,TESTBANK for Forensic Accounting and Fraud
Examination, 2nd Edition by Mary-Jo
Kranacher
Hello all ,
We have all what you need with best price
Our email :
Our website :
testbanks-store.com
,Test bank project for Forensic Accounting and Fraud Examination (2nd Ed.) by Mary-Jo Kranacher and Dick Riley
Test bank written by Brian L. Carpenter, PhD, CFE ∙ (989) 205-4182 ∙
CHAPTER 1
Module 1
1. Which of the following is NOT one of the four essential elements of fraud under common
law?
A. A material false statement
B. Reliance on the false statement by the victim
C. Knowledge that the statement was false when it was spoken
D. Use of email, wire, or telephone with a criminal intent to deceive
2. The “felonious stealing, taking and carrying, leading, riding, or driving away with
another’s property, with the intent to convert it or deprive the owner thereof” is the legal
definition of:
A. Embezzlement
B. Tort
C. Larceny
D. Fraud
3. A fiduciary is someone who:
A. Swears an oath before taking office
B. Acts for the benefit of another
C. Betrays the trust of another
D. Controls access to an organization’s cash or assets
4. An unauthorized assumption and exercise of the right of ownership over goods or
personal chattels belonging to another, to the alteration of their condition or the exclusion
of the owner’s rights is the definition of:
A. Collusion
B. Concealment
C. Capital misappropriation
D. Conversion
5. The intentional, deliberate misstatement, or omission of material facts or accounting data
that is misleading and, when considered with all the information made available, that
would cause the reader to change or alter his or her judgment or decision is defined by the
Association of Certified Fraud Examiners as:
A. Financial statement fraud
B. Financial statement misstatement
C. Financial statement concealment
D. Financial statement re-statement
1 of 11
,Test bank project for Forensic Accounting and Fraud Examination (2nd Ed.) by Mary-Jo Kranacher and Dick Riley
Test bank written by Brian L. Carpenter, PhD, CFE ∙ (989) 205-4182 ∙
6. Which of the following is an example of financial statement and reporting fraud?
A. Failing to post audit results on the company’s website
B. Debt ratio is materially higher than industry standards
C. Improper timing of revenue and expense recognition
D. Net income for any quarterly filing is 17% or more below analyst predictions
7. The essential characteristics of financial statement fraud are:
A. The misstatement is material and intentional and the users of the financial
statements are investors in publicly traded companies.
B. This misstatement is material and intentional and the preparers of the financial
statements have a fiduciary obligation to the organization.
C. The misstatement is material and intentional and the preparers of the financial
statements fail to report the misstatement to the SEC or other applicable authority.
D. The misstatement is material and intentional and the users of the financial
statements have been misled.
8. As a result of the Sarbanes-Oxley Act (2002), which of the following became part of the
business landscape?
A. Assessment of internal controls, preservation of evidence, whistleblower protection
and increased penalties for securities fraud
B. Mandatory separation of duties, two-factor authentication for online transactions,
and prohibition of fraudulent financial reporting
C. Mandatory quarterly reporting of shell company beneficial ownership, mandatory
criminal background checks on all publicly traded company officers and directors,
and annual review of internal controls by the SEC
D. Auditing firm competence certification, annual disclosure of conflicts of interest by
the board of directors, prohibition of illegal gratuities and penalties for
whistleblowers
9. The occupational fraud and abuse classification system (fraud tree) arranges
organizational frauds in which three categories?
A. The act, concealment, and conversion
B. Existence of a fiduciary relationship, breach of duty, harm to the plaintiff or benefit
to the fiduciary
C. Asset misappropriation, corruption, and financial statement fraud
D. Incentive, opportunity, and rationalization.
10. Internal fraud committed by one or more employees of an organization is more commonly
referred to as:
A. Fiduciary breach and embezzlement
B. Insider trading and market timing
2 of 11
,Test bank project for Forensic Accounting and Fraud Examination (2nd Ed.) by Mary-Jo Kranacher and Dick Riley
Test bank written by Brian L. Carpenter, PhD, CFE ∙ (989) 205-4182 ∙
C. Occupational fraud and abuse
D. Check tampering and billing schemes
11. The approach to investigating fraud recommended by the text:
A. Identify the specific law that was violated
B. Examine relevant evidence with an eye toward demonstrating three attributes of
fraud
C. Defer decisions that are suited to an attorney’s expertise
D. Provide reasonable evidence in support of any opinion of guilt
12. The three attributes of a fraud are:
A. The scheme or fraud act, the concealment activity, and the conversion or benefit.
B. The motive, rationalization and opportunity.
C. The intent, the planning, and the execution of a fraudulent act.
D. Asset misappropriations, corruption, and financial statement fraud and other
fraudulent statements.
