to the statement of retained earning.
It does not name any shareholders or their individual ownership stake in the company.

Question 21

If a fraudster wanted to conceal the removal of a liability from the books, what actions would balance the accounting equation?

Answer 21

The accounting equation, Assets = Liabilities + Owners’ Equity, is the basis for all double-entry accounting. Suppose that in order to make an organization appear that it has less debt, an accountant fraudulently removes a liability. This would leave the accounting equation unbalanced since the assets side would be greater than liabilities plus owners’ equity. In this particular case, the equation can be balanced by decreasing an asset, increasing a different liability, increasing an owners’ equity account, increasing revenues (and thus retained earnings), or reducing an expense (and thus increasing retained earnings).

Generally, revenues (sales, fees earned) will increase a corporation’s stockholders’ equity and its assets.

More specifically, revenues will increase the retained earnings section of stockholders’ equity. The assets that usually increase are cash or accounts receivable. However, it is possible that another asset would increase or that a liability would decrease.

Increasing an asset would only make the equation further out of balance.

Question 22

Which of the following types of accounts are increased by credits?

Answer 22

Entries to the left side of an account are referred to as debits, and entries to the right side of an account are referred to as credits. Debits increase asset and expense accounts, whereas credits decrease these accounts. On the other side of the equation, credits increase liabilities, revenue, and owners’ equity accounts. Conversely, debits decrease liabilities, revenues, and owners’ equity.

Assets = Liabilities + Owner’s equity.

Question 23

The statement of cash flows is broken down into three sections:

Answer 23

The statement of cash flows reports a company’s sources and uses of cash during the accounting period. This statement is often used by potential investors and other interested parties in tandem with the income statement to determine the true financial performance of a company during the period being reported.

The statement of cash flows is broken down into three sections:
• Cash flows from operating activities
• Cash flows from investing activities
• Cash flows from financing activities

Question 24

Generally speaking, _________________ is the proper basis for recording a piece of equipment on a company’s books.

Answer 24

Although some exceptions exist, generally historical cost is the proper basis for the recording of assets, expenses, equities, etc. For example, a piece of operational machinery should be shown on the balance sheet at initial acquisition cost (historical cost) and not at current market value, appraised value, or an estimated replacement value.

Question 25

If a fraudster wanted to conceal the misappropriation of cash, what actions would result in a balanced accounting equation?

Answer 25

The accounting equation, Assets = Liabilities + Owners’ Equity, is the basis for all double-entry accounting. If an asset (e.g., cash) is stolen, the equation can be balanced by increasing another asset, reducing a liability, reducing an owners’ equity account, reducing revenues (and thus retained earnings), or creating an expense (and thus reducing retained earnings).

Question 26

Lapping

Answer 26

Method of concealing a receivable.
Lapping payments is one of the most common methods of concealing skimming. Lapping is crediting of one account through abstraction of money from another account.

Question 27

Shrinkage

Answer 27

Shrinkage (not shortness) is unaccounted for reduction in the company’s inventory that results from error or theft.

Question 28

Majority of check fraud committed by:

Individual? Organized crime?

Answer 28

Organized crime

Question 29

A virus that loads itself on the target system’s memory, infects other files, and than unloads itself is called

Answer 29

Direct action virus

Question 30

Non-repudiation

Answer 30

Is an IS goal that an e-commerce system should strive to provide its users and asset holders.
It refers to a method used to guarantee that the parties involved in an e-commerce transaction cannot repudiate (deny) participation in that transaction. Non-repudiation is obtained through use of digital signify urea, confirmation services and time stamps.

Question 31

Check kiting

Answer 31

Multiple bank accounts are opened and money is deposited from account to account, however money never exist. Floating make check kiting possible.

Question 32

Common list of information security goals that should be provided

Answer 32

Confidentiality of data
Integrity of data
Availability of data
Non-repudiation

CIA-N

Question 33

Pharming

Answer 33

Is an attack is which a user is fooled into entering sensitive data into a malicious website that impersonates a legitimate website.

Question 34

Password cracking

Answer 34

Automated process by which am attacker attempts to guess a system user’s most likely passwords.

Question 35

Confidence schemes

Answer 35

Confidence schemes involve a range of fraudulent conduct usually committed by professional “con artists” against unsuspecting victims. The victims can be organizations, but more commonly are individuals. Con men usually act alone, but they might group together for a particularly complex endeavor.

Some examples of confidence schemes include advance-fee swindles, debt consolidation schemes, directory advertising schemes, merchandising schemes, personal improvement frauds, and diploma mills.

Question 36

Do telemarketing schemes target individuals? businesses?

