03 - Chapter 3 Fighting Fraud: An Overview MULTIPLE CHOICE...

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Chapter 3 Fighting Fraud: An Overview MULTIPLE CHOICE 1. Which of the following are the most effective fraud detectors? a. Auditors b. Customers c. Vendors d. Employees ANS: D A: Auditors usually detect fraud when there are red flags in the financial statements. Usually by this time the fraud is large. B: Customers can also detect fraud, but they are not the most effective resource. C: Vendors can also detect fraud, but again, they are not the most effective resource. D: Employees-managers, co-workers, and supervisors are in the best position to detect fraud. They are also the most effective fraud detectors. 2. Research has shown that __________ and __________ detect most frauds: a. Employees and managers b. Security and police c. IRS and FBI d. Auditors and Board of Directors ANS: A A: Correct 3. Organizations can eliminate opportunities to commit fraud by a. Accurately identifying sources and measuring risks b. Implementing appropriate preventative and detective controls c. Creating widespread monitoring by employees d. Installing independent checks and effective audits e. All of the above. ANS: E E: Each of these answers above is an effective method to reduce opportunity for fraud to occur. In fact, answers A through D are most effective when used together. 4. Audits, public record searches, and net worth calculations are used to gather which type of evidence? a. Testimonial b. Forensic c. Documentary d. Observational ANS: C A: Testimonial evidence is gathered from individuals. B: Forensic evidence is physical evidence, such as fingerprints and other tangible evidence. C: Documentary evidence is evidence that is gathered from paper, computers, etc. Audits, public re- cord searches and net worth calculations are also examples of documentary evidence. D: Observational evidence is collected by investigators and includes surveillance and invigilation. 5. Which of the following is not part of the evidence square? a. Management evidence
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b. Documentary evidence c. Personal Observation d. Physical evidence ANS: A A: Correct B: Incorrect - This is part of the evidence square C: Incorrect - This is part of the evidence square D: Incorrect - This is part of the evidence square 6. All of the following factors can be associated with high levels of fraud except: a. Top management that does not pay attention to appropriate behavior b. Lack of recognition of job performance c. Unrealistically low pay d. Lack of understanding of different department functions ANS: D A: Inappropriate tone from the top often carries over in employees B: Underappreciated employees lack loyalty to the company C: Underpaid employees will rationalize stealing D: Correct 7. Which of the following best creates a culture of honesty and integrity in the workplace? a.
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This note was uploaded on 01/31/2011 for the course ACCT 345 taught by Professor N/a during the Spring '10 term at Mountain State.

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03 - Chapter 3 Fighting Fraud: An Overview MULTIPLE CHOICE...

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