13. Who said, “White collar criminals consider your humanity as a weakness to be
exploited …”?
A. Dr. Joseph T. Wells
B. Sherron Watkins
C. Sam E. Antar
D. Andrew Fastow
Module 2
14. Forensic accounting is the application of financial principles and theories to facts or
hypotheses in a legal dispute and consists of two primary functions:
A. Litigation advisory services and investigative services
B. Expressing an opinion of guilt or innocence in court regarding audit results and
documenting the steps taken to reach that opinion
C. Subjecting accounting data to a Benford Analysis and explaining the results to a
judge or jury
D. Providing courtroom testimony and administrative technical guidance to attorneys
15. Forensic and Valuation Services (FVS) professionals can expect that:
A. Their opinion will be carefully noted in court.
B. The attorney for opposing counsel to defer to the FVS professional’s expert opinion
on matters pertaining to forensic accounting.
C. Their work will be carefully scrutinized by the opposing side and that engagements
are adversarial in nature.
3 of 11
,Test bank project for Forensic Accounting and Fraud Examination (2nd Ed.) by Mary-Jo Kranacher and Dick Riley
Test bank written by Brian L. Carpenter, PhD, CFE ∙ (989) 205-4182 ∙
D. Mediation, arbitration, and negotiations are directed by FVS professionals.
16. Which of the following is NOT typical of forensic and litigation advisory services?
A. Cost and lost profits associated with construction delays.
B. Divorce and matrimonial issues.
C. Environmental issues.
D. Stating an expert opinion about the guilt or innocence of a plaintiff or defendant in
a court of law.
Module 3
17. Forensic accounting and fraud examination require at least three major skill types:
A. Inquisitive, persuasive, and authoritative
B. Equanimity, objectivity, and a commitment to excellence
C. Technical competence, investigative, and communication
D. Specialization in law or accounting, experience, and ongoing professional
development
Module 4
18. Under current auditing standards, the auditor is required to:
A. Undertake a fraud-risk assessment but not for planning and performing auditing
procedures to detect immaterial misstatements.
B. Undertake a fraud-risk assessment to include planning and performing auditing
procedures to detect immaterial misstatements.
C. Undertake a fraud-risk assessment but not for planning and performing auditing
procedures to detect immaterial misstatements unless such misstatements are
caused by fraud (rather than error).
D. Undertake a fraud-risk assessment to include planning and performing auditing
procedures to detect immaterial misstatements whether caused by fraud or error.
19. The interrelationship among auditing, fraud examination, and forensic accounting is
dynamic and changes over time because of:
A. the Internet and other technological advances
B. high profile fraud cases such as Enron, Tyco, and WorldCom
C. emerging research by the ACFE which casts doubts on previously existing theories
of criminality
D. political, social, and cultural pressures.
20. Fraud examination is the ________ of resolving allegations of fraud from tips, complaints,
or accounting clues.
4 of 11
,Test bank project for Forensic Accounting and Fraud Examination (2nd Ed.) by Mary-Jo Kranacher and Dick Riley
Test bank written by Brian L. Carpenter, PhD, CFE ∙ (989) 205-4182 ∙
A. Tradecraft
B. Art and science
C. Discipline
D. Accounting technique
Module 5
21. If a company generates $12,000,000 in annual sales and has an operating margin of 5%,
how many additional dollars in sales would it need to generate to make up for fraud losses
of $180,000?
A. $3,600,000
B. $360,000
C. $180,000
D. $1,800,000
22. According to the ACFE’s 2016 Report to the Nations on Occupational Fraud and Abuse,
median fraud losses are the highest in cases of:
A. Asset misappropriation
B. Corruption
C. Financial reporting fraud
D. Insider trading
23. According to the ACFE’s 2016 Report to the Nations on Occupational Fraud and Abuse,
what kind of fraud scheme resulted in the greatest percentage of cases?
