8 Chapter Investigating Concealment
MULTIPLE CHOICE 1. __________ are commonly used by attorneys involved in litigation to track documents a. RFID tags b. Bates numbers c. Bar codes d. All of the above ANS: B B: Correct 2. Secondary evidence may be used in all of the following instances except: a. The original document has been lost or destroyed without the intent or fault of the party seeking to introduce the secondary evidence. b. The original document is in the possession of an adverse party who fails to produce it after a written notice to do so. c. The original documents are too voluminous to permit careful examination. d. The original documents are too fragile to be handled. ANS: D D: Correct; the original evidence would need to be produced in this case 3. The risk that an auditor examines a fraudulent check and does not recognize it as being fraudulent is called: a. Sampling Risk b. Non-Sampling Risk c. Discovery Sampling Risk d. Population Sampling Risk ANS: B A: Sampling risk is the risk that the sample is not representative of the population C: There is no such term D: There is no such term 4. All of the following information can be obtained from a cancelled check except: a. Account number of the maker b. Account number of the person who presented the check c. A trail of all people who transferred the check (assignees and assignors) d. Nature of transaction (cashed, deposited, presented for payment) ANS: C A: Incorrect; this can be determined from a cancelled check B: Incorrect; this can be determined from a cancelled check C: Correct D: Incorrect; this can be determined from a cancelled check 5. Computer searches and physical asset counts usually focus on which element of a fraud? a. Theft act b. Concealment c. Conversion d. Inquiry investigation
ANS: B B: Correct; they usually focus on concealment 6. Methods for concealment investigation include all but which of the following? a. Document examination b. Honesty testing c. Audits d. Computer searches ANS: B A: This is a concealment investigation technique C: This is a concealment investigation technique D: This is a concealment investigation technique 7. Three most common ways to obtain documentary evidence are _____________. a. By subpoena, voluntary consent, and invigilation b. By subpoena, search warrant, and voluntary consent c. Search warrant, invigilation, and surveillance d. Voluntary consent, surveillance, and invigilation ANS: B A: Invigilation is not a primary method of gathering documentary evidence. C: Surveillance is a theft act investigation technique. D: Surveillance and invigilation are not methods used to gather documentary evidence. 8. Each of the following is true about concealment investigation EXCEPT: a. Concealment investigation includes document investigation, physical asset counts, and computer searches. b. Many concealment investigation techniques focus on obtaining documentary evidence c. Audits are considered a concealment investigation technique. d. Invigilation (tightening controls to establish a fraud-free baseline and closely supervising the suspects during an examination period) is considered a concealment investigation technique. ANS: D D: Invigilation is part of the theft investigation process. the other statements are part of the concealment investigation process. 9. Which of the following is not a common way to obtain hard-to-get documentary evidence? a. Subpoena b. Search Warrant c. Voluntary Consent d. Force ANS: D D: Force may obtain information but it is not legal. 10. Three most common ways to obtain documentary evidence that is usually difficult to get are _____________. a. By subpoena, voluntary consent, and invigilation b. By subpoena, search warrant, and voluntary consent c. Search warrant, invigilation, and surveillance d. Voluntary consent, surveillance, and invigilation ANS: B
B: Correct 11. Which of the following is generally not an approach to investigate the concealment aspect of fraud? a. Document examination b. Audits c. Computer searches d. Polygraph tests ANS: D D: Polygraph testing is an approach usually associated with honesty testing, not investigating concealment. 12. Which of the following does not appear on a check, which has been cashed? a. Teller number b. Date c. Transaction number d. Time of the transaction ANS: D A: A appears on the back of a check. B: B appears on the back of a check. C: C appears on the back of a check. D: Correct 13. Which of the following terms describes the risk that the sample is not representative of the population? a. Errors b. Non-sampling risk c. Sampling risk d. Detection risk ANS: C A: This has nothing to do with sampling B: Non-sampling risk is the risk that a finding will be misinterpreted. This D: has nothing to do with sampling 14. Documents presented in court are often disputed. The following are questions that arise from disputed documents except: a. Was the signature written before the rest of the document? b. Is the signature genuine? c. Was the writing disguised? d. How old are the paper, printing and ink used? e. All of the above are questions that arise from disputed documents ANS: A E: All of the above are correct. 