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Page 1 of 6

1. One reason employees might be hesitant to use PO boxes in shell company schemes is that some businesses are specially vary of sending checks to vendors that have street addresses only.

True

False

2. Another way to eliminate competition in the solicitation phase of the selection process is to:

Solicit bid from fictitious suppliers

Solicit transaction from fictitious vendors

Solicit bid-splitting from fictitious vendors

None of the above

3. _________ assumes the business will go on indefinitely in the future.

Materiality

Going concern

Cost

Fair value

4. According to SAB 104, for the revenue to be typically considered realized or realizable and earned, which of the following criteria is NOT met:

Persuasive evidence of an arrangement exists

Services has been rendered

Timings have been met

Collectability is reasonably assured

5. The person or persons who have access to __________ are often the targets of unethical

vendors seeking an advantage in the process.

Bid-splitting

Sealed bids

General purchasing

Tailor specifications

6. A typical issue involving material and fraud would be:

Fraudulent statement

Misappropriations

Civil lawsuit

Quality control

7. A technique by which checks are numbered using a new technique that is revealed by a colored highlighter pen or by a bright light held behind the check is called:

Microline numbering

Holographic safety border

Embossed pearlescent numbering

None of the above

8. ___________ is to allow the owner, investors, creditors and others with an interest to know

the appropriate book worth of the business at a particular date.

Equity

Balance sheet

Income statement

Financial record

9. Which of the following search is used for unusually high incidence of returns and allowances scheme?

Allowances by vendors

Disposals of allowances than reorders

Returns and allowances

None of the above

10. The amount of cash on hand in a register may be compared to the amount showing in the register tape in order to detect _______.

Employee theft

Recorded sales

Internal audits

Occupational frauds

Page 2 of 6

11. CORRECT TEXT

_________ is defined as a person who works for the victim organization and who is primary

culprit

12. One final means of concealing a register scheme, as with many kinds of fraud, is to destroy all records of the transaction.

True

False

13. According to Marshall, ______ are probable future economic benefits obtained or

controlled by a particular entity as a result of past transactions or events.

Assets

Liabilities

Credentials

None of above

14. When situational pressures and perceived opportunities are low and personal integrity is high, occupational fraud is much more likely to occur than when the opposite is true.

True

False

15. Larceny is the scheme in which an employee simply takes inventory from the company premises without attempting to conceal it in the books and records.

True

False

16. Physical tampering prevention is a check tampering technique that is used to secure bank assisted controls.

True

False

17. Maintain the presence of a manager or supervisor near the area of the cash register as a deterrent to theft is a prevention for:

Fraudulent statement scheme

Asset misappropriation scheme

Larceny scheme

18. People commit financial statement fraud to:

Conceal false business performances

Preserve personal status/control

Maintain personal income

Stand outside the accounting system

19. Delivery has not occurred or services have not been rendered when:

Until installation and customer testing and acceptance has occurred.

A written order exists but contains a right of return.

Both A & B

Neither A nor B

20. _____________ involves purposeful misreporting of financial information about the

organization that is intended to mislead those who read it.

Fraudulent statement

Corruption

Asset misappropriations

None of above

Page 3 of 6

21. A process by which several bidders conspire to split contracts up and ensure that each gets a certain amount of work is called:

Bid opening

Fictitious Bidding

Bid pooling

Bid log

22. Depreciation is especially applicable when companies try to overvalue their assets and net worth; the lower their depreciation expense, the higher the company’s profits.

True

False

23. Verify supporting documentation on outstanding checks written for a material amount is a test used to conduct for:

Check disbursement

Bank confirmation

Cut-off statements

24. ____________ is a process by which a bookkeeper records all transactions and can adjust

the books.

Journal Entries

Accounting Cycle

Financial statement

None of all

25. The act of an official or fiduciary person who unlawfully and wrongfully uses his station or character to procure some benefit, contrary to duty and rights of others is called:

Conflict of interest

Corruption

Bribery

Overbilling

26. A shell company scheme in which actual goods or services are sold to the victim company is known as:

Maintenance scheme

Allocation scheme

Distribution scheme

Pass-through scheme

27. How many accounts are affected in fraudulent accounting entries and therefore same

number of categories on the financial statement?

One

At least two

More than two

None of above

28. Which of the following is NOT the method for stealing inventory and other assets?

Larceny schemes

Asset requisition and transfer

Purchasing and receiving schemes

Sales & Equipment handling

29. Assets that are long-lived and that differ from property, plant and equipment hat has been purchased outright or acquired under a capital lease are:

Tangible Assets

Intangible Assets

Forced Assets

None of above

30. Bank statement are diligently reviewed to ensure that amounts and signature have not been altered, is an activity for:

Account analysis

Bank reconciliation

Check disbursement controls

Check tampering

Page 4 of 6

31. The behavior profile of employees who are involved in bribery schemes may include:

Gambling habit

Extravagant lifestyle

Drug and/or alcohol addiction

All of the above

32. ________ increase assets and expenses and/or decrease liabilities and/or equity

Journal Entries

Debit

Credit

None of all

33. A voucher is:

a file that includes the purchase order that was send to the vendor, the vendor invoice listing the cost and quantity of items purchased, and the internal receiving reports that verify the purchased items have been delivered.

a figure that includes the sale order that was send to the dealer, the vendor invoice listing the cost and quantity of items sold, and the internal receiving reports that verify the purchased items have been delivered.

a report that includes the purchase order that was send to the vendor, the vendor invoice listing the quality and quantity of items purchased, and the external receiving reports that verify the items have been sold.

a mammogram that includes the purchase order that was send to the purchaser, the purchaser invoice listing the benefits and quantity of items purchased, and the internal receiving reports that verify the purchased items have been sold.