A. Billing
B. Check tampering
C. Expense reimbursements
D. Skimming
24. According to the ACFE’s 2016 Report to the Nations on Occupational Fraud and Abuse,
what is the median loss for schemes that ran 19-24 months in duration?
A. $178,000
B. $100,000
C. $150,000
D. $45,000
25. According to the ACFE’s 2016 Report to the Nations on Occupational Fraud and Abuse,
what percentage of asset misappropriation cases involved the creation of fraudulent
physical documents?
A. 60.7%
B. 49.3%
5 of 11
,Test bank project for Forensic Accounting and Fraud Examination (2nd Ed.) by Mary-Jo Kranacher and Dick Riley
Test bank written by Brian L. Carpenter, PhD, CFE ∙ (989) 205-4182 ∙
C. 52.9%
D. 42.2%
26. According to the ACFE’s 2016 Report to the Nations on Occupational Fraud and Abuse,
_______ remain the most frequent means by which occupational fraud is detected.
A. Internal audits
B. Management reviews
C. Tips
D. Account reconciliations
27. According to the ACFE’s 2016 Report to the Nations on Occupational Fraud and Abuse,
the largest source of tips that fraud is occurring comes from:
A. Customers
B. Vendors
C. Shareholders
D. Employees
28. According to the ACFE’s 2016 Report to the Nations on Occupational Fraud and Abuse,
________ employees caused median losses that were more than twice as large as those of
__________ employees.
A. Male; female
B. Female; male
C. Hourly; salaried
D. Salaried; hourly
29. When it comes to fraud loss amounts in organizations, the data shows that there is a direct
correlation between ________ loss and ________.
A. Average; perpetrator’s intelligence
B. Average; perpetrator’s position
C. Median; perpetrator’s intelligence
D. Median; perpetrator’s position
30. Although most cases in the ACFE’s 2016 Report to the Nations on Occupational Fraud
and Abuse involved a single perpetrator, when two or more persons conspired, the median
loss was more than ____ times higher.
A. Two
B. Seven
C. Nine
D. Four
6 of 11
,Test bank project for Forensic Accounting and Fraud Examination (2nd Ed.) by Mary-Jo Kranacher and Dick Riley
Test bank written by Brian L. Carpenter, PhD, CFE ∙ (989) 205-4182 ∙
31. According to the ACFE’s 2016 Report to the Nations on Occupational Fraud and Abuse,
survey respondents were presented with a list of 17 common behavioral red flags
associated with occupational fraud and asked to identify which, if any, of these warning
signs had been displayed by the perpetrator before the fraud was detected. Rank the
presence of the following four red flags in order of their prevalence from highest to lowest
percentage of cases in which they were identified.
A. Living beyond means, financial difficulties, past-employment related problems,
excessive pressure from within organization
B. Living beyond means, financial difficulties, wheeler-dealer attitude, unusually close
association with vendor/customer
C. Living beyond means, financial difficulties, addiction problems, divorce/family
problems
D. Living beyond means, financial difficulties, social isolation, complained about
inadequate pay
32. According to the ACFE’s 2016 Report to the Nations on Occupational Fraud and Abuse,
what percent of cases were perpetrated in companies with fewer than 100 employees?
A. 72.8%
B. 12.8%
C. 30.1%
D. 49.7%
33. Antifraud professionals logically conclude that small organizations are particularly
vulnerable to occupational fraud and abuse. The results from fraud surveys bear this out:
losses in the smallest companies were comparable to or greater than those in organizations
with the largest number of employees. It is suspected that this phenomenon exists for two
reasons.
A. Smaller businesses have fewer divisions of responsibility and there is a greater
degree of trust where people know one another personally.
B. Smaller businesses employ fewer highly trained business managers and employees
are less supervised.
C. Smaller businesses are more mission driven by nature and less inclined to formally
orient new employees to their responsibilities.
D. Smaller businesses employ more people with a wheeler-dealer mindset and don’t
solicit competitive bids as frequently.
