ACCT562 2022 April Quizzes Latest (Full)

ACCT562 Auditing - An Operational and Internal Perspective Including Fraud Examination

Week 1 Quiz  

Question 1(TCO A) Required traits of a good operational reviewer include:

  Foreign language skills

  Advanced programming knowledge

  Management experience

  None of the above

Question 2(TCO A) _____ and converting cash allows a business to survive.

  Customer service

  Debt management

  Employee satisfaction

  None of the above

Question 3(TCO A) Operational review phases include all EXCEPT the following:

  Reporting

  Field Work

  Planning

 

  Shareholder letter

Question 4(TCO A) The E of the Three E's pertaining to obtaining RESULTS of operations is:

  Effectiveness

  Economy

  Efficiency

  Economics

Question 5(TCO F) Which of the following is NOT a part of the fraud theory approach?

  Analyze available data.

  Develop what-if scenarios.

  Identify who committed the fraud.

  Refine the hypothesis.

Question 6(TCO F) Which of the following is NOT one of the legs of the Fraud Triangle?

  Situational environment

  Perceived non-shareable financial need

  Perceived opportunity

  Rationalization

Question 7(TCO F) Research in the Hollinger-Clark study suggests that the best way to deter employee theft is by:

  Increasing sanctions imposed on occupational fraudsters

  Increasing the perception of detection

  Strengthening internal controls

  Communicating the organization’s fraud policies to employees

Question 8(TCO F) In the Fraud Tree, asset misappropriations are broken down into cash and non-cash schemes. Which of the following is NOT considered a misappropriation of cash?

  Larceny

  Illegal Gratuity

  Skimming

  Fraudulent Disbursement

Question 9(TCO F) The concealment of receivables skimming can be difficult because

  the incoming payments are expected.

  inventory must be padded to conceal shrinkage.

  the audit trail must be destroyed.

  All of the above

Question 10(TCO F) In one of the case studies in the textbook (page 51), Brian Lee, a top-notch plastic surgeon, collected payments from his patients without giving a cut to the clinic where he practiced. How was he punished?

  Allowed to continue with the practice and make restitution.

  Terminated and required to make full restitution.

  Sued in civil court for the amount of loss.

  Convicted of larceny and sentenced to prison.

 

ACCT562 Auditing - An Operational and Internal Perspective Including Fraud Examination

Week 2 Quiz  

Question 1(TCO B) One of the primary purposes of the planning phase is to:

  identify possible operational area problems.

  identify competitive pressures.

  follow-up on earlier audit issues.

  interview senior managers new to their responsibilities.

Question 2(TCO B) Information obtained during the course of planning includes:

  management stock trading activity.

  previous auditor credentials.

  information from Motley Fool message boards.

  financial information.

Question 3(TCO B) Sources of planning information comes from all of the following EXCEPT:

  interviews

  physical inspection

  anonymous tips

  financial data

Question 4(TCO B) Problem areas should be identified. The auditor is encouraged to chase the ___________, not the _________________.

  elephant; mice

  cat; rat

  shark; tuna

  dog; bone

Question 5(TCO F) Senior management is most likely to understate business performance in the financial statements for which of the following reasons?

  To reduce the value of an owner-managed business for purposes of a divorce settlement.

  To comply with loan covenants.

  To increase the value of a corporate unit whose management is planning a buyout.

  To trigger performance-related compensation or earn-out payments.

Question 6(TCO F) The conceptual framework for financial reporting includes several assumptions that underlie generally accepted accounting principles. Which of the following is one of these assumptions?

  Economic entity

  Relevance

  Comparability

  Matching

Question 7(TCO F) Which of the following is a duty of the Public Company Accounting Oversight Board?

  tering accounting firms that audit publicly traded companies.

  Establishing or adopting standards relating to audits of publicly traded companies.

  Enforcing compliance with professional standards and securities laws relating to public company audits.

  All of the above

Question 8(TCO F) Scott Ruskin is the CEO of Decatur Materials. The company has been struggling for the last few years and is in danger of defaulting on several of its bank loan covenants. Scott is facing significant pressure from the board of directors to turn the company around. Unless he meets all of the financial goals for the year, he will be out the door without a golden parachute. To improve the financial appearance of the company, Scott undertakes a scheme to boost the balance sheet by faking inventory. The analysis of what financial ratio would most likely bring this scheme to light?

