Forensic Accounting and Fraud Examination, 2nd Edition Test Bank

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Chapter 01 - Introduction to Forensic Accounting and Fraud Examination1-1Chapter 01Introduction to Forensic Accounting and Fraud ExaminationMultiple Choice Questions1. Forensic Accounting is defined as:a. The practice of applying defined financial ratios to investigate acompany’sfinancialhealth.b. The use of law enforcement to subpoena financial records to determine unlawful actions.C. The application of investigative and analytical skills for the purpose of resolving financialissues in a manner that meets standards required by courts of law.d. The investigatory arm of the Securities and Exchange Commission.Difficulty: Easy2. If your actions are the result of misleading, intentional actions or inaction (includingmisleading statements and the omission of relevant information) to gain an advantage, thenyou have committed:a. Perjury.b. Contempt.c. Treason.D. Fraud.Difficulty: Moderate3. Which of the following does a forensic accountant investigate?a. Purchases of Businesses.b. Valuation of divorce assets.c. Calculation of lost profits.D. All of the above.Difficulty: Easy

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Chapter 01 - Introduction to Forensic Accounting and Fraud Examination1-24. Which of the following two are types of auditors?A.External and Internalb. Internal and Forensicc. Forensic and Internationald. External and ForensicDifficulty: Easy5. Forensic accounting can be broken into how many categories?A. Two: Investigative and Litigation.b. Two: Internal and External.c. Three: Investigative, External, Preventative.d. Three: Internal, Litigation, Certified.Difficulty: Moderate6. What is one of the primary differences between a Financial Statement auditor and aForensic Accountant?a. Financial statement auditors are likely to follow leads suggested by immaterial itemswhereas Forensic Accountants often must restrict their efforts to searching for materialmisstatements.B. Forensic Accountants are likely to follow leads suggested by immaterial items whereasfinancial statement auditors often must restrict their efforts to searching for materialmisstatements.c. Forensic Accountants must focus on specific legal areas that produce fraud charges underthe courts of law whereas financial statement auditors focus their attention on the GenerallyAccepted Accounting Principles.d. Forensic Accountants are likely to ask individuals to fix discrepancies found in financialstatements whereas financial statement auditors will fail a corporations financial statementcertification, therefore having repercussions with the SEC.Difficulty: Hard

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Chapter 01 - Introduction to Forensic Accounting and Fraud Examination1-37. Which of the following is not a skill needed by a Forensic Accountant?a. Auditing Skills.b. Criminology.C. Sociology.d. Information Technology.Difficulty: Moderate8. Which of the following events have made the Forensic Accounting industry more popularrecently?a. Corporate Scandals.b. Sarbanes-Oxley Act of 2002.c. Crime Dramas on Television.D. Both a and b.Difficulty: Easy9. Which is one of the areas that the Sarbanes-Oxley Act of 2002 has made CEO's rely onforensic accountants heavily?A.CEO’s must now certify their financial statements.b. CFO's must become qualified as forensic accountants.c. To become a CEO in a public company, their personal financial records must be certifiedby a forensic accountant.d. Both a and b.Difficulty: Moderate10. According to the 2002 Report to the Nation on Occupational Fraud and Abuse, whatpercentage of corporate revenues were lost in that year to fraud?a. 2%.b. 4%.C. 5%.d. 8%.Difficulty: Moderate

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Chapter 01 - Introduction to Forensic Accounting and Fraud Examination1-411. Which of the following types of organizations typically use Forensic Accountants?a. Publicly held corporations.b. Private/non-profit corporations.c. Federal/State Agencies.D. All of the above.Difficulty: Easy12. What is the most recognized fraud credential?A. Certified Fraud Examiner (CFE).b. Certified Public Accountant (CPA).c. American Counsel of Accredited Business Accountants (ACABA).d. Enrolled Agent (EA).Difficulty: Moderate13. What types of organizations offer credentials to forensic accountants?a. Association of Certified Fraud Examiners.b. American College of Forensic Examiners.c. Institute of Business Appraisers.D. All of the above.Difficulty: Easy14. Who was the founder of the Association of Certified fraud Examiners?a. The 187th Congress of the United States.b. President Bill Clinton.C. Joseph Wells.d. All of the above worked together to form the ACFE.Difficulty: Moderate