34. Which three antifraud measures are associated with the largest reduction in median losses
(though not among the most commonly implemented antifraud controls)?
A. Proactive data monitoring/analysis, management review, surprise audits
B. Proactive data monitoring/analysis, management review, fraud training for
employees
C. Proactive data monitoring/analysis, management review, hotline
7 of 11
, Test bank project for Forensic Accounting and Fraud Examination (2nd Ed.) by Mary-Jo Kranacher and Dick Riley
Test bank written by Brian L. Carpenter, PhD, CFE ∙ (989) 205-4182 ∙
D. Proactive data monitoring/analysis, management review, code of conduct
35. 29.3% of respondents to the 2016 ACFE survey cited a lack of ________ as the victim
organizations’ primary issue that contributed to the fraudster’s ability to perpetrate the
scheme.
A. Management review
B. Amoral corporate culture
C. Employee fraud education
D. Internal controls
36. A common complaint among those who investigate fraud is that organizations and law
enforcement ___________________________________________.
A. Fail to understand the many ways in which fraud and other white-collar fraud can
be perpetrated
B. Do not keep pace with the growing sophistication of fraud and other white-collar
offenses
C. Do not do enough to punish fraud and other white-collar offenses
D. Are overwhelmed with other concerns to the extent that fraud and other white-
collar offenses are regarded as inconsequential in the grand scheme of things.
37. Regarding criminal prosecutions of occupational fraud and their outcomes, although the
percentage of cases referred to prosecution ____________ gradually from the ACFE’s
2012 to the 2016 reports, the percentage of cases that prosecutors successfully pursued
___________.
A. Decreased; increased
B. Increased; decreased
C. Decreased; decreased
D. Increased; increased
38. One goal of the ACFE survey was to try to determine why organizations frequently
decline to take legal action against fraudsters. In cases where no legal action was taken,
the survey provided respondents with a list of commonly cited explanations and asked
them to mark any that applied to their case. Which of the following was NOT one of the
explanations cited by the survey’s participants?
A. Fear of bad publicity
B. Internal discipline sufficient
C. Lack of evidence
D. Credibility compromise
Module 6
8 of 11
Examination, 2nd Edition by Mary-Jo
Kranacher
Hello all ,
We have all what you need with best price
Our email :
Our website :
testbanks-store.com
,Test bank project for Forensic Accounting and Fraud Examination (2nd Ed.) by Mary-Jo Kranacher and Dick Riley
Test bank written by Brian L. Carpenter, PhD, CFE ∙ (989) 205-4182 ∙
CHAPTER 1
Module 1
1. Which of the following is NOT one of the four essential elements of fraud under common
law?
A. A material false statement
B. Reliance on the false statement by the victim
C. Knowledge that the statement was false when it was spoken
D. Use of email, wire, or telephone with a criminal intent to deceive
2. The “felonious stealing, taking and carrying, leading, riding, or driving away with
another’s property, with the intent to convert it or deprive the owner thereof” is the legal
definition of:
A. Embezzlement
B. Tort
C. Larceny
D. Fraud
3. A fiduciary is someone who:
A. Swears an oath before taking office
B. Acts for the benefit of another
C. Betrays the trust of another
D. Controls access to an organization’s cash or assets
4. An unauthorized assumption and exercise of the right of ownership over goods or
personal chattels belonging to another, to the alteration of their condition or the exclusion
of the owner’s rights is the definition of:
A. Collusion
B. Concealment
C. Capital misappropriation
D. Conversion
5. The intentional, deliberate misstatement, or omission of material facts or accounting data
that is misleading and, when considered with all the information made available, that
would cause the reader to change or alter his or her judgment or decision is defined by the
Association of Certified Fraud Examiners as:
A. Financial statement fraud
B. Financial statement misstatement
C. Financial statement concealment
D. Financial statement re-statement
1 of 11
,Test bank project for Forensic Accounting and Fraud Examination (2nd Ed.) by Mary-Jo Kranacher and Dick Riley
Test bank written by Brian L. Carpenter, PhD, CFE ∙ (989) 205-4182 ∙
6. Which of the following is an example of financial statement and reporting fraud?
A. Failing to post audit results on the company’s website
B. Debt ratio is materially higher than industry standards
C. Improper timing of revenue and expense recognition
D. Net income for any quarterly filing is 17% or more below analyst predictions
7. The essential characteristics of financial statement fraud are:
A. The misstatement is material and intentional and the users of the financial
statements are investors in publicly traded companies.
