Uncovering Fraud: Essential Concepts and Types You Should Know

A motorist crossed road during red Light, now he is pleading the traffic police officer to take some money instead of Challan, what kind of bribery is this?

• Official Bribery

• Commercial bribery

• Kickback

• Illegal Gratuities

Which of the following is reversal of bribery?

• Collusion

• Off Books Schemes

• Conflict of Interest

• Economic Extortion

Which is not a method of concealing On Book Payments?

• Fictitious Payables

• Ghost Employees

• Overbooking of Management Remuneration

• Overbilling

Which of the following method is used to examine Off Book Payments?

• Point of Receipt

• Point of Payment

• Sting Operations

• Loan Information

What is the primary objective of financial statement fraud?

• To comply with tax regulations

• To deliberately misrepresent a company’s financial condition

• To ensure compliance with accounting standards

• To reduce operational costs

Which of the following is NOT a component of the Fraud Triangle?

• Situational Pressures

• Opportunity

• Rationalization

• Compliance

What is one common method used in financial statement fraud involving assets?

• Overstating liabilities

• Fictitious accounts receivable

• Increasing depreciation rates

• Reducing inventory turnover

What is the correct order of steps for revenue recognition compliance as per revised standards?

• Recognize revenue, allocate the transaction price, identify performance obligations, determine the transaction price, and identify the contract

• Identify the contract, identify performance obligations, determine the transaction price, allocate the transaction price, and recognize revenue

• Allocate the transaction price, identify the contract, recognize revenue, determine the transaction price, and identify performance obligations

• . Determine the transaction price, recognize revenue, allocate the transaction price, identify performance obligations, and identify the contract

Which of the following is a red flag for concealed liabilities and expenses?

• Rapid growth in revenue compared to industry peers

• Recurring negative cash flows despite reporting earnings growth

• High inventory turnover ratio

• Increasing days’ sales in receivables

Which of the following is an example of agent fraud in the insurance industry?

• Reporting a vehicle as stolen after an accident.

• Collecting premiums but not remitting them to the insurance company.
  
  

• Inflating an inventory to claim more on property insurance.
  
  

• Creating fictitious medical records to support a claim.