ACCT562 2022 April Week 4 Quiz Latest

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.