B. This misstatement is material and intentional and the preparers of the financial
statements have a fiduciary obligation to the organization.
C. The misstatement is material and intentional and the preparers of the financial
statements fail to report the misstatement to the SEC or other applicable authority.
D. The misstatement is material and intentional and the users of the financial
statements have been misled.
8. As a result of the Sarbanes-Oxley Act (2002), which of the following became part of the
business landscape?
A. Assessment of internal controls, preservation of evidence, whistleblower protection
and increased penalties for securities fraud
B. Mandatory separation of duties, two-factor authentication for online transactions,
and prohibition of fraudulent financial reporting
C. Mandatory quarterly reporting of shell company beneficial ownership, mandatory
criminal background checks on all publicly traded company officers and directors,
and annual review of internal controls by the SEC
D. Auditing firm competence certification, annual disclosure of conflicts of interest by
the board of directors, prohibition of illegal gratuities and penalties for
whistleblowers
9. The occupational fraud and abuse classification system (fraud tree) arranges
organizational frauds in which three categories?
A. The act, concealment, and conversion
B. Existence of a fiduciary relationship, breach of duty, harm to the plaintiff or benefit
to the fiduciary
C. Asset misappropriation, corruption, and financial statement fraud
D. Incentive, opportunity, and rationalization.
10. Internal fraud committed by one or more employees of an organization is more commonly
referred to as:
A. Fiduciary breach and embezzlement
B. Insider trading and market timing
2 of 11
,Test bank project for Forensic Accounting and Fraud Examination (2nd Ed.) by Mary-Jo Kranacher and Dick Riley
Test bank written by Brian L. Carpenter, PhD, CFE ∙ (989) 205-4182 ∙
C. Occupational fraud and abuse
D. Check tampering and billing schemes
11. The approach to investigating fraud recommended by the text:
A. Identify the specific law that was violated
B. Examine relevant evidence with an eye toward demonstrating three attributes of
fraud
C. Defer decisions that are suited to an attorney’s expertise
D. Provide reasonable evidence in support of any opinion of guilt
12. The three attributes of a fraud are:
A. The scheme or fraud act, the concealment activity, and the conversion or benefit.
B. The motive, rationalization and opportunity.
C. The intent, the planning, and the execution of a fraudulent act.
D. Asset misappropriations, corruption, and financial statement fraud and other
fraudulent statements.
13. Who said, “White collar criminals consider your humanity as a weakness to be
exploited …”?
A. Dr. Joseph T. Wells
B. Sherron Watkins
C. Sam E. Antar
D. Andrew Fastow
Module 2
14. Forensic accounting is the application of financial principles and theories to facts or
hypotheses in a legal dispute and consists of two primary functions:
A. Litigation advisory services and investigative services
B. Expressing an opinion of guilt or innocence in court regarding audit results and
documenting the steps taken to reach that opinion
C. Subjecting accounting data to a Benford Analysis and explaining the results to a
judge or jury
D. Providing courtroom testimony and administrative technical guidance to attorneys
15. Forensic and Valuation Services (FVS) professionals can expect that:
A. Their opinion will be carefully noted in court.
B. The attorney for opposing counsel to defer to the FVS professional’s expert opinion
on matters pertaining to forensic accounting.
C. Their work will be carefully scrutinized by the opposing side and that engagements
are adversarial in nature.
3 of 11
,Test bank project for Forensic Accounting and Fraud Examination (2nd Ed.) by Mary-Jo Kranacher and Dick Riley
Test bank written by Brian L. Carpenter, PhD, CFE ∙ (989) 205-4182 ∙
D. Mediation, arbitration, and negotiations are directed by FVS professionals.
16. Which of the following is NOT typical of forensic and litigation advisory services?
A. Cost and lost profits associated with construction delays.
B. Divorce and matrimonial issues.
C. Environmental issues.
D. Stating an expert opinion about the guilt or innocence of a plaintiff or defendant in
a court of law.
