1. John Smith was in an auto accident as he was going to work. The car that hit him was at fault. As a result, Mr. Smith spent several weeks in the hospital. Only 35 years old, John has said he can never work again. The insurance company for the driver at fault does not agree and is contesting the claim. Smith's attorney has hired you as a financial forensics expert. What type of support will you provide to Smith's attorney? (Points : 2) Conduct surveillance of Smith's activities
Determine Smith's economic loss
Gather evidence to determine if Smith is lying
Determine the financial amount the insurance company can pay Smith
2. Joe was employed by his brother Ed. Ed owned multiple businesses but employed his brother Joe to manage them as a salaried employee. Ed spent most of his time on his yacht or flying in his plane with various friends. Joe on the other hand had the responsibility of making sure that all of the businesses ran profitably. Ed was very clear in telling his brother that he wanted to make sure they were not taxed unduly for all these businesses. He put tremendous pressure on Joe to circumvent taxes and would spend hours at the end of each fiscal year questioning his brother on the tax situation. The I.R.S. discovered a Swiss bank account under another name that was traced back to Joe. Ed is in turn suing his brother. Joe has hired a litigation team to help prove his innocence. What will Joe's hired fraud examiner try to establish?
risk tolerant corporate culture and coercion
intent and damages
lack of financial incentive and disparate impact
lack of intent and benefit
3. What is the basis of a fraud investigation?
Suspicion
Predication
Critical review
Remediation
4. A fraud examiner's objective is to determine if fraud has occurred and who was responsible. What is the objective of a financial forensics investigator?
Use adversarial techniques to gather evidence
Determine whether internal controls will prevent financial fraud
Render an opinion on the cause of the fraud
Use financial evidence to prove fraud allegations
5. Mrs. Barnes had a prenuptial agreement with her husband that if there were a dissolution of the marriage on any grounds other than agreed upon irreconcilable differences, the husband would forgo any monies or assets left to her by her parents' estate. Now Mrs. Barnes has found out that her husband has had an affair. Mr. Barnes claims they need to divorce based on irreconcilable differences. Which professional might help Mrs. Barnes, a fraud examiner or a forensic accountant and on what basis?
A forensic accountant because there will be financial damages involved
A fraud examiner because Mr. Barnes had expenses involved with the infidelity
A fraud examiner because Mrs. Barnes is proving default on a contract
A forensic accountant because Mr. Barnes will receive a portion of the estate.
6. How are auditing, fraud examination, and financial forensics interrelated?
All may involve litigation support
All may involve gathering evidence
All use similar investigative techniques
All are impacted by the SOX Act
7. Which of the following would be acting in a fiduciary capacity?
An investment broker conducting transactions
A bookkeeper recording transactions
A salesman attempting to get his customer the best price
A cashier accepting payments
8. Where does the perception of fraud deterrence originate?
In the company culture
In the fraud examiner's recommendations
In an employee's mind
In management's implementation of internal controls
9. What is a source of pressure to commit financial statement fraud?
To meet analysts' predictions
To recover losses from investments
To maintain organizational structure
To maintain an extravagent lifestyle
10. What function is an auditor responsible for?
Internal controls
Fraud detection
Risk assessment
Calculation of damages
11. Why is higher employee compensation of a fraud perpetrator associated with higher fraud losses?
This fraud perpetrator has more access to assets
This fraud perpetrator uses collusion
This fraud perpetrator must maintain a good reputation
This fraud perpetrator has a higher lifestyle to maintain
12. When are forensic accountants engaged to provide services?
When an individual has been arrested for fraud.
When a fraud suspect has been identified
When a company requires an internal control system test
When several fraud suspects need to be investigated
13. Which type of fraud is the least likely to occur yet yields the highest losses?
Asset misappropriation fraud schemes
Financial statement fraud schemes
Public corruption schemes
Company kickback fraud schemes
14. What is a financial forensics investigator's mindset when analyzing information?
Adversarial
Cautious
Subjective
Objective
15. The investigative approach for a forensic accountant is based on which of the following?
Methods following generally accepted auditing standards
Methods following the Sarbanes Oxley Act
Methods to determine who is responsible
Methods to determine the financial impact
16. Which act would be considered fraud instead of abuse?
Using a company gas card to fuel your personal vehicle
Taking home office supplies and giving them to your children
Shopping online using a company computer during work hours
Constantly leaving work early
17. Ed owned multiple businesses but employed his brother Joe to manage them as a salaried employee. Ed spent most of his time on his yacht or flying in his plane with various friends. Joe on the other hand had the responsibility of making sure that all of the businesses ran profitably. Ed was very clear in telling his brother that he wanted to make sure they were not taxed unduly for all these businesses. He put tremendous pressure on Joe to circumvent taxes and would spend hours at the end of each fiscal year questioning his brother on the tax situation. The I.R.S. discovered a Swiss bank account under another name that was traced back to Joe. Ed is in turn suing his manager/brother Joe and has hired a forensic accountant to gather evidence against Joe. What type of evidence will the forensic accountant be looking for?
ego
motivation
conversion
collusion
18. What is one reason for the proliferation of white collar crime?
Minimal losses to victims
Untrained investigative personnel
Lack of investigative resources
Lack of interest by prosecutors
19. In which situation would a business hire a fraud examiner?
An allegation of defamation of character
To complete the taxes for a business
Search for hidden assets in a divorce case
To detemine the cause of inventory shrinkage at a company
20. What are the two primary functions of a financial forensics professional?
Forensic auditing and expert witness services
Forensic auditing and investigative services
Investigative services and expert witness services
Litigation advisory services and investigative services