(Top QUALITY 2024/2025 EXAM REVIEW) WGU C254 Fraud & Forensic, Questions and answers, 100% Accurate. VERIFIED.

WGU C254 Fraud & Forensic, Questions and answers, 100% Accurate. VERIFIED. Which of the following are the four areas of the fraud exposure rectangle - -Management and Directors Relationship with others Organization & Industry Financial Results & Operational Characteristics To detect fraud, symptoms must be not Observed and Recognized - -True When is a contingent liability supposed to be recognized on the books (a contingent liability is the potential for a payout based on a court case or some other future event)? - -Probable Many accounts payable frauds occur with timing/cut-off issues around the end-of-period events. - - True The Enron fraud was (in a very simplistic description) involved in what type of fraud? - - Understatement of Liability fraud How does discovery sampling relate to fraud risk exposure? - -Only 100% examination guarantees no fraud; discovery sampling allows auditor to control the fraud exposure by extrapolating the sample onto the population To detect inventory/cost of goods sold frauds, auditors tend to focus on which two symptoms THE MOST? - -Analytical and Accounting/Documentary symptoms Why is inventory/cost of goods sold frauds more difficult for perpetrators than revenue-related frauds? - -There is no compounding affect in subsequent periods with revenue frauds f Ending inventory is overstated, then COGS (cost of goods sold) is ______________ and net income is ____________________ - -Understated, Overstated Which of the following is RARELY used as a method to perpetrate an inventory/cost of goods sold fraud? - -Understate Beginning Inventory What is the most practical way to look for analytical symptoms of revenue-related fraud? - -Looking at changes and comparison within and from the financial statements Who usually benefits from revenue-related fraud, in the short-term? - -Stockholders Which of the following is NOT an account that can be manipulated to perpetrate a revenue-related fraud? - -Accounts Payable What were the findings of two studies that evaluated the effectiveness of using red flag checklists during an audit to detect fraud? - -Auditors are Less Sensitive to the pretense of fraud than those that donates use checklists When an auditor finds a fraud red flag, what should be his or her first reaction? - -Examine the red flag in contex