15. An audit is a method of what investigation? a. Theft Investigation b. Conversion Investigation c. Concealment investigation d. Inquiry Investigation ANS: C A: A is incorrect because the methods for theft investigations are 1 Surveillance and covert operations, 2 Invigilation, 3 Physical Evidence
B: B is incorrect because the methods of conversion investigation are public record searches and net worth method C: Correct D: D is incorrect because inquiry investigations involve Interviews, Interrogations, & Honesty 16. Which of the following issues is often disputed in court? a. Is the signature genuine? b. Was printing performed before or after a signature? c. How old is the paper, printing and ink used? d. All of the above issues are often disputed in court. ANS: D A: Because b and c are also correct B: Because a and c are also correct C: Because a and b are also correct 17. Which of the following is not a type of Financial Statement Fraud? a. Overstated revenues b. Understated revenues c. Stealing company money d. Early revenue recognition ANS: C A: True statement B: True statement C: This doesn't touch the financial statement D: True statement 18. Computer searches and physical asset counts are methods for ___________. a. Theft investigation b. Concealment investigation c. Conversion investigation d. Inquiry investigation ANS: B A: Incorrect B: Correct C: Incorrect D: Incorrect 19. Moe owns a 24-hour convenience store. He has noticed that the amounts of liquor inventory purchases have gotten bigger and frequent lately. Nevertheless, sales provided by this particular item haven't increased. He is concerned that the two night-shift employees might be involved. The best method to use for this investigation is: a. Theft investigation b. Conversion investigation c. Embezzlement investigation d. Concealment investigation ANS: D D: Correct; Moe could use concealment investigation techniques to learn how his employees are concealing the fraud and the extent of the embezzlement. 20. You are completely sure of which variable to examine in a concealment fraud case. The most efficient investigation method would be:
a. b. c. d.
Computer searches, since they better identify signals of fraud Random sampling Discovery sampling, since they better identify signals of fraud Check all records, because it eliminates both sampling and non-sampling risk
ANS: C A: Incorrect B: Incorrect; Random sampling is not as efficient as discovery sampling C: Correct D: Incorrect; If we know which variable to examine, it's unnecessary to check every record. 21. Which of the following is a common method used by auditors to look for the existence of fraud? a. By asking clients about past fraud experiences b. By gathering documentary evidence and checking for fraud symptoms c. By conducting anti-fraud training sessions for all employees d. None of the above ANS: B B: Correct 22. Documents are a great source of evidence because of the following: a. They do not forget b. They cannot be cross-examined or confused by attorneys c. They cannot commit perjury d. They never tell inconsistent stories of different occasions e. All of the above ANS: E E: Correct 23. Documents are often the incriminating evidence for fraud. Which of the following should be used when ensuring that the documents are legitimate and accessible for trial? a. Photograph the evidence b. Digitally enhance the evidence c. Mark the evidence d. Preserve the evidence in a non-transparent container ANS: C C: Correct; evidence should be uniquely marked so that it may be identified later 24. Concealment is generally accomplished by manipulating any of the following documents except: a. Bills of laden b. Sales receipts c. Titles d. Insurance policies e. All of the above can be manipulated to conceal a fraud
ANS: E E: Correct
25. DocLab is a division of which organization? a. US Marshals b. FBI c. CIA d. ACFE
ANS: B B: Correct; the FBI's document Conversion Lab was started in 2002
26. Case Management software a. Helps organize large cases with many investigators b. Shows link analysis charts to help connect people, places, and events c. Is inexpensive and available on the Internet d. All of the above e. A & B
ANS: E C: Case management software is generally quite expensive.