  Quick ratio

  Collection ratio

  Inventory turnover

  Profit margin

Question 9(TCO F) Establishing clear and uniform accounting procedures with no exception clauses can help reduce financial statement fraud by addressing which side of the fraud triangle?

  Pressures to commit fraud

  Opportunity to commit fraud

  Rationalizations of financial statement fraud

  Non-shareable problems

Question 10(TCO F) In the vertical analysis of an income statement, _____________ is assigned 100 percent, with all other items expressed as a percentage thereof.

  gross sales

  net sales

  gross margin

  net income

 

ACCT562 Auditing - An Operational and Internal Perspective Including Fraud Examination

Week 3 Quiz  

Question 1(TCO C) The work program is the key to:

  a satisfied client

  clearly identified risks

  a successful review

  planning handoffs

Question 2(TCO C) The work program should include interviews with:

  external auditor

  board members

  large shareholders

  None of the above

Question 3(TCO F) The two categories of cash receipts schemes are:

  lapping and skimming

  lapping and cash larceny

  cash larceny and skimming

  skimming and billing schemes

Question 4(TCO F) Reversing entries is a method for concealing larceny of ___________?

  cash

  receivables

  payables

  non-cash assets

Question 5(TCO F) If discrepancies are found between the sales records and the cash on hand, which of the following schemes might be occurring?

  Cash larceny at the point of sale

  Cash larceny from the deposit

  Fraudulent disbursements

  Sales skimming

Question 6(TCO F) Jeff Lewis is an accounts receivable clerk for FTB Industries. As customers pay off their balances, Lewis posts the payments but pockets the money. He can conceal his theft by:

  making unsupported entries for the amount stolen

  adjusting the account with a discount

  destroying the records

  All of the above

Question 7(TCO F) In one of the case studies in the textbook (page 106), Albert Miano, the facilities supervisor for a popular magazine, submitted phony invoices. When Miano received the checks for the phony invoices, he forged the contractor’s signature. He then endorsed the check in his own name. How was the fraud caught?

  The auditors found a discrepancy in the invoices that were submitted.

  The new chief of internal audit found it by accident.

  A vendor received a check by mistake and called the accounts payable department.

  The external audit found it in an audit sample of canceled checks.

Question 8(TCO F) In one of the case studies in the textbook (page 93), a Southeastern medical college was plagued with fraudulent activity. What started as an investigation into some suspicious expense reimbursement activity eventually led to the discovery of a fictitious company that was set up to fraudulently bill the college for supplies that never existed. What was the first sign that there were more problems than the initial expense reimbursement fraud?

  The auditors found an unusually high number of new unapproved vendors.

  The administrative assistant suddenly left town when requested to be interviewed.

  The supervisor resigned his position immediately.

  A tip was received by internal auditors.

Question 9(TCO F) According to the 2011 Global Fraud Survey, fraudulent disbursement schemes include:

  Billing schemes

  Check tampering schemes

  Payroll schemes

  All of the above

Question 10TCO (F) Testing for _____ includes sorting payments by vendor, amounts, and invoices.

  billing schemes

  non-compliance vendors

  shell companies

  unauthorized payments

 

ACCT562 Auditing - An Operational and Internal Perspective Including Fraud Examination

Week 4 Quiz  

Question 1 (TCO D) The review team should be aware of various management and operational techniques, which includes all of the following except:

  Benchmarking

  Visioneering

  Learning Organizations

  Participative Management

Question 2(TCO F) Manually altering entries in an organization‘s books in order to conceal fraud is called:

  Fictitious reconstruction

  Shrinkage

  Forced reconciliation

  Padding the books

Question 3(TCO F) Which of the following is a rule that the interviewer should follow when asking questions during the introductory phase of the interview?

  Promise confidentiality to the respondent.

  Give the interviewee the opportunity to respond to the source of the allegations.

  Question only one person at a time.