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Chapter 01 - Introduction to Forensic Accounting and Fraud Examination1-515. Which of the following is NOT a way to become a Certified Fraud Specialist (CFS)?a. Successfully completing a multipart examination that covers the detection, deterrence,investigation, and prosecution of white-collar crime.B. A bachelor's degree in business or ten years of accounting-related experience and pass thetwo parts of the Certified Fraud Specialist examination.c. Completing the ACFS Academy core courses and taking an examination at the end of eachcourse.d. Being grandfathered in by means of submitting information on the experience andeducation.Difficulty: Hard16. What is the mission of the Association of Certified Fraud Specialists (ACFS)?a. To encourage CPAs to report potential areas that a Forensic Accountant should be usedwithin.b. To pre-screen potential Forensic Accountants who would make good FBI agents.C. To encourage its members to offer pro-bono service to the communities in which itsmembers reside.d. All of the above are part of the ACFS's mission.Difficulty: Moderate17. What is a way to become a CFS?a. Complete a multi-part examination that covers the detection, deterrence, investigation, andprosecution of white-collar crime.b. Complete the ACFS Academy core courses and take an examination at the end of eachcourse.c. Be grandfathered in by means of submitting information on the experience and education ofthe candidate.D. All of the above are ways to become a CFS.Difficulty: Moderate

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Chapter 01 - Introduction to Forensic Accounting and Fraud Examination1-618. If you are a CPA and want to become credentialed by the National Association ofCertified Valuation Analysts (NACVA), which credential would you be issued?A. Certified Valuation Analyst.b. Accredited Valuation Analyst.c. Certified Forensic Financial Analyst.d. National Valuation Analyst.Difficulty: Moderate19. If you are experienced in the valuation field and want to become credentialed by theNational Association of Certified Valuation Analysts (NACVA), which credential would yoube issued?a. Certified Valuation Analyst.B. Accredited Valuation Analyst.c. Certified Forensic Financial Analyst.d. National Valuation Analyst.Difficulty: Moderate20. If you are a litigation consultants and want to become credentialed by the NationalAssociation of Certified Valuation Analysts (NACVA), which credential would you beissued?a. Certified Valuation Analyst.b. Accredited Valuation Analyst.C. Certified Forensic Financial Analyst.d. National Valuation Analyst.Difficulty: Moderate21. The National Litigation Support Services Association (NLSSA) allows only one CPAfirm into its membership:A. In each Metropolitan Statistical Area.b. In each Megalopolis.c. Per million residents in the city it resides.d. Each four year presidential cycle.Difficulty: Moderate

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Chapter 01 - Introduction to Forensic Accounting and Fraud Examination1-722. The Institute of Business Appraisers (IBA) supports the valuating of which type ofbusinesses?a. Public Corporations.b. Private Corporations.C. Closely-held Businesses.d. Non-Profit Organizations.Difficulty: Moderate23. The Institute of Business Appraisers offers which certification?a. CPA.B. CBA.c. AICPA.d. EA.Difficulty: Easy24. In which way does the AICPA support Forensic Accountants?a. Through its Forensic Accountants division.B. Through its Business Valuation and Forensic & Litigation Services section.c. Through its credentialing of Forensic Accountants.d. The AICPA does not support Forensic Accountants.Difficulty: Moderate25. What credential does the AICPA offer?A. Accredited in Business Valuation.b. Accredited Business Accountant.c. Forensic Accountant Accreditation.d. Accounting for Forensic and Litigation.Difficulty: Moderate

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Chapter 01 - Introduction to Forensic Accounting and Fraud Examination1-826. How does forensic accounting differs from other types of accounting?a. It is a separate field that has no relation to accounting.b. Forensic Accountants require at least an masters in accounting.C. Forensic Accountants are more likely to be found dissecting these statements and obtainingevidence from other sources.d. General Accountants must hold to subjective evidence whereas forensic accountants mustuse objective evidence.Difficulty: Moderate27. What is Defalcation?a. The ruling of a judge to restore the assets wrongfully taken to their rightful owner.b. The act of conspiring to commit perjury.c. The process of finding stolen assets through financial statement analysis.D. The appropriation of assets for the benefit of those who do not rightfully deserve them.Difficulty: Moderate28. What are litigation services?a. It is another term for a law firm.b. It is a specialized branch of forensic accounting.C. It is the service provided to the courts to determine an equitable judgment.d. It is an out of court settlement service for corporations.Difficulty: Moderate29. You are attempting to get two parties to compromise on a situation. This means that youare engaged in:a. Litigation.B. Mediation.c. Plea Bargaining.d. Grand Jury testimony.Difficulty: Easy

