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For Part 1, please number your answer sheet from 1...

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For Part 1, please number your answer sheet from 1 to 40 and provide the letter corresponding to the best answer (eg, 1. A, 2. B, etc.). 1. The defendant has an account at a local bank. As part of the trial, bank statements showing the defendant made several large cash deposits are admitted. Which type of evidence is this: a. Testimony b. Real c. Demonstrative d. All of the above 2. In searching for breakdowns of internal controls by collusion and fraud, auditors: a. should check all journal entries made on holidays, weekends, and late at night. b. should discuss with employees any journal entry which has been made to reduce liabilities or increase owners? equity. c. should verify all journal entries and values associated with consolidations which resulted for work within spreadsheets. d. should obtain an understanding of the internal control processes regarding journal entries and other adjustments. 3. The basic accounting flow consists of the following events in what sequence? 1. Post to general ledger 2. Business transactions occur 3. Financial statements are prepared 4. Journal entries are recorded a. 2, 4, 1, 3 b. 2, 4, 3, 1 c. 4, 2, 3, 1 d. 4, 3, 1, 2 4. Under RICO, which of the following is an illegal activity: a. Purchasing a bank to deposit gambling receipts generated from illegal betting parlors b. Investing in a bank that provides services to foreign nationals c. Purchasing a bank formerly used to reinitiate money into the financial system from a bankruptcy trustee d. All of the above 5. Which is considered the lowest threshold for ethical decision making? a. A professional code of ethics of an accounting organization. b. Codes of conduct or directives about what is best for society. c. The law. d. Codes of conduct guided by trust in the underlying values that guide society. 6. Most data extraction and analysis tools can: a. retrieve, sort, and filter data. b. extract, and analyze data from accounting databases. c. identify gaps, duplicates, missing information, and statistical anomalies. d. All of the above are correct answers. 7. Which of the following acts would not be considered an abuse or abusive? a. Surf the Internet while at work. b. Remove small amounts of cash from the cash register till. c. Taking a long lunch or break. d. Using sick leave to see a child?s play at school. 8. An employee enters the work place on a day off and utilizes the leased plotter/printer for four hours to produce graphics for his child?s school play. The lease payment is $80 per hour and his wages are $20 per hour. Select the correct statement from the choices below. a. This is an abuse at the assumed value of $400. b. This is an instance of fraud at the assumed value of $400. c. This is an abuse at the assumed value of $320. d. This is an instance of fraud at the assumed value of $320. 9. Auditors in identifying and assessing the risks of material financial statement fraud should do all but which of the following? a. Make inquiries of the board of directors, senior executives, legal counsel, and others charged with government governance within the client organization to gather sufficient information about the risk of the fraud. b. Communicate with legal counsel about the allegations of fraud and how they are addressed. c. Consider all evidence gathered through analytical procedures that is considered unusual, unexpected, or even suspiciously normal based on the financial condition and results of the business. d. Consider evidence gathered only through the audit of internal control of financial reporting that may suggest the existence of one or more fraud risk factors, and that adequate and effective internal controls did not address and account for the detected risk. 10. Select the most correct statement from those below regarding the legal standards for negligence. a. Breach?a determination that the defendant failed to use ordinary or reasonable care in the exercise of that duty. b. Reasonableness?a determination that the defendant failed to use ordinary or reasonable care in the exercise of that duty. c. Breach?an actual connection between the defendant?s breach of duty and the plaintiff?s harm can be established d. Cause in Fact ? the defendant must have been the proximate cause or contributed to the injury to the plaintiff. 11. Transferring funds obtained illegally from a safe deposit box in the US to a safe deposit box in Canada is an example of: a. Reiniating b. Layering c. Placement d. None of the above 12. In September 2004, the Committee of Sponsoring Organizations (COSO) of the Treadway Commission released their _______ framework, recognized by the SEC as the critical methodology for Sarbanes?Oxley. a. ERM b. IFRS c. XBRL d. XML 13. SAS No. 99 lists several steps in considering the risk of fraud in a financial statement audit. All of the following are correctly stated except: a. Auditors must brainstorm with the key personnel of both the internal and independent audit teams to plan a strategy to detect fraud. b. Auditors must evaluate the audit evidence throughout the audit and respond to any identified misstatements. c. Auditors must determine the types of fraud risks that exist. d. Auditors are required to report all fraud to an appropriate level of management. 