  All of the above

Question 4(TCO F) When the subject of an investigation has been accused of misconduct, establishing a morally acceptable rationalization might allow the accused to reconcile his actions with his conscience. Which of the following is not an example of an acceptable rationalization?

  The accused has been unfairly treated by his management.

  The accused has un-reconciled personal issues from the past.

  The accused felt that he needed to get back at someone in the organization.

  The accused engaged in the misconduct for the benefit of others.

Question 5(TCO F) In one of the case studies in the Wells textbook (page 51), Brian Lee, a top-notch plastic surgeon, collected payments from his patients without giving a cut to the clinic where he practiced. What was his motivation for committing the fraud?

  He was greedy.

  Repay his students loans.

  Fund his charitable doctor work.

  None of the above

Question 6(TCO F) Nicolette Garrison works part-time at an independent record store. Whenever her friend, Jacob Barker, comes into the store during one of her shifts, he picks up a CD and brings it to the register where Nicolette is stationed. After ringing a no sale transaction on the cash register, Nicolette pretends to swipe Jacob's credit card for payment. She puts the CD in a bag and gives it to Jacob, who walks out without actually paying for the merchandise. What kind of scheme is being committed?

  Fake sale

  False refund

  Sales skimming

  Cash larceny

Question 7(TCO F) A(n) _____________ interview is one that has the potential to bring about strong emotional reactions in the respondent.

  explosive

  aggressive

  volatile

  emotive

Wells, Chapter 16 page # 423

Question 8(TCO F) According to the 2011 Global Fraud Survey, the theft of which type of non-cash asset was the least common but caused the highest median loss?

  Equipment

  Proprietary information

  Securities

  Inventory

Question 9(TCO A) All are benefits of the operational reviews to management except:

  location opportunities for new revenue

  reviewing compliance for legal requirements

  ensuring profit forecasts are met

  identifying trouble spots in future operations

Question 10(TCO B) Financial analysis using common-size balance sheet and income statements are used in the _____ phase to identify audit opportunities.

  Survey

  Work Program

  Reporting

  Planning

Question 11(TCO A-D) Interviewing, financial analysis, observing processes are all part of the _____ phase.

  Survey

  Planning

  Work program

  Reporting

Question 12(TCO A) Operational areas eligible for review include:

  financial signature authority

  database access permissions

  purchases, payment processes

  All of the above

Question 13(TCO F) Samantha Lewis, CFE, is conducting an investigation into possible skimming of the accounts receivable at Southwest Paint and Supply Co. If Lewis plans to interview all of the following parties, whom should she interview first?

  Marie Riley, the primary suspect.

  Jose Rodriguez, an accounts receivable clerk who filled in for Riley when she was on vacation.

  Sean Miles, a regular customer of the company, whose complaint about his account balance prompted the investigation.

  Thomas Banks, Riley’s supervisor, who is suspected of helping Riley cover the fraud in exchange for a portion of the proceeds.

Question 14(TCO F) Research in the Hollinger-Clark study suggests that the best way to deter employee theft is by:

  Increasing sanctions imposed on occupational fraudsters

  Increasing the perception of detection

  Strengthening internal controls

  Communicating the organization s fraud policies to employees

Question 15(TCO F) Which of the following is not part of the fraud theory approach?

  Analyze available data.

  Develop what-if scenarios.

  Identify who committed the fraud.

  Refine the hypothesis.

Question 16(TCO F) The technique for analyzing the percentage change in individual financial statement items from one accounting period to the next is known as:

  Ratio analysis

  Horizontal analysis

  Vertical analysis

  None of the above

Question 17(TCO F) In the Fraud Tree, asset misappropriations are broken down into cash and non-cash schemes. Which of the following is not considered a misappropriation of cash?

  Larceny

  Skimming

  Concealed expenses

  Fraudulent Disbursement

Question 18(TCO A) Businesses do not exist to:

  Serve customers

  Convert cash

  Manage debt

  None of the above

Question 19(TCO F) The most important factor in preventing cash larceny from the deposit is:

  Having a visible management presence in the mailroom

  Separating the duties of the deposit function

  Having two employees deliver the deposit to the bank

  None the above

Question 20(TCO F) Senior management is most likely to understate business performance in the financial statements for which of the following reasons?