Module 3
17. Forensic accounting and fraud examination require at least three major skill types:
A. Inquisitive, persuasive, and authoritative
B. Equanimity, objectivity, and a commitment to excellence
C. Technical competence, investigative, and communication
D. Specialization in law or accounting, experience, and ongoing professional
development
Module 4
18. Under current auditing standards, the auditor is required to:
A. Undertake a fraud-risk assessment but not for planning and performing auditing
procedures to detect immaterial misstatements.
B. Undertake a fraud-risk assessment to include planning and performing auditing
procedures to detect immaterial misstatements.
C. Undertake a fraud-risk assessment but not for planning and performing auditing
procedures to detect immaterial misstatements unless such misstatements are
caused by fraud (rather than error).
D. Undertake a fraud-risk assessment to include planning and performing auditing
procedures to detect immaterial misstatements whether caused by fraud or error.
19. The interrelationship among auditing, fraud examination, and forensic accounting is
dynamic and changes over time because of:
A. the Internet and other technological advances
B. high profile fraud cases such as Enron, Tyco, and WorldCom
C. emerging research by the ACFE which casts doubts on previously existing theories
of criminality
D. political, social, and cultural pressures.
20. Fraud examination is the ________ of resolving allegations of fraud from tips, complaints,
or accounting clues.
4 of 11
,Test bank project for Forensic Accounting and Fraud Examination (2nd Ed.) by Mary-Jo Kranacher and Dick Riley
Test bank written by Brian L. Carpenter, PhD, CFE ∙ (989) 205-4182 ∙
A. Tradecraft
B. Art and science
C. Discipline
D. Accounting technique
Module 5
21. If a company generates $12,000,000 in annual sales and has an operating margin of 5%,
how many additional dollars in sales would it need to generate to make up for fraud losses
of $180,000?
A. $3,600,000
B. $360,000
C. $180,000
D. $1,800,000
22. According to the ACFE’s 2016 Report to the Nations on Occupational Fraud and Abuse,
median fraud losses are the highest in cases of:
A. Asset misappropriation
B. Corruption
C. Financial reporting fraud
D. Insider trading
23. According to the ACFE’s 2016 Report to the Nations on Occupational Fraud and Abuse,
what kind of fraud scheme resulted in the greatest percentage of cases?
A. Billing
B. Check tampering
C. Expense reimbursements
D. Skimming
24. According to the ACFE’s 2016 Report to the Nations on Occupational Fraud and Abuse,
what is the median loss for schemes that ran 19-24 months in duration?
A. $178,000
B. $100,000
C. $150,000
D. $45,000
25. According to the ACFE’s 2016 Report to the Nations on Occupational Fraud and Abuse,
what percentage of asset misappropriation cases involved the creation of fraudulent
physical documents?
A. 60.7%
B. 49.3%
5 of 11
,Test bank project for Forensic Accounting and Fraud Examination (2nd Ed.) by Mary-Jo Kranacher and Dick Riley
Test bank written by Brian L. Carpenter, PhD, CFE ∙ (989) 205-4182 ∙
C. 52.9%
D. 42.2%
26. According to the ACFE’s 2016 Report to the Nations on Occupational Fraud and Abuse,
_______ remain the most frequent means by which occupational fraud is detected.
A. Internal audits
B. Management reviews
C. Tips
D. Account reconciliations
27. According to the ACFE’s 2016 Report to the Nations on Occupational Fraud and Abuse,
the largest source of tips that fraud is occurring comes from:
A. Customers
B. Vendors
C. Shareholders
D. Employees
28. According to the ACFE’s 2016 Report to the Nations on Occupational Fraud and Abuse,
________ employees caused median losses that were more than twice as large as those of
__________ employees.
A. Male; female
B. Female; male
C. Hourly; salaried
D. Salaried; hourly
29. When it comes to fraud loss amounts in organizations, the data shows that there is a direct
correlation between ________ loss and ________.
A. Average; perpetrator’s intelligence
B. Average; perpetrator’s position
C. Median; perpetrator’s intelligence
D. Median; perpetrator’s position
30. Although most cases in the ACFE’s 2016 Report to the Nations on Occupational Fraud
and Abuse involved a single perpetrator, when two or more persons conspired, the median
loss was more than ____ times higher.