14. Two separate defendants are charged with conspiring to commit fraud. Each has chosen to be tried separately. In the first trial evidence is admitted that demonstrates the defendant attempted to conceal her act of stealing cash. At the second trial, the prosecuting attorney can: a. Admit the same evidence b. Refer to the evidence used at the first trial c. Draw a link between the first trial and the second trial d. None of the above 15. One way of demonstrating that the act was fraud and not a mistake is by: a. Demonstrating that the employee concealed the act b. Showing that there were multiple incidents of the same act c. The destruction of evidentiary documents that describe the act d. All of the above 16. Upon discovering fraud, internal auditors: a. must fully investigate it and determine perpetrator(s), value, damage, and recommend possible action. b. should only continue their investigation if the fraud is in the present or immediately previous period. c. have an obligation to notify management or the board of directors when the incidence of significant fraud has been established to a reasonable degree of certainty. d. must provide the audit committee and the board of directors with a preliminary written statement detailing the known facts and presenting reasonable suspicions as to perpetrators, values, methods, and time periods affected. 17. The lead audit or coordinating partner and reviewing partner of the registered accounting firm must rotate off of the audit every ________ years. a. Five b. Ten c. Two d. When the PCAOB mandates it. 18. The biggest advantage investigators have when tracing the flow of illegal funds is: a. Most illegal funds consist of electronic transfers, making detection easier b. Most illegal funds at some time flow through a bank in the US making detection easier c. Most illegal funds return to the persons performing the laundering making detection easier d. Most illegal funds are converted to hard assets making detection easier 19. Which of the following individuals theorized that the learning of criminal activity usually occurred within intimate personal groups? a. Donald Cressey b. Steve Albrecht c. Edwin Sutherland d. Richard Hollinger and John Clark 20. The audit committee oversees the adequacy and effectiveness of the company?s internal control structure to ensure all of the following except: a. the efficiency and effectiveness of operations. b. the timeliness of financial reporting. c. the reliability of financial reporting. d. compliance with applicable laws and regulations. 21. The three legs of the fraud triangle are: a. Opportunity, Perceived Pressure, and Rationalization. b. Opportunity, Value, and Rationalization. c. Opportunity, Perceived Pressure, and Benefit. d. Timing, Value, and Benefit. 22. When the losses caused by fraud are correlated to the levels of compensation of the perpetrator, the line is somewhat linear, with slow rise from low compensation to approximately: a. $100,000 annually where the rate of loss skyrockets. b. $300,000 annually where the rate of loss skyrockets. c. $500,000 annually where the rate of loss skyrockets. d. $750,000 annually where the rate of loss skyrockets. 23. According to Hollinger and Clark?s research, which of the following are least likely to engage in illegal behavior in the workplace? a. younger workers. b. older workers. c. employees that feel they are exploited. d. dissatisfied workers. 24. To be proactive, the audit committee should ensure that: 1. Audit committee members have knowledge, education, awareness, and sophistication concerning the various fraudulent management override and collusive schemes that may be perpetrated by management. 2. Only the external audit group needs have knowledge, education, awareness, and sophistication concerning the various fraudulent management override and collusive schemes that may be perpetrated by management. 3. The audit committee has reviewed the comprehensive fraud risk assessment provided by management and also considers how collusive fraud and management override schemes are mitigated and detected. 4. The audit committee periodically participates in continuing education programs that can prepare its members to appraise management?s fraud risk assessment. 5. The audit committee identifies who has the specific responsibility for the collusive and management override fraud risk assessment process: its members, the internal audit group, or the independent audit group? 6. The audit committee is interacting with personnel beyond executive management and asking the tough questions of knowledgeable employees, financial managers, internal auditors, and external auditors. 7. The audit committee has a protocol for acting on proven unethical and potentially fraudulent conduct. a. 1, 2, 3, and 5. b. 1, 3, 4, and 6. c. 3, 4, 6, and 7. d. 4, 5, 6, and 7. 25. Which of the following methods is used to make detection of persons responsible for money laundering more difficult: a. The use of electronic bank transfers b. The use of cashier?s checks c. The use of commercial checks d. All of the above 26. Which of the following is not a major provision in the Sarbanes-Oxley Act of 2002? a. Creating an independent regulatory framework for the accounting profession. b. Enhancing the quality and transparency of financial reports. c. Revising the process of establishing new financial accounting standards. d. Establishing new protections for corporate whistleblowers. 27. Red flags, symptoms of fraud, often go unnoticed or are not vigorously pursued because: a. there is not supporting evidence of fraud. b. the red flags are not associated with financial statement preparation. c. there are many red flags in day-to-day operations that are not fraud indicators. d. the audit committee is involved in other investigations. 28. Which of the following is an example of invigilation: a. Claire is hired on Tuesday and on Wednesday $1,000 cash is found missing from the office. b. Claire is hired in 20x1 and cash is missing from the office during 20X2; Claire subsequently leaves in 20X3 and cash is no longer missing. c. Dora is hired in January and leaves unexpectedly in March. Later that month, $1,000 cash is missing from the office. d. All of the above 29. The main deterrent for fraud in the corporate environment: a. remains the internal audit team. b. remains the external audit team. c. is the threat of getting caught. d. is the effectiveness of the SEC and FBI investigators. 