  To reduce the value of an owner-managed business for purposes of a divorce settlement.

  To comply with loan covenants.

  To increase the value of a corporate unit whose management is planning a buyout.

  To trigger performance-related compensation or earn-out payments.

Question 21(TCO F) According to a study by COSO, which of the following groups is the most likely to commit financial statement fraud?

  Organized criminals

  Mid-level employees

  Senior management

  Lower-level employees

Question 22(TCO B) One of the primary purposes of the planning is to:

  Interview senior management on risk.

  Start to develop the basis for the operational review work program.

  Identify competitive pressures.

  Interview senior managers new to their responsibilities.

Question 23(TCO A) Operational review procedures embrace the concept of conducting operations for economy, efficiency, and effectiveness. Provide a brief description of the ECONOMY aspect, and provide an example.

Question 24(TCO F) The 2010 Report to the Nations on Occupational Fraud and Abuse covered a number of factors that are related to occupational fraud. List and explain at least three of these factors.

Question 25(TCO F) Albrecht, in his research, developed the “fraud scale” and furnished a list of the reasons employees and executives commit occupational fraud. How are Albrecht’s conclusions similar to Cressey’s? How are they different?

Question 26(TCO F) How can fictitious revenue be created through the use of false sales to shell companies? Discuss the method and result of committing this fraud.

 

ACCT562 Auditing - An Operational and Internal Perspective Including Fraud Examination

Week 5 Quiz  

Question 1(TCO E) Why operations have become inefficient and are reflected in the _____ of the finding.

   statement of condition

cause

   effect

   criteria

Question 2 (TCO E) Criteria standards for the operational auditor include internal standards for the organization, such as _____.

   policy

  

regulation

   contract

All of the above

Reider 5page #202

 Question 3(TCO E) Findings should be vetted by a rigorous findings _____ which ensure findings are valid.

checklist

   debate

   matrix

   test

Question 4 (TCO E) To be successful, the audit report must

   be succinct and clear.

persuade management.

   be thoroughly vetted.

   be communicated widely.

Question 5TCO E) The ABC's of effective reporting include all of the following except:

   accuracy

   brevity

   defense

feasibility

Question 6 (TCO F) To prevent and detect forged maker schemes, an organization should:

   Separate the duties of check preparation and check signing.

   Rotate authorized check signers.

   Maintain a usage log for the signature stamp.

All of the above

Question 7(TCO F) If a fraudster fails to remove a terminated employee from the payroll and collects the former employee‘s fraudulent paychecks, he/she is committing a:

   Payroll larceny scheme

   Falsified hours and salary scheme

   Forged endorsement scheme

Ghost employee scheme

Question 8(TCO F) In one of the case studies in the textbook (page 169), Katie Jordon was the All-American Girl Next Door working her first job out of college. As an on-site manager for an apartment complex in Dallas, she did such a good job that when her employer purchased a huge apartment complex in Houston, they asked her to run it. All was good until a member of the maintenance crew resigned. She continued to keep him on the payroll and pocketed his wages. She later added a non-existent assistant when she saw how easy it was to add an employee without being questioned. However, her scheme eventually came to light, and her days of bonus pay were over. How was her scheme discovered?

   An employee tipped off the main office when she saw the timesheets listing an employee that she had never heard of.

When Jordon’s boss made a routine visit to the office, he noticed that there was no sign of an assistant in the office.

   She was splitting the proceeds with her boyfriend, and he contacted the home office when she broke up with him.

   The auditors found it when they conducted a routine audit of all new acquisitions after being in business for one year.

Question 9 (TCO F) _____ is the offering, giving, receiving, or soliciting of something of value as a reward for a favorable decision.

Business diversion

Economic extortion

Illegal gratuity

   Commercial bribery

Question 10(TCO F) In one of the case studies in the textbook (page 239), the General Services Administration (GSA), the federal government’s bookkeeping agency, purchased more than $200 million worth of defective and useless furniture from a New Jersey furniture manufacturer. After reviewing the books of the furniture manufacturer, it was clear that the company was paying off GSA inspectors. The investigators eventually focused on one particular regional inspector because:

   He vacationed in Europe with the vendor and charged the trip back to the government as a business related trip.

