Fraud 7 Flashcards

fraudulent disbursement scheme
Terms Definitions
kickbacks
getting something for helping somone
bustouts
borrows money then files for bankruptcy
Periodicity
A "time period" assumption, which deems that economic activity be divided into specific time intervals, such as monthly, quarterly, and annually
the new fraud "diamond"
includes incentive, opportunity, rationalization, as well as capability - personal traits and abilities
Overstatements
Type of financial statement fraud in which an individual exaggerates a company's assets or revenues to meet certain objectives
Gough Chapter 2
"ethical complacency" is that people seem to not try to imrpove anymore becuase they think they are too set in their ways to change
we are so busy that we don't think we have time to change ourselves
we are arrogant and think we don't need to change
what are our primary weaknesses?
look inward and know yoruself and it will help us in life
 
In the Median Loss of Fraudulent Disbursements
in order from highest loss to
least amount
 
Billing
Check Tampering
Payroll
Register Disbursement
Expense Reimbursement
Bid pooling
A process by which several bidders conspire to split contracts, thereby ensuring that each gets a certain amount of work
Benchmark admission
A small admission made to wrongdoing that signals a subject's willingness to confess
Check Tampering
In the case of Melissa Robinson, Executive Secretary of a charitable organization in Nashville, what type of fraud did she commit?
 
In Fraud Examination
"forgeries" are limited to?
 
In this text remember that "Forgeries" are constrained to thoses cases in which an individual signs another person's name on a check.
a) kickback scheme
Company A submits an inflated invoice to Company B. Jonny, which works for Company B, authorized payment for the invoice. Jonny committed an overbilling scheme, which is a:a) kickback schemeb) Illegal gratuityc) conflict of interestd) economic extortion
Anatomical physical responses
Involuntary reactions by the body to fright
internal controls - control activities
policies and procedures that help ensure that management's directives are carried out. 
 
performance reviews (actual vs. budget)
segregation of duties (authorization, record and custody)
information processing (authorization, accuracy and completeness of transactions)
physical controls (safeguards over access to assets and records)
 
 
What is a Mischaracterized Expense Scheme?
 
An attempt to obtain reimbursement for personal expenses by claiming they are business related.
Who is Peter Roman?
Peter Roman is the chief investigator for the subcommittee of the us. Senate Com.
a) Check tampering
What type of scheme is an altered payee scheme?a) Check tamperingb) Billing schemec) Cash larcenyd) None of the above
Overstated refund scheme
A false refund scheme in which an employee overstates the amount of a legitimate customer refund, gives the customer the actual amount of the refund, and steals the excess
 
How did Jerry Harkanell change raise his wages? Case "Say Cheese"
 
He submitted the unit's manually prepared timesheets to his supervisor, she would sign the timesheets and make copies to retain for her records, Harkanell would then alter the orginal time sheets before he delivered them to the payroll department.
 
Which employee's are the ones who committ unconcealed larceny schemes?
Ironically, employees who steal company property are often highly trusted within their organizations. This trust can provide employees with access to restricted areas safes, supply rooms, or even keys to the business.
a) Economic extortion (p. 239)
Kalani demands a certain supplier to pay her $1,000; in return she will award the supplier with subcontracts on various projects. If the supplier refuses, she will award the subcontracts to rival suppliers. This is an example of:a) Economic extortionb) Briberyc) Illegal gratuityd) Conflict of interest
Payroll preparation, authorization, distribution, and reconciliation
The separation of what four duties can help prevent payroll schemes?
 
 
How did the Frequent Flier's Fraud Crash?
Andrew Worth
 
During a routine review of the company-sponsored credit card activity reports an inordinate number of credits showed up on Andrew Worth's credit card account.
 
What are some of the ways to prevent and detect larceny of Noncash Assets?
Dividing of duties requisitioning, purchasing, and receiving, these assets should be segregated. Payables functions should be segregated from all purchasing and receiving duties.  All merchandise should be physically guarded and locked, with access restricted to authorized personnel only. Access logs, personalized entry codes, Installations of security cameras, their presence should be made known to employees, security guards
c) sales are recorded prematurely (p 270)
Which of the following is characteristic of "playing the accounting system"?a) fictitious sales recorded to legitimate or phony customersb) the fraudster produces financial statements using a personal computerc) sales are recorded prematurelyd) a) and c) only
1) Overstating hours2) Increasing the pay rate
What are two methods of falsifying hours and salary?
What did the invesgator look at when he started looking into the case.
 
He looked at the inventory.
 
He compared the# of refunds for the item returned, food processors to the number originally received in shipment minus those sold. Then compared with the food processors actually in stock.
e) a), b) and c) (p 250)
Which of the following is indicative of a bid-rigging scheme?a) An unusually high contract priceb) Low-bid awards are followed by amendments that increase payments to the contractorc) Large, unexplained price differences among biddersd) a) and c) onlye) a), b) and c)
The operations manager discovered a company check on Ernie's desk written out in his name with Sell's signature being forged
In the case titled "What are friends for", what caused James Sell to believe that Ernie Phillips was stealing from the company?
According to the 2006 or 2004 National Fraud Survery Register Disbursement Schemes are..
were reported less frequently than any other fraudulent disbursement scheme. They accounted for about 3 percent of the fraudulent disbursements, they are 2nd least costly with expense reimbursement being the least costly.
see page 198
f) all of the above
Which of the following is not a way to eliminate competition in the bidding process?a)b) An employee writes contract specifications that apply to only one vendorc) A vendor pays an employee to assure that one or more of the vendor's competitors do not get to bid on the contractc) bid poolingd) Solicit bids from fictitious supplierse) a) and c) onlyf) all of the above
Falsifying the number of hours the employee has worked
What is the most common method of misappropriating funds from the payroll?
c) it consists of five persons, all of which are CPAs (p 281)
Which of the following statements is false about the PCAOB?a) it enforces compliance with the Sarbanes-Oxley Act, the rules of the Board, professional standards, and securities laws relating to public company auditsb) it is appointed and overseen by the SECc) it consists of five persons, all of which are CPAsd) only some members of the PCAOB are CPAs
What happened to the GSA agency and the Art Metal furniture Co.?
The GSA was reduced in size and power. The GSA's role as a federal government's chief purchasing agent has been greatly diminished. Art Metal went bankrupt.
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