30. Which of the following is an example of financial statement fraud: a. The sales manager records as a sale shipments of goods on January 1, 20X1, the day after year-end b. The financial controller capitalizes a large amount of expenses that should have been included on the income statement c. The CEO insists that current year bonuses be deferred to the next fiscal year for payment d. Both ?a? and ?b? 31. Based on a number of theories, people obey laws for all of the following reasons except: a. The fear of punishment b. The desire for rewards c. In order to act in a just and moral manner according to society?s standards. d. Due to a duty to act 32. Cyberforensics would generally not involve: a. capture and preservation. b. Identification and extraction. c. operating system identification. d. documentation and case preparation related to digital data. 33. A colleague witnesses the defendant counting a large amount of cash. The defendant is accused of theft. This evidence is: a. Circumstantial and relevant b. Circumstantial and irrelevant c. Direct and relevant d. None of the above 34. The first step to detecting fraud is to: a. build an internal control system. b. establish an audit committee and identify its authority. c. seek out red flag transactions and possible anomalies. d. build an understanding of the organization and the environment in which it operates. 35. The ______ Amendment provides that an individual has the right to an attorney to defend himself and the right to confront witnesses against him. a. Fifth b. Fourth c. Sixth d. Fourteenth 36. Collusion involves: a. Two or more individuals working together to override internal control b. Negating the effect of separation of duties c. At least one high level employee d. Both ?a? and ?b? 37. The perpetrators of white-collar crime today: a. are aware that the FBI thoroughly investigate and document any possible cases due to the attention created by cases such as Enron and WorldCom. b. are aware that the FBI is understaffed and inadequately trained for fraud investigations. c. have a great fear of the FBI for its reputation and tenacity in completion of investigations. d. are fearful of the Securities and Exchange Commission due to its increased power in the prosecution of white-collar crime since passage of the Sarbanes-Oxley Act in 2002. 38. From the statements below select the most correct. a. Prevention and deterrence are typically more costly than attempting to remediate a fraud that has already occurred. b. Fraud deterrence refers to creating environments in which people are prohibited from committing fraud. c. Fraud detection refers to the process of preventing and discovering the presence of fraud. d. Prevention and deterrence are typically more cost beneficial than attempting to remediate a fraud that has already occurred. 39. Journal entries of concern include: a. entries made by accounting personnel. b. entries made by members of senior management. c. routine accrual entries prepared at year-end. d. All of the choices are correct. 40. Which of the following is NOT an example of financial statement fraud: a. Managing the reserves in order to ?smooth? earnings b. Accruing an expense in the current period when it should be recognized in the following period c. Filling an order, billing the customer for the order, and then shipping it to a company owned warehouse d. Both ?a? and ?b? Part 2: (worth total of 17 points) For Part 2, please number your answer sheet from 41 to 50 and provide the letter corresponding to the best answer (eg, 41. A, 42. B, etc.). 41. Cyber-crime involves the use of cell phones. a. True b. False 42. The Sarbanes?Oxley Act (SOX) of 2002 is aimed at accounting staffs, auditing firms, corporate governance, executive management (CEOs and CFOs), officers, and directors. a. True b. False 43. According to Mr. Sam E. Antar (former Crazy Eddie CFO and a convicted felon), too many audit committee members have no formal educational background in accounting and auditing, and no specialized training in fraud detection. a. True b. False 44. Anyone in a public park, parking lot, or mall may be videotaped without violating any laws as long as no audio of the target is recorded. a. True b. False 45. Generally, evidence is admissible in court if it is relevant, its probative value outweighs any prejudicial effects, and it is trustworthy. a. True b. False 46. An independent auditor?s ?adverse? opinion on financial statements indicates the auditors have completed their work and are concerned with the ?going concern? aspects of the audited entity. a. True b. False 47. Andy Jones creates a shell organization from which to buy supplies for his company. This is a method to hide assets. a. True b. False 48. Direct evidence consists of a supervisor?s opinion as to the plaintiff?s mental state at the time of the crime. a. True b. False 49. Earnings management below a threshold value may be judged immaterial. a. True b. False 50. An employee, having authorized access to a work computer, commits fraud while using the computer. This is an example of a computer crime. a. True b. False Part 3: (worth total of 15 points) Please provide a response to the following FIVE (5) discussion questions. 51. Explain the ?fraud triangle? and ?M.I.C.E.? and compare the two in your explanation. 52. What is tone at the top and why is it an important part of ethical behavior in an organization? 53. What common law protections do individuals have during interviews? 54. The statement is frequently made that the financial statements are ?not misleading and are free of material errors, irregularities, and fraud.? What does this statement mean? 55. Explain the difference between mail and wire fraud. Which do you think might be easier to detect? Why?

 

Paper#1520 | Written in 18-Jul-2015

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