   He paid cash for a new home on the Jersey shore.

He purchased eleven race horses.

   He had credit card charges of more than twice his annual salary during a six-month period.

 

ACCT562 Auditing - An Operational and Internal Perspective Including Fraud Examination

Week 6 Quiz  

Question 1 (TCO F) Which of the following procedures can be used to prevent mischaracterized expense reimbursement schemes?

   A policy should be established and communicated to employees regarding what types of expenses will and will not be reimbursed.

   Employees should be required to sign their expense reports before being reimbursed.

   The internal audit department should review all expense reports under a certain dollar amount.

   None of the above

Question 2(TCO F) An altered or forged receipt can indicate what type of expense reimbursement scheme?

   Mischaracterized expense reimbursements

   Fictitious expense reimbursements

   Overstated expense reimbursements

All of the above

Question 3 (TCO F) Charlene DiAngelo is a sales manager for Northwest Paper & Plastics. On April 11, she took some clients out for a business lunch to discuss a potential contract. When she returned to the office, she made a photocopy of her restaurant receipt. Using correction fluid, she changed the date on the photocopy to read June 11. She submitted the original restaurant receipt with a reimbursement request on April 11 and held on to the photocopy for two months. On June 12, she submitted the altered photocopy along with a second reimbursement request. What type of fraud scheme did DiAngelo commit?

   Altered receipt

   Fictitious expense reimbursement

   Billing

Multiple reimbursement

Question 4(TCO F) Which of the following can be used to conceal a false refund scheme?

   Destroying register tapes

   Issuing refunds below the review limit

   Forcing inventory totals

All of the above

Question 5(TCO F) In one of the case studies in the textbook (page 190), Cy Chesterly was the vice president in charge of sales for one of the largest machine parts manufacturers in the Midwest. He was an excellent salesman and helped build the company into one of the most successful companies in the industry. While Chesterly was known to go overboard on the entertainment expenses, he really went wild when it came to buying personal items, vacations, furniture, and jewelry to name a few. He was caught; however, and his lifestyle came to a halt. What was the most likely reason that the company didn't have Chesterly prosecuted?

   Chesterly was well-liked by everyone and, with new management coming in, the company thought it would have a negative impact on morale.

   Chesterly's wife became seriously ill, and the company felt it would have been too much of a blow to her recovery if he were in prison.

Some of the company's customers were believed to have been involved in Chesterly's schemes.

   He agreed to mortgage his home to repay the money.

Question 6(TCO F) ter disbursement schemes are different from skimming and larceny at the register in that they:

Are on-book schemes, whereas skimming and larceny are off-book schemes

   Require the use of an accomplice

Leave a record of the removal of money on the register tape

   All of the above

Question 7(TCO F) For the perpetrator, the most dangerous part of a typical register disbursement scheme is often:

Physically removing the cash from the register and carrying it out of the store.

   Adjusting the cash register tape to match the cash count.

   Forging the customer receipt as documentation for the reversing transaction.

   Replacing the returned merchandise to the physical inventory.

Question 8TCO F) In one of the case studies in the textbook (page 197), Bob Walker was the head cashier for a discount drug store who perpetrated his fraud scheme by issuing fictitious refunds. What happened to Walker?

   He was placed on probation and ordered to make full restitution.

   The store terminated his employment and took a promissory note for the amount stolen in return for not turning him over to the police.

   His parole was revoked for a previous conviction and he was returned to prison

He was arrested, but disappeared after making bail.

Question 9(TCO F) Leslie White, CFE, was called in to investigate some suspicious activity at Anderson's Department Store. During her investigation, she ran a test to search for customer sales and refunds that occurred on the same day. She also summarized refunds by employee and extracted the names of all employees who can post both refunds and inventory adjustments. What type of scheme is Leslie most likely looking for?

   Skimming

   Unconcealed larceny

   Fraudulent reimbursements

Fictitious refunds

Question 10(TCO F) Meredith Chapman works as a retail clerk at a children's clothing store. When a customer returns an item for a cash refund, Meredith enters an amount greater than the actual refund into the register, pays the customer the amount owed for the returned merchandise, and keeps the excess cash for herself. What type of scheme is Meredith committing?