Answer 36

Both
Telemarketing offenses are classified as consumer fraud, yet many businesses are affected by office supply and marketing services scams. The hit-and-run nature of phone rooms, the geographical distances between the crooks and their victims, and the resources and priorities of law enforcement agencies all make enforcement efforts difficult

Question 37

scavenger or revenge scheme

Answer 37

The scavenger or revenge scheme involves the company that initially conned the consumer. Using a different company’s name, the outfit contacts the consumer again and asks if he would like to help put the unethical company out of business and get his money back. Naturally, an upfront fee is required to finance the investigation.

Question 38

Turnkeys

Answer 38

Turnkeys comprise an industry of their own by providing the collateral a telemarketing scam needs—turnkeys launder credit card receipts and checks, sell autodialers and phone lists, and provide the merchandise portrayed as valuable prizes.

Question 39

1-in-5

Answer 39

The most common giveaway scam is known as the “1-in-5.” A postcard arrives in the mail telling the receiver he has already won a prize. A new luxury vehicle tops the list, along with cash, jewelry, a living room set, and gift certificates. The odds of winning any of the prizes are astronomical. Victims are given trinkets or coupons redeemable only for the company’s own shoddy merchandise.

Question 40

telemarketing scam: verifier

Answer 40

The caller is passed to a verifier, who reads some vague words about the deal and records the person’s agreement. These recordings are intentionally vague, leaving out the pitch and key details, essentially recording only the customer’s consent. Verifiers also stall customers who call back to complain (heat calls), finding reasons why a little more patience will solve the problem, and in some cases, convincing the person to send a little more money to help the process along.
Fronter->Closer (convinces person to buy)->Verifiers (records person’s agreement)

Question 41

basic procurement process steps in competitive bidding

Answer 41

Presolicitation phase
Solicitation phase
Bid evaluation and award phase
Post award and administration phase

Question 42

Retainage

Answer 42

Retainage is the amount withheld from each draw request until such time as the construction is complete and the lien period has expired.

Question 43

Daisy Chain

Answer 43

In a daisy chain, a bank buys, sells, and swaps its bad loans for the bad loans of another bank, creating new documentation in the process. Its purpose is to mask or hide bad loans by making them look like they are recent and good.

Question 44

air loan

Answer 44

An air loan is a loan for a nonexistent property. There is nothing to collateralize the loan on but air. Most or all of the documentation is fabricated, including the borrower, the title commitment, and the appraisal

Question 45

ABC transaction (in property sells)

Answer 45

Property flipping becomes illegal and fraudulent, however, when a home is purchased and resold within a short period of time at an artificially or unjustly inflated value. In a flipping scheme, the property is sold twice in rapid succession at a significant increase in value (also known as an ABC transaction, where the property moves from party A to party B to party C very quickly)

Question 46

Property Flopping

Answer 46

Property flopping is a variation on property flipping, but it generally involves a property subject to a short sale (meaning the owner sells the property at a lower value than the unpaid mortgage amount on the property). This variation typically is conducted by industry insiders or unscrupulous entrepreneurs rather than the homeowner. Property flopping involves a rapid transfer of property with an unjustified, significant change in value (like the ABC transaction in flipping schemes), but instead of inflating the value on the second transaction, the value on the first transaction is deflated. To prevent problematic short sale flopping, some lenders are starting to require all interested parties to sign an affidavit requiring disclosure of an immediate subsequent sale.

Question 47

Property Flipping

Answer 47

Property flipping is the process by which an investor purchases a home and then resells it at a higher price shortly thereafter. For example, an investor buys a house in need of work for $250,000 in July, renovates the kitchen and bathrooms, and landscapes the yard at a cost of $50,000. He then resells the house two months later (the time it takes to make the renovations) for a price that is reflective of the market for a house in that condition. This is a legitimate business transaction, and there are numerous individuals and groups in the real estate market who make an honest living flipping properties.
Property flipping in and of itself is not illegal or fraudulent, but it becomes so when a property is purchased and resold within a short period of time at an artificially or unjustly inflated value. In a flipping scheme, the property is sold twice in rapid succession at a significant increase in value (also known as an ABC transaction, where the property moves from party A to party B to party C very quickly).

Question 48

Insurance Kick back

Answer 48

Kickbacks in the health care industry can come from several sources.
Examples of kickbacks are:
Payment for referral of patients
Waiver of deductible and copayments
Payment for insurance contracts or health care programs
Payment for vendor contracts
Payments to adjusters

Question 49

billing separately for procedures that are actually part of a single procedure.

Answer 49

Because health care procedures often have special reimbursement rates for a group of procedures typically performed together (e.g., blood test panels by clinical laboratories), some providers attempt to increase profits by billing separately for procedures that are actually part of a single procedure. This process is called unbundling or coding fragmentation. Simple unbundling occurs when a provider charges a comprehensive code, as well as one or more component codes.

