Fraud Examination Chapter 11 Exam Questions and Complete Solution
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Fraud 505
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Fraud 505
Fraud Examination Chapter 11 Exam Questions and Complete Solutions
Unlike other types of fraud, financial statement fraud is usually not concealed and is therefore relatively easy to spot - Ans: False
Fraud indicators, or red flags, can be caused by fraud or by legitimate, non-fraud factors -...
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Fraud Examination Chapter 11 Exam Questions and Complete Solutions
Unlike other types of fraud, financial statement fraud is usually not concealed and is therefore relatively easy to spot - Ans: False
Fraud indicators, or red flags, can be caused by fraud or by legitimate, non-fraud factors - Ans: True
Without a confession, forged documents, or repeated fraudulent acts that establish a pattern of dishonesty, convicting someone I fraud is often difficult. - Ans: True
According to the 1999 and 2010 COSO studies of fraudulent financial reporting, the most common method used to perpetrate financial statement fraud includes overstating liabilities - Ans: False
According to the 1999 COSO study, most companies that committed financial statement fraud had no audit committee or had an audit committee that met less than twice a year - Ans: True
Michael "Mikey" Monus and Patrick Finn of Phar-Mor used three methods of income statement fraud: account manipulation, overstatement of inventory, and accounting rules manipulations. - Ans: True
In identifying management fraud exposures, it is useful to think of the fraud exposure triangle, which includes 1) management and directors, 2) organizations and industry, and 3) relationships with others - Ans: False
Financial statement fraud is usually committed by entry-level accountants against an organization - Ans: False
In searching for financial statement fraud, the three aspects of directors and members of management that should be known are 1) their backgrounds, 2) their motivations, 3) their influence in making decisions for the organization - Ans: True An organization's relationship with other organizations and individuals is of no interest to a fraud examiner - Ans: False
Recording fictitious revenues is one of the most common ways of perpetrating financial statement fraud - Ans: True
Most often, the controller or chief financial officer (CFO) of a corporation is the perpetrator of financial statement fraud because of his or her knowledge of accounting and unlimited access to accounts - Ans: False
Financial statement fraud, like other types of fraud, is most often committed against an organization instead of on behalf of the organization - Ans: False
Most people who commit management fraud are repeat offenders - Ans: False
Most financial statement frauds occur in large, historically profitable organizations - Ans: False
Zero-order strategic reasoning takes into account the potential actions of others before one decides to act - Ans: False
Backdating is a method of dating stock options so that stock option holders can maximize their payout - Ans: True
Identifying fraud exposures is one of the most difficult steps in detecting financial statement fraud. - Ans: True
Higher-order reasoning is the most challenging of the types of strategic reasoning, but can potentially be
the most effective in detecting financial statement fraud - Ans: True
Financial statement fraud is usually committed by:
A. Executives
B. Managers
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