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Chapter 01 - Introduction to Forensic Accounting and Fraud Examination1-930. Misrepresentation is the act of presenting oneself in a manner that does not agree withreality. What does "presenting" mean?A. Actions, statements, or omissions.b. Words, court judgments or opinions.c. Appearance, style or function.d. Both a and b.Difficulty: ModerateTrue / False Questions31. Forensic Accounting is a part of Fraud investigation.FALSEDifficulty: Moderate32. Forensic Accounting does not greatly differ from traditional accounting.FALSEDifficulty: Easy33. Some forensic accountants perform investigations much like financial privateinvestigators.TRUEDifficulty: Moderate34. Internal Auditors are individuals from outside CPA firms that come into your business toperform an audit.FALSEDifficulty: Easy

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Chapter 01 - Introduction to Forensic Accounting and Fraud Examination1-1035. Investigative services that may or may not lead to courtroom testimony.TRUEDifficulty: Moderate36. Errors are always an indication of intentional fraud.FALSEDifficulty: Moderate37. Due to the Sarbanes-Oxley Act of 2002, CEO's no longer have to sign their financialstatements.FALSEDifficulty: Easy38. Governmental agencies never use forensic accountants.FALSEDifficulty: Easy39. To date, there are only two forensic accounting organizations in the world.FALSEDifficulty: Moderate40. It is possible to hold credentials as a forensic accountant.TRUEDifficulty: Easy

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Chapter 01 - Introduction to Forensic Accounting and Fraud Examination1-11Essay Questions41. Describe how a forensic accountant would employ his or her skills?Forensic accounting is the application of investigative and analytical skills for the purpose ofresolving financial issues in a manner that meets standards required by courts of law. Noticethat forensic accounting is not limited to the use of financial investigations that result in legalprosecution; the investigation and analysis must, however, meet the standards required in thecourt of law that has jurisdiction.Difficulty: Moderate42. Compare and contrast the usage of internal versus external auditors.Internal auditing is the process by which a company's operations are verified by employees ofthe company known as internal auditors. Internal auditors may also be involved in collectingand evaluating information to assist in determining whether operations should be changed.Conversely, External auditors are not employees of the company; they are auditors (licensedby the state in which they practice who have passed the Certified Public Accountantexamination or, if a Chartered Accountants, have passed the Chartered Accountantexamination and are licensed by the country in which they practice) hired to determinewhether the financial statements of the company fairly present, in all material respects,financial position, results of operations, and cash flows in accordance with specified criteria(usually generally accepted accounting principles).Difficulty: Moderate43. How is defalcation different from misrepresentation?The appropriation of assets for the benefit of those who do not rightfully deserve them,whereas the act of presenting oneself in a manner that does not agree with reality.Difficulty: Hard

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Chapter 01 - Introduction to Forensic Accounting and Fraud Examination1-1244. What are some of the special skills that a forensic accountant might use in their trade?Forensic accountants apply special skills in accounting, auditing, finance, quantitativemethods, certain areas of the law, research, and investigative skills to collect, analyze, andevaluate evidential matter and to interpret and communicate findings.Difficulty: Moderate45. What are some of the areas a forensic accountant should be knowledgeable in?Auditing, Investigative, Criminology, Accounting, Legal, Information technology (IT) andCommunication.Difficulty: Moderate46. In what sectors of our economy can forensic accountants find work?Forensic accountants can be employed in all types of businesses including: Public/privatecorporations, closely held businesses, non-profits and Federal, State, County and Localgovernments.Difficulty: Easy47. Even if a case does not go to court, a forensic accountant might be called upon to assistduring what two types of situations (define both)?Mediation and arbitration. Mediation is assisting parties with differing perspectives to arriveat a compromise. Arbitration is a hearing and deciding a case that involves parties that havetaken different positions.Difficulty: Hard