   Overstated expenses

   Cash larceny

Overstated refunds

   Skimming

ACCT562 Auditing - An Operational and Internal Perspective Including Fraud Examination

Week 7 Quiz  

Question 1(TCO F) A company may need to undertake an internal investigation into alleged employee fraud for which of the following reasons?

  To mitigate the company‘s vicarious liability for the wrongful conduct

  To determine the source and amount of loss

  To guard against wrongful termination accusations

  All of the above

Question 2(TCO F) In most cases, which of the following parties should be primarily responsible for directing a fraud examination?

  The external auditors

  The head of the security department

  The company’s legal counsel

  The human resources manager

Question 3(TCO F) Of the following, which is the preferred method of organizing documentary evidence?

  Chronological order

  Alphabetical order

  By witness

  Order received

Question 4 (TCO F) _____ involves obtaining information through the use of falsehoods or deception.

  Pretexting

  Subject manipulation

  Forensic investigation

  Surveillance

Question 5(TCO F) A well-written, accurate, and understandable investigation report will:

  Convey all pertinent evidence

  Add credibility to the investigation

  Accomplish the objectives of the case

  All of the above

Question 6(TCO F) The axiom that states employees who believe that they will be caught engaging in occupational fraud and abuses are less likely to commit it is called:

  Cognitive choice

  Preventive selection

  Perception of detection

  None of the above

Question 7(TCO F) Which of the following choices is not an action that will increase the perception of detection within an organization?

  Increasing the use of analytical reviews

  Developing employee anti-fraud education programs

  Establishing a reporting program

  Random e-mails that fraud is being investigated

Question 8(TCO F) As it relates to Corporate Sentencing Guidelines, corporations are required to perform certain minimum steps for due diligence. Which of the following is one of the required steps?

  Consistently enforce standards through appropriate discipline.

  Have policies defining standards and procedures to be followed by the organization’s agents and employees.

  Use due care not to delegate significant authority to people who are known to have a propensity to engage in illegal activities.

  All of the above are part of due diligence

Question 9(TCO F) The school of ethical thought that advocates situational ethics, i.e., each behavior should be evaluated on its own merits, is the:

  Imputed ethical principle

  Circumstantial ethical principle

  Utilitarian ethical principle

  Imperative ethical principle

 

ACCT562 Auditing - An Operational and Internal Perspective Including Fraud Examination

Week 8 Quiz  

Question 1(TCO A) The Three E's of operational auditing do not include:

  Efficiency

  Effectiveness

  Efficacy

  Economy

Question 2(TCO A) Successful operational auditors possess all the following attributes except:

  Communication skills

  Subject matter expertise in systems

  Ability to spot trouble areas

  Chase elephants, not mice

Question 3(TCO B) Budgeted to actual performance data can be utilized to identify:

  Financial fraud

  Control weaknesses

  Areas for further investigation

  Management effectiveness

Question 4(TCO C) Management, process owners, and key stakeholders should all be _____ in the work program.

  observed

  identified

  interviewed

  weighted by risk factors

Question 5(TCO C) The work program should include interviews with:

  External auditor

  Large shareholders

  Board members

  None of the above

Question 6(TCO A-D) Reviewing high level processes, interviewing, and understanding the business is part of the _____ phase.

  reporting

  survey

  work program

  planning

Question 7(TCO D) The review team should be aware of various management and operational techniques, which includes all of the following except:

  Visioneering

  Participative Management

  Learning Organizations

  Benchmarking

Question 8(TCO E) Why operations have become inefficient is reflected in the _____ of the finding.

  criteria

  cause

  statement of condition

  effect

Question 9(TCO E) One of the functions of the operational review report is to

  None of the above

  identify responsible management.

  persuade and call to action.

  benchmark performance.

Question 10(TCO F) In one of the case studies in the textbook (page 190), Cy Chesterly was the vice president in charge of sales for one of the largest machine parts manufacturers in the Midwest. He was an excellent salesman and helped build the company into one of the most successful companies in the industry. While Chesterly was known to go overboard on the entertainment expenses, he really went wild when it came to buying personal items such as vacations, furniture, and jewelry to name a few. He was caught, however, and his lifestyle came to a halt. What was the most likely reason that the company didn’t have Chesterly prosecuted?

