WGU C254 Fraud & Forensic
Accounting, Questions and answers,
100% Accurate. VERIFIED.
America's capital markets are the envy of the world because of their efficiency, liquidity, and resiliency.
What role do financial statements play in American capital markets? - -They present a fair picture...
WGU C254 Fraud & Forensic Accounting , Questions and answers, 100% Accurate. VERIFIED. America's capital markets are the envy of the world because of their efficiency, liquidity, and resiliency. What role do financial statements play in American capital markets? - ✔✔-They present a fair picture of the financial position and results of the organization. Why are American financial statements so widely trusted? - ✔✔-They are prepared with integrity, and there is a system that checks all published statements. True or false: The SEC views auditors of pu blic companies as "unreliable and frequently incompetent." - ✔✔-False True or false: Financial statements don't need to be as accurate as possible. There is so much that goes into building them that there are bound to be mistakes. - ✔✔-False In 2002, a l andmark piece of legislation was signed into law to protect against and deter fraud, which also created a private sector organization called the PCAOB (Public Committee Accounting Oversight Board) to help. What was this piece of legislation? - ✔✔-Sarbanes -Oxley Act (SOX) What is the most significant "red flag" or telltale sign of fraud? - ✔✔-The symptoms, or red flags, cannot be ranked in order of their significance or extent. Motivations for fraud change from case to case, though there tends to be a comm on theme. What is that common theme? - ✔✔-to attempt to improve financial information to support high stock price, support a bond or stock offering, & increase stock price True or false: Financial statement fraud affects everyone, not just those directly or indirectly involved with the fraudulent company. TrueFalse - ✔✔-True True or false: By its nature, fraud is a hidden and secret act. Therefore, it is difficult to detect and even harder to prove. - ✔✔-True True or false: Only large, multimillion dollar companies perpetrate fraud; large risk equals large reward. - ✔✔-False In most cases of fraud, who was implicated in those cases as, at the very least, being complicit? - ✔✔-
CEO & CFO What is the most common technique used to manipulate financial statements? - ✔✔-misstating revenues While not the most common tactic of perpetrating fraud, which of the following is still considered very common? - ✔✔-improper capitalization of assets use of off -balance -sheet SP Es to hide debt and expenses overstatement of existing assets Within the misstatement of revenues concept, there are two schemes that are used most often. What are they? - ✔✔-improper timing of revenues and fictitious revenues True or false: Though the p ercentage of financial statement frauds is relatively small, the damage they can cause can be enormous. - ✔✔-True Why is it important to be extra cautious when changing auditors? - ✔✔-On average, one out of four companies with fraud switched auditors duri ng the fraud period or right before the fraud period . True or false: Many fraud cases begin their frauds with schemes too large to catch with just one audit, like in the case of Phar -Mor. - ✔✔-False: Phar -Mor began its fraud with very simple and almost inconsequential misstatements, but it escalated from there.
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