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Chapter 01 - Introduction to Forensic Accounting and Fraud Examination1-1348. Name some of the organizations that support forensic accounting:The Association of Certified Fraud Examiners, the American College of Forensic Examiners,the Association of Certified Fraud Specialists, the National Association of Certified ValuationAnalysts, the National Litigation Support Services Association, the Institute of BusinessAppraisers, and the American Institute of Certified Public Accountants.Difficulty: Easy49. What does credentialing mean?Some of the organizations that support forensic accounting will evaluate the forensicaccountant’sknowledge and experience based upon education, time in the field and writtenexaminations. These organizations will then issue a credential based upon these criteria. Thisis similar to the CPA credential.Difficulty: Moderate50. What was one of the biggest changes in the SOX of 2002 that increased the usage offorensic accountants?CEO's now had to personally sign the financial statements and could personally be held liablefor any fraud within those statements.Difficulty: Easy

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Chapter 02 - The Forensic Accounting Legal Environment2-1Chapter 02The Forensic Accounting Legal EnvironmentMultiple Choice Questions1. In most cases, the penalties of monetary damages or equitable relief are awarded in whichtype of case?A. Civil.b. Criminal.c. Grand Jury.d. Disposition.Difficulty: Easy2. Whom does the burden of proof fall upon?a. Defense.B. Plaintiff.c. Jury.d. Investigators.Difficulty: Easy3. The burden of proof must be met to satisfy the judge or jury in which of the following typesof trials?a. Civil.B. Criminal.c. Both a and b.d. Trails involving monetary damages.Difficulty: Moderate

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Chapter 02 - The Forensic Accounting Legal Environment2-24. State Constitutional laws are considered supreme laws unless:a. The burden of proof is not meet.b. There are local laws that are violated.c. The case is a criminal case.D. The State laws are in conflict with the U.S. Constitution.Difficulty: Moderate5. The Bill of Rights are:A. The first 10 Amendments to the U.S. Constitution.b. The Declaration of Independence.c. The 10 Commandments.d. The rules of conduct for the courtroom.Difficulty: Easy6. If a decision from a U.S. District Court is to be appealed, it will be heard in the:a. U.S. Supreme Court.b. State Supreme Court.C. U.S. Circuit Courts of Appeal.d. State Circuit Courts of Appeal.Difficulty: Moderate7. Who has the sole discretion to bring charges in any case?a. Investigator.b. Circuit Court.c. Judge.D. District Attorney.Difficulty: Easy

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Chapter 02 - The Forensic Accounting Legal Environment2-38. During arraignment, the accused must be presented with a written copy of:A. The charges.b. The evidence against them.c. Bail.d. The jury.Difficulty: Moderate9. If a motion in limine is made, the judge may:a. Excuse some jury members.B. Exclude some evidence.c. Modify bail conditions.d. Provide a lawyer to the defendant.Difficulty: Moderate10. Hearsay evidence may be used during:a. If the defendant is pleading guilty.b. During the trail if the defendant waives their right to hearsay evidence.c. During a preliminary hearing.D. None of the above.Difficulty: Moderate11. If a client turns over evidence to their attorney with the purpose of attempting to make it aprivileged communication, a judge may:A. Allow the evidence into the case.b. Never allow the evidence into the case.c. Call a mis-trial.d. Dismiss the attorney.Difficulty: Hard

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Chapter 02 - The Forensic Accounting Legal Environment2-412. Burglary, Embezzlement, Larceny, Robbery, Fraud and Extortion are which types ofcrimes?a. Federal Criminal Acts.b. State Criminal Acts.c. Constitutional Violations.D. Common Law Crimes.Difficulty: Moderate13. The difference between civil and criminal law violations is that criminal cases willinvolve:A. The violation of a Statute.b. The violation of the U.S. Constitution.c. The use of an attorney.d. Plea agreements.Difficulty: Easy14. The U.S. Constitution contains how many amendments?a. 12.b. 14.c. 24.D. 27.Difficulty: Hard15. Where are the Federal statutory laws set forth?a. U.S. Constitution.b. Laws of Government.C. United States Code.d. U.S. Circuit Court.Difficulty: Moderate