Question 50

Social engineering

Answer 50

Social engineering is the act of using deceptive techniques to manipulate people into taking certain actions or disclosing information.
In social engineering schemes, social engineers use various forms of trickery, persuasion, threats, or cajolery to encourage their targets to release information that the engineers can use and exploit to achieve their goals.
Attackers engage in social engineering to achieve various means. Some use social engineering to gain unauthorized access to systems or obtain confidential communication so they can commit fraud, intrude into networks, gain access to buildings, steal another party’s secrets, commit identity theft, or engage in some other nefarious act. In some situations, spies use social engineering to procure information that will give them a competitive advantage, whereas others might engage in social engineering to find ways in which they can install malware.

Question 51

Sliding

Answer 51

Sliding is the term used for including additional coverage in an insurance policy without the insured’s knowledge. The extra charges are hidden in the total premium. Since the insured is unaware of the coverage, few claims are ever filed. For example, motor club memberships, accidental death, and travel accident coverage can usually be slipped into the policy without the insured’s knowledge.

Question 52

Technical surveillance

Answer 52

Technical surveillance is the practice of covertly acquiring audio, visual, or other types of data from targets through the use of technical devices, procedures, and techniques.
When spies resort to the use of technical surveillance, it is usually to gather nondocumentary evidence, or information that cannot be found through open sources.
Corporate spies might employ various forms of technological surveillance, such as aerial photography, bugging and wiretapping, video surveillance, photographic cameras, cell phones, monitoring computer emanations, and computer system penetrations.

Question 53

Ditching

Answer 53

Ditching, also known as owner give-ups, involves getting rid of a vehicle to cash in on an insurance policy or to settle an outstanding loan. The vehicle is normally expensive and purchased with a small down payment. The vehicle is reported stolen, although in some cases, the owner just abandons the vehicle hoping that it will be stolen, stripped for parts, or taken to a pound and destroyed. The scheme also sometimes involves a homeowner’s insurance claim for the property that was supposedly in the vehicle when it was “stolen.”

Question 54

Workers’ compensation schemes are generally broken into four categories

Answer 54

(COPA)
Workers’ compensation schemes are generally broken into four categories: premium fraud, agent fraud, claimant fraud, and organized fraud schemes.
Premium fraud involves the misrepresentation of information to the insurer by employers to lower the cost of workers’ compensation premiums. For example, an employer might understate the amount of the payroll for higher-risk classifications, thus receiving lower-cost premiums.
Agent fraud schemes consist primarily of pocketing premiums and conspiring to reduce premiums. Underhanded agents sometimes issue certificates of coverage to the ostensibly insured customer while pilfering the premium rather than forwarding it to the insurance carrier. Agents might also conspire to alter or improperly influence insurance applications to offer lower premiums to their clients.
Claimant fraud involves misrepresenting the circumstances of any injury or fabricating that an injury occurred.
Organized fraud schemes are composed of the united efforts of a lawyer, a capper, a doctor, and the claimant. This type of scheme is used not only in workers’ compensation cases, but also in other medical frauds, such as automobile injuries.

Question 55

tombstone policies

Answer 55

An insurance salesperson might submit fictitious policies called tombstone policies to improve his sales record or increase his commissions. The term tombstone policy came into being because agents would literally take names off tombstones to write the new, fictitious policies.

Question 56

Which of the following is NOT a type of physical access control device that can be used to control access to physical objects?
 A. Biometric systems	
 B. Electronic access cards 
 C. Profiling software 
 D. Locks and keys

Answer 56

C

Question 57

The restitution against loss to a third party when the insured fails to fulfill a specific undertaking for the third party's benefit is referred to as:
 A. Disability insurance	
 B. Fidelity insurance 
 C. An indemnity bond 
 D. Casualty insurance

Answer 57

C
An indemnity bond reimburses its holder for any loss to third-party beneficiaries when the insured fails to fulfill a specific undertaking for the third party’s benefit. Property insurance indemnifies against pecuniary loss to the insured’s property for specific losses; for example, from fire, theft, or auto collision. Casualty insurance indemnifies against legal liability to others for injury or damage to persons, property, or other defined legal interests because of specified risks or conduct. Fidelity insurance indemnifies against economic loss to the insured because of employee dishonesty. Disability insurance indemnifies against income loss under defined circumstances.

Question 58

Which of the following situations would constitute health care fraud committed by an insurance company?
A. Failing to pay a claim because the claim is missing required information
B. Selling an insurance policy that is disguised as a savings plan or investment
C. Submitting cost data to health care regulators to justify rate increases
D. All of the above

Answer 58

B

Question 59

Financial statement fraud is the intentional or erroneous misrepresentation of the financial condition of an enterprise. t/f

Answer 59

f

Question 60

Examples of fraud schemes perpetrated by health care institutions and their employees include all of the following EXCEPT:
A. Improper contractual relationships
B. DRG creep
C. Billing for experimental procedures
D. Unintentional misrepresentation of the diagnosis

Answer 60

D