WorksheetsAIS - FRAUD
Total questions: 30
Worksheet time: 19mins
Which of the following best defines fraud in a financial statement auditing context?
Fraud is either an intentional or unintentional misstatement of the financial statements, depending on materiality.
Fraud is an unintentional misstatement of the financial statements.
Fraud is either an intentional or unintentional misstatement of the financial statements, depending on consistency.
Fraud is an intentional misstatement of the financial statements.
Misappropriation of assets is normally perpetrated by
employees at lower levels of the organization.
management of the company.
the internal auditors.
members of the board of directors.
Fraudulent financial reporting
always involves inadequate disclosures.
can involve understating net income in order to reduce income taxes.
can be intentional or unintentional.
all of the answers choices.
Which of the following is not a factor that relates to opportunities to commit fraudulent financial reporting?
ineffective oversight of financial reporting by the board of directors
lack of controls related to the calculation and approval of accounting estimates
high turnover of accounting, internal audit, and information technology staff
management's set of ethical values
Which of the following is a factor that relates to incentives or pressures to commit fraudulent financial reporting?
excessive pressure for management to meet debt repayment requirements
management's practice of making overly aggressive forecasts
high turnover of accounting, internal audit, and information technology staff
significant accounting estimates involving subjective judgments
Which of the following is a factor that relates to attitudes or rationalization to misappropriate assets?
a sense of superiority by executives
significant accounting estimates involving subjective judgments
high turnover of accounting, internal audit and information technology staff
excessive pressure for management to meet debt repayment requirements
Which of the following is not a risk factor that the auditor should take into account when considering the possibility of fraudulent financial reporting at an audit client?
Significant accounting estimates are not difficult for the auditor to verify and justify.
Increasing business complexity occurs as a result of numerous recent acquisitions.
Information technology personnel are found to be not keeping up with the latest trends in internal controls and data security.
Board members' personal net worth is threatened if the entity's financial performance does not meet market expectations.
All of the following are ways to protect yourself from fraud except...
Not carrying your Social Security card
Posting all your information on the Internet
Shredding personal documents before discarding them
Memorizing and using difficult PIN numbers
Which of the following is not a way to protect yourself from fraud online?
Use unsecured public Wi-Fi at an airport to make important financial transactions
Update your operating system, web browsers and email software frequently
Jump at free downloads and save them to your hard drive
What are the 3 steps to secure your computer to lower down the risk of cybercrime attack?
Use anti-virus software/malware software
Usage of unprotected public network
Activate firewall
Block spyware
What can you do to protect your identity online?( Choose three)
Always use same password for every account
Create a unique password with special characters
shop only at secure websites
Be careful about personal information you are sharing online
Someone uses another person's personal identifying information, like their name, identifying number, or credit card number, without their permission, to commit fraud or other crimes.
Advanced persistent threats
ATM fraud
Identity theft
Which of the following is the greatest risk to information systems and causes the greatest dollar losses?
human errors and omissions
physical threats such as natural disasters
dishonest employees
fraud and embezzlement
4) All of the following could lead to computer fraud except
allowing computer operators full access to the computer room.
releasing data to unauthorized users.
allowing computer users to test software upgrades.
storing backup tapes in a location where they can be quickly accessed.
Most fraud perpetrators are insiders because
insiders are more dishonest than outsiders.
insiders know more about the system and its weaknesses than outsiders.
outsiders are more likely to get caught than insiders.
insiders have more need for money than outsiders.
9) Perpetrators of theft of company assets typically exhibit all the following characteristics except that they
attempt to return or pay back stolen amounts soon after the initial theft, but find they are unable to make full restitution.
use trickery or lies to gain the confidence and trust of others at the organization they defraud.
become bolder and more greedy the longer the theft remains undetected.
begin to rely on stolen amounts as part of their income.
"Cooking the books" is typically accomplished by all the following except
inflating accounts payable.
accelerating recognition of revenue.
delaying recording of expenses.
overstating inventory.
SAS No. 99 requires that auditors
plan audits based on an analysis of fraud risk.
detect all material fraud.
alert the Securities and Exchange Commission of any fraud detected.
take all of the above actions.
Downloading a master list of customers and selling it to a competitor is an example of
data fraud.
output theft.
download fraud.
fraudulent financial reporting.
The simplest and most common way to commit a computer fraud is to
alter computer input.
alter computer output.
modify the processing.
corrupt the database.
The most efficient way to conceal asset misappropriation is to
write-off a customer receivable as bad debt.
alter monthly bank statements before reconciliation.
alter monthly physical inventory counts to reconcile to perpetual inventory records.
record phony payments to vendors.
What can be done to prevent fraud?
An established, company-wide code of conduct, an internal audit department, external audit of internal controls over financial reporting, hotlines
Leave your computer unlocked and unattended when you go for a break
Emailing yourself sensitive data to your private email address
Using your personal flash drive to back up data from your work computer
What is the main control weakness in the company?
Lack of management review
Override of existing internal controls
Lack of internal controls
What is fraud?
any intentional or deliberate act to deprive another of property or money by guile, deception or other unfair means
An attempt to disguise the proceeds of crime
Purchasing something at an agreed discounted rate
Which of the following is an example of fraudulent financial reporting?
A. Company management changes inventory count tags and overstates ending inventory, while understating cost of goods sold.
B. The treasurer diverts customer payments to his personal due, concealing his actions by debiting an expense account, thus overstating expenses.
C. An employee steals inventory and the "shrinkage" is recorded in cost of goods sold.
D. An employee steal small tools from the company and neglects to return them; the cost is reported as a miscellaneous operating expense.
Fraud is an intentionally deceptive action designed to provide
the perpetrator with an ________ gain or to deny a right to a victim.
Types of fraud include tax fraud, credit card fraud, wire fraud, securities
fraud, and bankruptcy fraud. Fraudulent _________ can be carried out by one
individual, multiple individuals or a business firm as a whole.
lawful, activities
unlawful, activities
unlawful, activity
lawful, activity
The criminal steals checks that are drawn off of a valid account and then imitates the maker's signature.
Forgery
Counterfeit Checks
Altered Checks
Closed Account Fraud
The criminal attains a real account number, and then creates fake checks using that real account number.
Counterfeit Checks
Closed Account Fraud
Forgery
Altered Checks
Wrongful or criminal deception intended to result in financial or personal gain
Fraud
Fruit
Fradu
Fraude
Refers to malicious action in which a person falsifies trips in order to financially benefit
Fraudulent Intention
False Positive