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Chapter 02 - The Forensic Accounting Legal Environment2-516. District Attorneys are also known as:A. Prosecutors.b. Defendants.c. Jury Foremen.d. Court Recorders.Difficulty: Easy17. If an employee is determined to have been under pressure to commit the crime, had theopportunity to commit the crime and has complete rationalization for committing the crime,then the employee is caught in a(n):a. Evidentiary motion.b. Sworn statement.C. Fraud triangle.d. Fruit of the poisonous tree.Difficulty: Moderate18. A forensic accountant can become involved in financial crimes investigation by being:a. An in-house accountant.b. External auditor.c. External consultant.D. All of the above.Difficulty: Moderate19. If you are chosen to serve on a Grand Jury, you will serve:a. For one trial.B. For a specific period of time.c. Until you are released by the judge.d. Until you are selected for a trial jury.Difficulty: Moderate

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Chapter 02 - The Forensic Accounting Legal Environment2-620. If evidence in a trial is deemed to be gained as a Fruit of a Poisonous Tree, it means that:A. The evidence was gained via a defective search warrant.b. The evidence was provided by someone who wanted the defendant to be found guilty.c. The custody chain for the evidence has been broken.d. The evidence was planted.Difficulty: Moderate21. To arrest a suspect, law enforcement must have:a. Indisputable evidence that the person is guilty.b. A search warrant.C. Probable cause.d. DNA evidence.Difficulty: Moderate22. If issued a Citation, a person must:a. Report for incarceration.B. Submit to the booking procedure within several days after the citation.c. Sign a confession.d. Provide evidence that they are not guilty.Difficulty: Easy23. The RICO provides a basis for which of the following:a. Control over organized gambling.b. Federal Witness Security Program.c. Forfeiture of assets used to commit crimes.D. All of the above.Difficulty: Moderate

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Chapter 02 - The Forensic Accounting Legal Environment2-724. The Foreign Corrupt Practices Act is applicable to whom?a. United States Congressmen.b. U.S. Corporations who do businesses in other country.C. Any corporation.d. All of the above.Difficulty: Hard25. The Sarbanes-Oxley (SOX) Act of 2002 provides detailed updates to and modernizationof:a. The United States Code.b. The United States Constitution.c. The Federal Communications Commission.D. The Securities and Exchange Act of 1934.Difficulty: Moderate26. The first major computer crimes act was:a. The Sarbanes-Oxley (SOX) Act of 2002.B. Computer Fraud and Abuse Act.c. The Cyber Intrusion Detection Act of 1996.d. Computer Detection Infiltration Act.Difficulty: Hard27. If two or more people agree to commit a crime, with even the smallest amount ofcoordination, they have committed a:A. Conspiracy.b. Robbery.c. Burglary.d. Fraud.Difficulty: Easy

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Chapter 02 - The Forensic Accounting Legal Environment2-828. Attorney's may ask leading questions:a. On direct examination but not cross examination.B. On cross examination but not direct examination.c. On both direct and cross examination.d. On neither direct nor cross examination.Difficulty: Hard29. If a prosecutor and defense attorney are exchanging witness statements and otherevidence, they are participating in:a. Fraud.b. Conspiracy.c. Voir dire.D. Discovery.Difficulty: Moderate30. Double Jeopardy is when:a. You can be tried for the same crime in both Federal and State courts.b. You cannot be tried in the same court for the same crime once the trial begins.c. You cannot be tried for the same crime in the same court if the judge dismisses the case.D. All of the above are true.Difficulty: ModerateTrue / False Questions31. Civil crimes always involve police, prosecutors and courts.FALSEDifficulty: Moderate

