Forensic Accounting 1;1. Research has shown that the relationship between eye contact and deception;a. is nonexistent;b. is positive in that eye contact increases as the level of deception rises;c. is negative in that eye contact decreases as the level of deception increases;d. depends on the interviewer-interviewee relationship;e. none of the above;2. 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;e. none of the above;3. Increased cognitive load can result in;a. decreased speech disturbances and shorter pauses before giving an answer;b. decreased speech disturbances and longer pauses before giving an answer;c. increased speech disturbances and shorter pauses before giving an answer;d. increased speech disturbances and longer pauses before giving an answer;e. none of the above;4. 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;e. none of the above;5. People believe that deception is;a. associated with an increase in movements and actually is associated with the same;b. associated with an increase in movements and actually is related to a decrease in movements;c. associated with a decrease in movements and actually is related to a decrease in movements;d. associated with a decrease in movements and actually is related to an increase in movements;e. none of the above;6. Interviewing is;a. the systematic questioning of individuals who have knowledge of events, people, and evidence involved in a case under investigation;b. the process of answering questions from an interviewer for the purpose of finding a job;c. by far the most common technique used in investigating and resolving fraud;d. both a and c;e. none of the above;7. The cognitive load framework emphasizes that;a. deception is a cognitively complex task and it is cognitively easier to fabricate a plausible and convincing lie consistent with everything the observer knows;b. deception is a cognitively easy task and it is cognitively easier to fabricate a plausible and convincing lie consistent with everything the observer knows;c. deception is a cognitively easy task and it is cognitively more difficult to fabricate a plausible and convincing lie consistent with everything the observer knows;d. deception is a cognitively complex task and it is cognitively more difficult to fabricate a plausible and convincing lie consistent with everything the observer knows;e. none of the above;8. Which of the following is a characteristic of a good interview?;a. make the interview as concise as possible;b. the interviewer should announce his or her bias at the outset, because the interviewee will;cooperate better when the interviewee knows the type of information the interviewer is seeking;c. friendly interviewees appear very helpful, but they may have hidden motives and may provide;bad information;d. it is important to schedule interviews ahead of time, especially if you are planning to interview;a potentially hostile interviewee;9. The expert interviewer achieves more success in interviews by;a. instilling fear and intimidation in the interviewee;b. creating a comfortable environment by showing cordiality and respect for the interviewee;c. being willing to explain the process and purpose of the interview and seeking the interviewee?s commitment to full disclosure;d. b and c;e. none of the above;10. Experts agree that if when asked a question the hands gesture away from the body;a. the answer is probably false;b. the answer may be either false or true;c. the answer is probably true;d. the interviewee is uncertain of the correct answer;e. none of the above;11. An interviewer can infer from the subject?s posture the following;a. the willingness to deceive, the level of confidence and emotional involvement;b. the level of emotional involvement, interest and confidence and willingness to cooperate;c. level of interest and confidence and willingness to cooperate;d. the willingness to deceive and the level of emotional involvement;e. none of the above;12. Professionals seem to perform poorly in detecting lies via examining nonverbal behavior because;a. they do not pay sufficient attention to facial expressions and hand movements of interviewees;b. they do not know where to look and have false beliefs about which behaviors might be clues to deception;c. they do not pay sufficient attention to facial expressions and have false beliefs about which behaviors might be clues to deception;d. they do not know where to look and do not pay sufficient attention to facial expressions;13 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 statements, 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;e. none of the above;14. 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 amount of losses;d. approximate date of the offense;e. none of the above;15. 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;e. none of the above;16. 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 approximation of the amount stolen;d. the net worth method is useful for obtaining confessions from suspects during interviews or;interrogations;e. none of the above.;17. Based upon the following facts, determine a person?s preliminary understatement of income;Schedule C receipts?????????????. $280,000;Schedule C expenses????????????. 135,000;Personal living expenses??????????? 