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- 1. Multiple ChoiceWhich is not one of the three M's of financial statement fraud?Missing general ledger.Manipulation.Misrepresentation.Intentional misapplication.
- 2. Multiple ChoiceWhich group is not one of the members of corporate governance in the six-legged stool as outlined by Professor Zab Razaee?BODAudit Committee.Internal auditors.Employees of the company.
- 3. Multiple ChoiceWhich quality or characteristic is not outlined in Statement of Financial Concepts No. 2?Relevance.Materiality.Timeliness.Transparency.
- 4. Multiple ChoiceWhich would be an example of the bill-and-hold strategy?Books are kept open beyond the appropriate time.Sell products and hold them, with an agreement to bill customers later.Combine restricted fund account with the general fund account.Inflate revenues with phony software sales.
- 5. Multiple ChoiceAn example of "channel stuffing" would be:Keeping books open beyond the appropriate time.Combining restricted fund account with the general fund account.Booking income before receiving payments.Inflating revenues with phony software sales.
- 6. Multiple ChoiceUnder the KPMG categories of fraud, what would probably not be an employer internal fraud?False insurance claims.Ghost vendors.Check forgery.False financial statements.
- 7. Multiple ChoiceCOSA defines "internal controls" as a process, effected by an entity's board of directors, management and other personnel, designed to provide reasonable assurance regarding the achievement of objectives in the following categories except:A reasonable degree of transparency.Effectiveness and efficiency of operations.Reliability of financial reporting.Compliance with applicable laws and regulations.
- 8. Multiple ChoiceWhich of the following is a red flag for forensic accountants?Complex financial products.Aggressive revenue recognition policies.All of the aboveNone of the above
- 9. Multiple ChoiceWhat is an industry conditions risk factor?Company in a declining industry.Significant accounts based upon estimates.Significant related-party transactions.Aggressive incentive programs.
- 10. Multiple ChoiceWhat is an operating and financial stability risk factor?New accounting requirements for the company.Substance over form questions.Company declining in the industry.High degree of competition.
- 11. Multiple ChoiceWhat is an investigative technique used by the SEC to investigate specific companies for cooking the books?Lapping.Kiting.Wildcatting.Channeling.
- 12. Multiple ChoiceElements in the fraud triangle can be restated as all of the following except:Individual is either dishonest or able to rationalize theft.Notices or creates an opportunity to commit fraud.Generally acts alone, out of embarrassment.Feels some sort of pressure or incentive to commit fraud.
- 13. Multiple ChoiceWhich is not one of the classic "red flags" of "cooking the books"?Double billing a customer.Personal expenses paid with company funds.Sudden raises or bonuses to employees.Unnecessary use of collection services.
- 14. Multiple ChoiceWhich would be a good name for the scheme of listing investment income as operating revenue?Period shift.Expense manipulation.Liability trap.Revenue trick.
- 15. Multiple ChoiceWhat is an equitable remedy that allows a person to win a dispute against a company that does not have standing to suit?Equity doctrine.Alter ego.Division analysis.Dominance doctrine.
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