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Chapter 02 - The Forensic Accounting Legal Environment2-932. The first 10 Amendments are the primary foundation to the United States Code.FALSEDifficulty: Easy33. The most important U.S. Code to Forensic Accountants is Title 18.TRUEDifficulty: Moderate34. The Supreme Court must hear every case of appeal sent from the Circuit Courts.FALSEDifficulty: Moderate35. There are many ways for a forensic accountant to become involved in a financial-crimesinvestigation, such as in the capacity of in-house accountant, as an external auditor, or as anoutside consultant.TRUEDifficulty: Easy36. The three elements of the Fraud Triangle are Pressure, Opportunity, and Rationalization.TRUEDifficulty: Easy37. Search Warrants are the same as Affidavits.FALSEDifficulty: Easy

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Chapter 02 - The Forensic Accounting Legal Environment2-1038. Plea Bargains may only take place prior to a trial beginning.FALSEDifficulty: Easy39. A Motions in Limine a request from the defendant to exclude some evidence that may beintroduced during the trial.TRUEDifficulty: Moderate40.If a witness’s testimony is damaged upon cross examination, the defense may ask for a re-direct examination.TRUEDifficulty: ModerateEssay Questions41. Describe the differences between a bench trial and a trial by jury?A bench trial is a trial where the judge decided guilt or innocence. A trial by jury is where 12members of the jury decide guilt or innocence.Difficulty: Easy

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Chapter 02 - The Forensic Accounting Legal Environment2-1142. Explain the construction of the United States Constitution and specifically describe thefourth article and the concepts it recognizes?The U.S. Constitution is consists of 7 articles and 27 amendments. The first 3 articles definethe 3 major branches of government: the executive, judicial, and legislative branches. Thefourth article defines the concepts of "full faith and credit" and "privileges and immunities".The full faith and credit concept requires that states "recognize" the public acts, records, andjudicial proceedings of other states. The privileges and immunities concept more or lessrequires states to treat the citizens from other states the same as their own. For example, itwould be unconstitutional for California to forbid citizens of New York from using its publicbeaches.Difficulty: Hard43. If a trial will be held in the federal court system, and subsequently appealed, explain thetypes and names of the courts your case will be heard in.U.S. District Courts, of which there are 100 districts, some with multiple court houses, thenthe case would be appealed to a U.S. Circuit Court of Appeal, of which there are 11 and twoD.C District Courts, then the case would go to the U.S. Supreme Court, which only hearscases that it agrees to review.Difficulty: Moderate44. Who are District Attorneys and what is their function within the court system?District Attorneys are also referred to as Prosecutors. They are the plaintiff in the cases andhave sole discression as to charges being made against a defendant or not.Difficulty: Easy

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Chapter 02 - The Forensic Accounting Legal Environment2-1245. Describe how working papers can be an aid to the forensic accountant?Forensic accountants can use working papers to help ‘lock in' the stories of bookkeepers andaccountants within a company that is being investigated and keep a record of what hasoccurred in the financial systems of that company.Difficulty: Moderate46. Prior to a trial, the prosecution and defense may be involved in plea bargains. Explain howthis process works?Prosecution will typically offer a defendant a reduced sentence for pleading guilty orproviding evidence toward implicating others in this or other crimes. It is estimated that 90%of all cases are ‘pleaded out’.Difficulty: Moderate47. Explain the Personal Knowledge Rule and how expert witnesses are exempt from it.The personal knowledge rule is that witnesses can only testify to things that they personallyobserve with one or more of their own senses. Expert witnesses are exempt from the personalknowledge rule and are allowed to draw conclusions based upon evidence and facts presentedto them.Difficulty: Moderate48. When are communications considered privileged?Privileged communications are typically between professionals and their clients such asattorney-client, spouse-spouse, doctor-patient, psychoanalysts-patient, clergy-congregation,and accountant-client in certain tax matters.Difficulty: Easy

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Chapter 02 - The Forensic Accounting Legal Environment2-1349. Describe some common law crimes.Larceny, Burglary, Conspiracy, Embezzlement, Fraud (False Pretenses), Robbery, Extortion,Arson, Solicitation, Aiding and Abetting (and the proper definitions of each of these)Difficulty: Moderate50. Compare and contrast 18 USC 96: Racketeer Influenced Corrupt Organizations (RICO),15 USC 78dd: Foreign Corrupt Practices Act (FCPA) of 1977 and The Sarbanes-Oxley(SOX) Act of 2002.The answer will contain some basic parameters that the codes/acts contain and describe howeach of them is designed to cover illegal activities that occur in differing circumstances orindustries.Difficulty: Hard