65,000;a. an overstatement;b. $80,000;c. $135,000;d. $280,000;e. None of the above;18. Which statement is false?;a. The source and application of funds technique is a variation of the net worth method that shows increases and decreases in a taxpayer?s accounts at the end of the year.;b. Often the IRS agent will use the expenditure approach when a taxpayer is spending income lavishly rather than purchasing assets or investments.;c. The expenditure approach is similar to the Cash T, except that the data used are the increases and decreases in the taxpayer?s accounts.;d. The source and application of funds method is a variation of the bank deposit method.;e. None of the above.;19. Which statement is true?;a. Beauty and barber shops are cash intensive businesses.;b. Where the application of funds is less than the sources, a taxpayer is deemed to have an understatement of income.;c. Where the application of funds is greater than the sources, a person is deemed to have an overstatement of income.;d. The Cash T is appropriate for persons where a substantial amount of income is deposited in banks and the expenditures are proportionate to the income reported.;e. None of the above is true.;20. Which statement is false?;a. The net worth analysis may be used when searching for hidden income in drug trafficking and insurance fraud situations.;b. Whereas the focus of the net worth method is on the year-end balances as well as other assets and liabilities, the bank deposit technique looks at the funds deposited during the year.;c. The bank deposit method attempts to reconstruct gross taxable receipts rather than adjusted taxable income.;d. The bank deposit method is appropriate when most of the income is deposited in banks and most of the expenses are paid by checks.;e. All of the above are true.;21. In computing income under the net worth method, the following facts are found;Total assets $1,600,000;Total liabilities 825,000;Nondeductible expenses 120,000;Net worth at beginning of year 560,000;Adjusted gross income is;a. $170,000;b. 215,000;c. 290,000;d. 335,000;e. None of the above.;22. Which of the following is a step in locating offshore assets?;a. determine if a subject traveled overseas;b. locate the subject?s travel agency;c. identify the means employed to move cash offshore;d. all of the above;e. none of the above;23. Which of the following are specialized bank accounts, in connection with wire transfer services, that invite misuse by sophisticated and professional money launderers?;a. basic checking accounts;b. threshold accounts;c. cupo accounts;d. b and c;e. none of the above;24. The government can seize property under the following methods except?;a. initiating a forfeiture procedure under the Federal Rules of Criminal Procedure;b. beginning a summary or administrative procedure under federal customs law;c. seizing the property if it is in the possession of a known felon;d. none of the above;25. The most difficult aspect in the pursuit of hidden assets is;a. asset recovery;b. tracing;c. securing cooperation of foreign governments;d. b and c;e. none of the above;26. One important initial goal in asset tracing for the professional is;a. to establish a cooperative relationship with the foreign government involved;b. to attach any assets hidden offshore;c. to establish some paper trail that evidences communication, either initially or ongoing, with the holder of the assets;d. a and b;e. none of the above;27. One method of identifying the foreign holder of assets is;a. by checking a person?s Rolodex and/or calendar;b. by checking with U.S. Customs;c. by checking passport stamps;d. by examining travel documents and not necessarily just the passport;e. none of the above;28. The proceeding in criminal forfeiture is;a. against a person being charged with a crime (in personam);b. against an item of property being charged with a crime (in rem);c. neither in personam nor in rem;d. such that no property is forfeited unless it is proved by a preponderance of the evidence that the property was involved in the crime;29. In civil forfeiture, once probable cause is established, the burden of proof;a. shifts to the property owner to show beyond a reasonable doubt that the property is not related to the crime;b. shifts to the property owner to show by a preponderance of the evidence that the property is not related to the crime;c. belongs to the government to show beyond a reasonable doubt that the property is implicated in the crime;d. belongs to the government by a preponderance of the evidence that the property is implicated in the crime;e. none of the above;30. Which of the following statements is true?;a. it matters whether the owner of property was involved in the crime for purposes of civil forfeiture;b. the owner does not even have to be accused or even suspected of involvement in the criminal activity for his property to be forfeited;c. it matters whether the owner of property was even aware that criminal activity was taking place;d. even if the owner can prove the object?s innocence, the government still has a right to the property that relates back to the time of its illegal use;e. none of the above;31. Fraudsters and other criminals place as much importance and invest as much time, money, and effort into the manner in which their property is laundered and then used as they do in the crimes that generate the property because;a. they must achieve a disconnect between themselves and the proceeds of their crime;b. they must achieve a disconnect between the proceeds of the crime and the form in which they derive their benefits;c. a and b;d. none of the above;32. A critical element in the formation of a shell company to be used for illicit purposes is;a. the use of an LLC so bearer shares may be employed for ownership purposes;b. the use of a nominee to hide the identity of the true beneficial owner(s);c. the lack of transparency regarding ownership;d. none of the above;33. Which of the following is not a method used to move funds offshore?;a. wire transfers;b. professional intermediaries;c. personal checks;d. all of the above;e. none of the above;34. The difference between an offshore bank and a shell bank is that;a. the shell bank has a physical presence in the country in which it is licensed whereas the offshore bank does not;b. the offshore bank specifically cannot carry on business