  Some of the company’s customers were believed to have been involved in Chesterly‘s schemes.

  He agreed to mortgage his home to repay the money.

  Chesterly was well liked by everyone and, with new management coming in; the company thought it would have a negative impact on morale.

  Chesterly’s wife became seriously ill and company felt it would have been too much of a blow to her recovery if he were in prison.

Question 11(TCO F) The textbook lists several ways to reduce the pressures to commit financial statement fraud, including:

  Maintaining accurate personnel records including background checks on new employees.

  Having confidential reporting mechanisms to communicate inappropriate behavior

  Maintaining accurate and complete internal accounting records.

  Avoiding setting unachievable financial goals.

Question 12(TCO F) Which of the following choices is not an action that will increase the perception of detection within an organization?

  Developing employee anti-fraud education programs

  Random e-mails that fraud is being investigated

  Establishing a reporting program

  Increasing the use of analytical reviews

Question 13(TCO F) Daniel Isley works as an internal auditor for Atlantic Insurance Co. While reviewing the company’s travel and entertainment expenses, Isley noticed that one employee had submitted several receipts from Chase’s Restaurant for round-dollar amounts just under the company’s reimbursement limit. Further, the receipts were consecutively numbered, but were submitted over a six-month period. What type of scheme did Isley most likely uncover?

  Fictitious expense reimbursement

  Multiple reimbursements

  None of the above

  Mischaracterized reimbursement

Question 14(TCO F) In most cases, which of the following parties should be primarily responsible for directing a fraud examination?

  The external auditors

  The human resources manager

  The head of the security department

  The company’s legal counsel

Question 15(TCO F) In one of the case studies in the textbook (page 239), the General Services Administration (GSA), the federal government’s bookkeeping agency, purchased more than $200 million worth of defective and useless furniture from a New Jersey furniture manufacturer. After reviewing the books of the furniture manufacturer, it was clear that the company was paying off GSA inspectors. How did the investigation get started?

  An audit conducted by the GSA found a high rate of return of modular furniture during a six-month period.

  A Senator had his desk collapse when he threw his sub-committee’s budget on his desk after a hearing.

 

  A series of articles in a Washington D.C. newspaper led to a congressional investigation.

  A whistleblower called the GSA’s hotline to report that inspectors in New Jersey were receiving bribes for certifying the furniture.

Question 16(CO A) Consider the examples below. Please identify which of the three "E's" each example represents. Discuss how the evaluation of the three "E's" fits into the specific objectives of the operational audit.

Griggs Corporation has achieved the established goals for the new product line. The new product line's revenue increased by 10 percent.

At ABC Company, upper management has recently authorized and actively purchased zero coupon bonds. The investment accounting software used by general accounting is not capable of recording zero coupon bonds. As a result, zero coupon bonds are being recorded manually.

New government regulations have a negative impact on forecasted sales.

The Superway grocery store is open 24 hours. During the overnight shift, the manager schedules one cashier.

The quick-mart has just implemented just-in-time inventory purchasing agreements.

Question 17(TCO B) One of the most important areas of the planning phase is to identify the critical problem areas. Name and explain these five areas, and then recommend the sources you might use in the review of administrative and operational controls.

Question 18(TCO C) There are four procedural steps in the work program development. Identify these procedural steps and their purpose, and then decide which work steps might help the reviewer meet the objective in a purchase requisition procedure, as outlined in your notes.

 Question 19(TCO D) Describe four factors that a reviewer must consider in reaching conclusions during the field work phase. Explain why a reviewer should consider these factors. Then identify four specific field work techniques used to identify weaknesses in management and operational systems.

Question 20(TCO E) Criteria is one of the attributes of review findings. Identify no less than four of the six criteria standards and analyze their inclusion in your report. Then discuss the six steps to developing a finding, including the purpose of each step.

Question 21(TCO F) What is cash larceny? Briefly describe some of the common types of cash larceny schemes. What are some of the internal control procedures to deter and detect cash larceny schemes?