34. If the assets are intentionally purchased by the company but simply misappropriated by the fraudster, this is referring to as:

Inventory larceny scheme

Asset receiving scheme

Fraudulent purchase

Falsify shipping

35. Which are check tempering frauds in which an employee prepares a fraudulent check and submits it usually along with legitimate checks to an authorized maker who signs it without a proper review?

Endorse check scheme

Legitimate check scheme

Payable check scheme

Concealed check scheme

36. Employees with the authority to grant discounts in order to skim revenues may use which authority?

False discounts

Recording a discount on sale procedure

Internal discount sales audits

None of the above

37. Skimming is:

The removal of cash from a victim entity prior to its entry in an accounting system.

The addition of cash from a victim entity prior to its entry in an accounting system.

The removal of cash from a victim entity after its entry in an accounting system.

None of above

38. The principal way to detect omitted credits from books of account is through:

Forced Balance

Trend analysis

Expense account

None of all

39. CORRECT TEXT

___________ allows the fraud examiner to inspect key attributes on a smaller portion (or

sample) of those documents.

40. Which of the following offender types in which people who take the money and run away?

Absconders

Long-term violators

Offender types

None of the above

Page 5 of 6

41. CORRECT TEXT

The _______________ cost method of pricing would carry an asset’s value on the financial

statements as what it would currently cost, considering inflation.

42. The scheme which reduces victim companies to issue fraudulent payments for goods or services that they have not received is called:

Bogus claims

Billing scheme

Reliance billing

Misappropriate claims

43. The most common method for billing scheme is:

Tips

Accident

None of the above

44. CORRECT TEXT

One of the simplest ways to justify unacceptable conduct and avoid guilt feelings is to invent a good reason for ________.

45. Which of the following method is NOT used to detect conflicts of interest?

Tips & Complaints

Review of vendor ownership files

Underbillings of assets

Interviews with purchasing personnel

46. Which check tampering red flag may indicate employees have embezzled cash and charged the embezzlement to expense accounts?

Voided checks

Payable checks

Missing checks

Duplicate checks

47. In physical tampering prevention technique, hidden images can be seen only when the check is held at an angle through:

High-resolution sprays

Holographic safety inks

Watermark backers

Chrome coloring

48. Physical assets including _________ and ________ are the most commonly

misappropriated noncash asset in our study.

Interest & Collusion

Inventory & Equipment

Inventory & Purchase

Sales & Equipment

49. One final means of concealing a register scheme, as with many kinds of fraud, is to destroy all records of the transaction.

True

False

50. __________ can be defined as conduct detrimental to the organization and to the

employee.

Employee deviance

Employee theft

Employee fraud

All of the above

Page 6 of 6

51. The most common method for billing scheme is:

Tips

Accident

None of the above

52. Which check tampering red flag may indicate employees have embezzled cash and charged the embezzlement to expense accounts?

Voided checks

Payable checks

Missing checks

Duplicate checks

53. _________ revenues involve the recording sales of goods or services hat did not occur.

Fictitious or fabricated revenues

Financial revenues

Red flag revenues

Concealed revenues

54. In which phase of competitive bidding process, fraudsters attempt to influence the selection of a contractor by restricting the pool of competitors from whom bids are sought?

Need recognition

Solicitation

False specification

Submission

55. When an incorrect total is carried from the journal to the ledger or from ledger to the financial statements, this method is called:

Forced Balance

Out-of-balance

False balance

None of all

56. The excess credits (or debits) on the income statement are used to decrease (or increase) the equity account.

True

False

57. __________ may be defined as the offering, giving, receiving or soliciting anything of value

to influence an official act.

Corruption

Diverting business to vendors

Bribery

Lacking approval authority

58. The forms that allow noncash assets to be moved from one location in a company to another can be used to facilitate the misappropriation of those assets are called:

Inventory usages

Fake sales

Asset requisition

All of the above

59. Which of the following are used in a short term skimming scheme?

Unrecorded sales, understated sales and theft of incoming checks

Unrecorded sales, understated sales and dual endorsements

False company accounts, understated sales and theft of incoming checks

Understated sales, theft of incoming checks and check-for-currency substitutions

60. A special scheme in which employees know their employer is seeking to purchase a certain asset and take advantage of the situation by purchasing the asset themselves is:

Conflict of interest in sale

Turnaround sale or flip

Unauthorized sale

Written sale of unique assets

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