A. Two
B. Seven
C. Nine
D. Four
6 of 11
,Test bank project for Forensic Accounting and Fraud Examination (2nd Ed.) by Mary-Jo Kranacher and Dick Riley
Test bank written by Brian L. Carpenter, PhD, CFE ∙ (989) 205-4182 ∙
31. According to the ACFE’s 2016 Report to the Nations on Occupational Fraud and Abuse,
survey respondents were presented with a list of 17 common behavioral red flags
associated with occupational fraud and asked to identify which, if any, of these warning
signs had been displayed by the perpetrator before the fraud was detected. Rank the
presence of the following four red flags in order of their prevalence from highest to lowest
percentage of cases in which they were identified.
A. Living beyond means, financial difficulties, past-employment related problems,
excessive pressure from within organization
B. Living beyond means, financial difficulties, wheeler-dealer attitude, unusually close
association with vendor/customer
C. Living beyond means, financial difficulties, addiction problems, divorce/family
problems
D. Living beyond means, financial difficulties, social isolation, complained about
inadequate pay
32. According to the ACFE’s 2016 Report to the Nations on Occupational Fraud and Abuse,
what percent of cases were perpetrated in companies with fewer than 100 employees?
A. 72.8%
B. 12.8%
C. 30.1%
D. 49.7%
33. Antifraud professionals logically conclude that small organizations are particularly
vulnerable to occupational fraud and abuse. The results from fraud surveys bear this out:
losses in the smallest companies were comparable to or greater than those in organizations
with the largest number of employees. It is suspected that this phenomenon exists for two
reasons.
A. Smaller businesses have fewer divisions of responsibility and there is a greater
degree of trust where people know one another personally.
B. Smaller businesses employ fewer highly trained business managers and employees
are less supervised.
C. Smaller businesses are more mission driven by nature and less inclined to formally
orient new employees to their responsibilities.
D. Smaller businesses employ more people with a wheeler-dealer mindset and don’t
solicit competitive bids as frequently.
34. Which three antifraud measures are associated with the largest reduction in median losses
(though not among the most commonly implemented antifraud controls)?
A. Proactive data monitoring/analysis, management review, surprise audits
B. Proactive data monitoring/analysis, management review, fraud training for
employees
C. Proactive data monitoring/analysis, management review, hotline
7 of 11
, Test bank project for Forensic Accounting and Fraud Examination (2nd Ed.) by Mary-Jo Kranacher and Dick Riley
Test bank written by Brian L. Carpenter, PhD, CFE ∙ (989) 205-4182 ∙
D. Proactive data monitoring/analysis, management review, code of conduct
35. 29.3% of respondents to the 2016 ACFE survey cited a lack of ________ as the victim
organizations’ primary issue that contributed to the fraudster’s ability to perpetrate the
scheme.
A. Management review
B. Amoral corporate culture
C. Employee fraud education
D. Internal controls
36. A common complaint among those who investigate fraud is that organizations and law
enforcement ___________________________________________.
A. Fail to understand the many ways in which fraud and other white-collar fraud can
be perpetrated
B. Do not keep pace with the growing sophistication of fraud and other white-collar
offenses
C. Do not do enough to punish fraud and other white-collar offenses
D. Are overwhelmed with other concerns to the extent that fraud and other white-
collar offenses are regarded as inconsequential in the grand scheme of things.
37. Regarding criminal prosecutions of occupational fraud and their outcomes, although the
percentage of cases referred to prosecution ____________ gradually from the ACFE’s
2012 to the 2016 reports, the percentage of cases that prosecutors successfully pursued
___________.
A. Decreased; increased
B. Increased; decreased
C. Decreased; decreased
D. Increased; increased
38. One goal of the ACFE survey was to try to determine why organizations frequently
decline to take legal action against fraudsters. In cases where no legal action was taken,
the survey provided respondents with a list of commonly cited explanations and asked
them to mark any that applied to their case. Which of the following was NOT one of the
explanations cited by the survey’s participants?
A. Fear of bad publicity
B. Internal discipline sufficient
C. Lack of evidence
D. Credibility compromise
Module 6
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