Forensic Accounting (Midterm) False 26. It is most often people who are not trusted who commit fraud.

False 26. It is most often people who are not trusted who commit fraud. (always have to be trusted)
False 27. Management fraud is when managers intentionally deceive their employees about the
Reviewer: Chapter 1 potential of raises, vacations, and other perks. (about manipulation of a company’s financial
True/False statements)
True 28. Despite intense measures meant to impede it, fraud appears to be one of the fastest-growing
False 1. All frauds that are detected by organizations are made public. (companies merely hid the frauds crimes in the United States.
to avoid public relations.) True 29. The ACFE is a nonprofit organization dedicated to the prevention and dedication of fraud
True 2. Perpetrators use trickery, confidence, and deception to commit fraud. throughout the world.
True 3. One of the most common responses to fraud is disbelief by those around the fraud. False 30. There is no difference between a Certified Fraud Examiner (CFE) and a Certified Public
True 4. Manufacturing companies with a profit margin of 10 percent must usually generate about 10 Accountant (CPA). (CFE leader of antifraud community also prevention and detection while CPA
times as much revenue as the dollar amount of the fraud in order to restore net income to its pre- focus on all aspects of accounting.)
fraud level.
False 5. Fraud involves using physical force to take something from someone. (physical force is robbery. Identification
Fraud involves deceit or trickery, not force.)
False 6. Identity theft is an example of employee embezzlement. (identity theft is stealing someone’s 1. Why does fraud seem to be increasing at such an alarming rate?
personal information.) - Computers, the Internet, and technology make fraud easier to commit.
True 7. When perpetrators are criminally convicted of fraud, they often serve jail sentences and/or pay
fines. 2. Which of the following is not an important element of fraud?
True 8. Management fraud is deception perpetrated by an organization’s top management. - Intelligence (confidence, deception trickery)
True 9. A Ponzi scheme is considered to be a type of investment scam.
True 10. Most people agree that fraud-related careers will be in demand in the future. 3. Fraud is considered to be:
False 11. In civil cases, fraud experts are rarely used as expert witnesses. (often) - A serious problem that continues to grow
True 12. Many companies try to hide their losses from fraud rather than make them public.
False 13. The only group/business that must report employee embezzlement is the federal government. 4. People who commit fraud are usually:
(banks are require to report their frauds because of their FDIC Insurance) - Trusted individuals
False 14. Advances in technology have had no effect either on the size or frequency of fraud or on the
detection or investigation of fraud. (technology has tended to increase the size/frequency of 5. “The use of one’s occupation for personal enrichment through the deliberate misuse or misapplication
frauds committed.) of the employing organization’s resources or assets” is the definition of which of the following types of
True 15. Fraud losses generally reduce a firm’s income on a dollar-for-dollar basis. fraud?
False 16. The single most critical element for a fraud to be successful is opportunity. (confidence) - Employee embezzlement or occupational fraud
True 17. Fraud perpetrators are often those who are least suspected and most trusted.
False 18. Unintentional errors in financial statements are a form of fraud. (are not because there must 6. Corporate employee fraud-fighters:
always be “intent”) - Prevent, detect, and investigate fraud within a company
False 19. Occupational fraud is fraud committed on behalf of an organization. (against)
True 20. Companies that commit financial statement fraud are often experiencing net losses or have 7. Investment scams most often include:
profits that are significantly lower than expectations. - Worthless investments or assets sold to unsuspecting investors
False 21. Indirect fraud occurs when a company’s assets go directly into the perpetrator’s pockets
without the involvement of third parties. (direct fraud) 8. Which of the following is not true of civil litigation?
False 22. In vendor fraud, customers don’t pay for goods purchased. (customer fraud) - It must be heard by 12 jurors. (one party files, compensate, preponderance)
False 23. A negative outcome in a civil lawsuit usually results in jail time for the perpetrator. (negative
outcome result in restitution and damage payments while only criminal lawsuits result in jail time 9. Future careers in fraud will most likely be:
for perpetrator.) - In high demand and financially rewarding
True 24. When fraud is committed, criminal prosecution usually proceeds before civil litigation.
False 25. A fraud may be perpetrated through an unintentional mistake. (intentional) 10. Studying fraud will help you:
 - All of the above (evidence-gathering, avoid, valuable interviewing) 24. Which of the following is required to become a CFE?
- All of the above are required to become a CFE (strict code of professional conduct and ethics,
11. Which of the following is the least reliable resource for fraud statistics? good standing of the ACFE, high moral character)
- Fraud perpetrators (fbi agencies, health agencies, insurance organizations)
25. Which of the following is not true regarding the ACFE.
12. Which of the following statements is true? - It has roughly 12,000 members throughout the world (largest anti-fraud, anti-fraud fighting
- Fraud is often labeled the fastest-growing type of crime efforts, provider of anti-fraud training)

13. Which of the following is not an element of fraud?

- Accidental behavior (false representation, damage to a victim, intentional/reckless behavior)

14. What is the best way to minimize fraud expense within an organization?
- Effective prevention fraud

15. What is the most important element in successful fraud schemes?

- Confidence in the perpetrator

16. Which of the following characters is least likely to be involved in a fraud?

- A long-haired teenager wearing leather pants

17. Which of the following is not a common type of fraud?

- Executives embezzling from petty cash (employee embezzlement, bribes, investment scams)

18. Which of the following is not a form of vendor fraud?

- Not paying for goods purchased (overcharging, shipment of inferior goods, nonshipment of
goods even though payment has made)

19. Civil law performs which of the following functions?

- Remedy for violation of private rights

20. Fraud fighting can include which of the following type(s) of careers?
- All of the above (professors, lawyers, CPA firms)

21. Which of the following is not an example of employee embezzlement?

- Angry employees vandalizing the building with spray paint (land conservation, cashiers stealing
money, salespeople overcharging)

22. Which of the following is not an example of vendor fraud?

- A vendor has much higher prices than its competitors. (overcharges, not performed, not
provided)

23. “Intentional manipulation of financial statements” describes which kind of fraud?

- Management fraud