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Chapter 09 - Fraud Examination Evidence I: Physical, Documentary, and Observational Evidence9-1Chapter 09Fraud Examination Evidence I: Physical, Documentary, and ObservationalEvidenceMultiple Choice Questions1. Evidence includes:a. Physical objectsb. Documentsc. ObservationsD. All of the aboveDifficulty: Easy2. If evidence is tangible, it is said to be _______ evidence.a. Documentedb. HeresyC. Physicald. ForgedDifficulty: Moderate3. Which of the following would be a violation of the chain of custody?a. Locking documents in a safe that only the investigator has the combination to.B. Mailing original documents to another party without proof of receipt.c. Signing over original documents to legal counsel.d. Documenting the placing of items in a case file for storage.Difficulty: Moderate4. How many ways is documentary evidence collected?A. 4b. 3c. 2d. 1Difficulty: Easy

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Chapter 09 - Fraud Examination Evidence I: Physical, Documentary, and Observational Evidence9-25. Two common approaches to using ratio analysis are:a. Internal and external.B. Horizontal and vertical.c. Formal and informal.d. Industry and general.Difficulty: Moderate6. The general principle of Benford's Law is that:a. If fraud exists, the difference between horizontal analysis figures will be divisible by 9.b. Ratios will be increased or decreased by one digit if fraud exists.C. The likelihood that numbers 1, 2, 3, 4, 5, 6, 7, 8, and 9 will appear as the first digit innumbers occurring in a random data set conforms to a predictable pattern.d. The likelihood that numbers 2, 4, 6, 8 and 10 will appear as the first digit in numbersoccurring in a random data sets conforms to a predictable pattern.Difficulty: Easy7. Once financial statement fraud is suspected, how should the fraud investigator proceed?a. Call the district attorney to begin criminal proceedings.B. Determine whether the financial statements agree with the general ledger balances.c. Perform a Benford's Law test.d. Interview the accounting department staff.Difficulty: Moderate

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Chapter 09 - Fraud Examination Evidence I: Physical, Documentary, and Observational Evidence9-38. If documents are contested because one or more persons do not believe they are authentic,they are referred to as:a. Forensic Evidence.B. Questioned Documents.c. Altered Documents.d. Fraud trigger points.Difficulty: Easy9. Alterations of documents might include:a. Added signatures after the document was created.b. Removal of letters or numbers on a document.c. Symbols that have been added or removed.D. All of the above.Difficulty: Easy10. When businesses or persons obtain mortgages for things other than real estate, these arecalled:a. LeinsB. Chattel Mortgagesc. Collateral Loansd. Uncollateralized LoansDifficulty: Easy11. Which of the following type of records can typically only be access by law enforcement?a. Commercial Databasesb. Motor Vehicle Identification NumberC. Dealership vehicle recordsd. UCC FilingsDifficulty: Moderate

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Chapter 09 - Fraud Examination Evidence I: Physical, Documentary, and Observational Evidence9-412. If the fraud investigator is not an employee of the IRS, or a member of a federal agencythat can obtain tax records via subpoena, how much he obtain the information?a. Through a bench warrant.B. Through discovery or voluntary consent of the tax payer.c. Through a subpoena issued by a Grand Jury.d. All of the aboveDifficulty: Moderate13. When did the Social Security Administration begin tracking the SSDI?a. 1984B. 1962c. 1944d. 1876Difficulty: Easy14. Databases, court records and real estate records are all considered:A. Sources of information for an investigation.b. Worthless in an investigation.c. Forensic data collections.d. Areas of hiding for individuals who wish to commit fraud.Difficulty: Moderate15. How can UCC filings assist an investigator?a. They can see what real estate a company purchased.b. UCC filings will show when financial statements were submitted to the SEC.c. UCC filings will only show international real estate transaction filings.D. To determine whether mortgages on items other than real estate exist.Difficulty: Moderate16. Where are most restricted databases maintained in each state?a. At the public safety headquarters.B. At the secretary of state's office.c. At the state information management computer backup location.d. Within the department of vital statistics office.Difficulty: Easy

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