in the jurisdiction in which it is licensed whereas such restrictions do not specifically affect shell banks;c. only shell banks use correspondent services;d. U.S. banks have more access to client account information in a shell bank than in an offshore bank;e. none of the above;35. Various ways to obscure ownership and activity of an LLC are;a. ownership by one or more other business entities (e.g., a trust);b. creation of layers of ownership;c. formation of an LLC serving as a member or manager of another LLC in a jurisdiction offering little transparency;d. a and b;e. a, b, and c;36. Creditors are not limited to asking questions or requesting documents from the debtor. Thgey can also subpoena records and there is little the debtor can do to stop these attempts. Many times the most valuable source of information for a creditor is;a. bank account statements;b. telephone records unless a prepaid calling card has been used;c. depositions of the debtor and his/her accountant;d. written interrogatories sent to the debtor;e. none of the above;37. The purpose of money laundering is to;a. take illegitimate funds and make them look like they were earned from legitimate business activities;b. purposefully transfer restricted grant monies into discretionary accounts through confutation;c. secretly take suitcases full of money from one country to another;d. only a and b;Questions 38 through 42 are based on the following information;Stanley Moose;Computation of Unreported Taxable income;Assets 12-31-02 12-31-03 12-31-04 12-31-05;Cash on hand 1,000.00 1,000.00 1,000.00 1,000.00;Cash in banks 15,000.00 15,000.00 15,000.00 15,000.00;Checking accts 2,556.79 167.56 356.06 264.57;Bonds 91,897.58 122,770.04 123,001.00 132,601.17;Stocks & Notes receivable 2,983.72 1,983.72 983.72 13,487.50;Real Estate 10,386.92 10,386.92 10,386.92 61,886.92;Business Equip. 5,700.00 5,700.00 5,700.00 5,700.00;Autos 10,428.49 5,950.00 7,854.70 9,554.70;Total Assets 139,953.50 162,958.24 164,282.40 239,494.86;Liabilities;Mortgages & Loans Payable 402.88 49.93 -0- 22,260.00;Taxes Payable 7,059.11 5,105.90 4,089.00 6,040.85;Total Liabilities 7,461.99 5,155.83 4,089.00 28,300.85;Net Worth 132,491.51 157,802.41 160,193.40 211,194.01;03 04 05;Beginning Net Worth 132,491.51 157,802.41 160,193.40;Stanley Moose? living expenses were 12,646.61, 22,303.34, and 16,283.63 in 2003, 2004, and 2005, respectively. His tax deductions were 2,394.66, 2,461.99, and 3,738.75 for 2003, 2004, and 2005, respectively. His income tax exemptions were 2400, 2400, and 2400 for 2003, 2004, and 2005, respectively. Mr. Moose? reported taxable incomes were 7,527.33, 18,765.49, and 9,610.33 for 2003, 2004, and 2005, respectively.;38. Stanley Moose? corrected taxable income for 2003 per the net worth method is;a. $33,162.85;b. $ 7,851.95;c. $ 7,527.33;d. none of the above;39. Stanley Moose? unreported taxable income for 2003 is;a. $ -0-;b. $324.62;c. $25,635.52;D. It cannot be determined;40. Stanley Moose? unreported taxable income for 2005 is;a. $61,145.49;b. $51,000.61;c. It cannot be determined;d. $51,535.16;41. Stanley Moose? unreported taxable income for 2004 is;a. $2,390.99;b. $18,765.49;c. -0-;d. It cannot be determined;e. None of the above;42. Stanley Moose? change in net worth for 2005 is;a. $2,390.00;b. $51,000.61;c. $75,212.46;d. None of the above;Part II. Please analyze the fact pattern below and complete the required work.;1. Bardwell is a privately owned incorporated business that operates a garage which repairs and services motor vehicles. Most customers are required to pay cash or check on collecting their vehicle. Credit accounts are available to business customers. These customers sign the invoice on collection of the vehicle and their business is billed monthly. Separate series of prenumbered invoices are drawn up by the foreman for cash sales and for credit sales. All customer accounts are maintained by the receptionist. His duties include the following;Cash Sales;--Collect cash or checks from customers on collecting their vehicle;--At the end of the day, check the numerical sequence of cash sale invoices, add the sales total and agree the total to the amount of cash and checks received;--Record the total cash sales in the cash receipts book;Credit Sales;--Obtain the customer?s signature on the invoice copy of business account customers;--Enter the invoices in numerical sequence in the sales journal and post the customer?s account in the A/R ledger;--Send monthly statements to credit account customers and follow up overdue accounts;--List the balances on the A/R ledger at the end of the month and reconcile the total with the control account in the G/L;Cash Receipts;--Open the mail, extract checks from credit account customers, record them in the case receipts book, and post the A/R ledger;--Make up the day?s banking cash and checks from both cash and credit sales, prepare the deposit slip and bank the cash and checks;All other accounting duties are the responsibility of two further accounts clerks and all are subject to supervision by the garage manager.;Required;As a member of the audit staff of the company?s external auditors, you visit the garage and make a count of cash on hand. You subsequently compare details of unbanked cash receipts that you counted with the entry in the cash receipts book for that date. Although the total in the cash receipts book is the same, the amount of banknotes and coins is less and there is a check from a business customer that you did not record.;(1) Explain the procedures to be followed in making a cash count for audit purposes.;(2) Explain the irregularity that the discrepancy between cash count and cash receipts book might lead you to suspect, and describe how you would investigate the discrepancy.
Paper#28886 | Written in 18-Jul-2015Price : $62