Fraud Ch 11

  1. What was the largest bankruptcy in US history?
  2. Which section of SOX is most highly debated
    Section 404
  3. According to the book, has recent legislation reduced the risk of fraud in the US?
    Yes, but the risk of fraud will never be completely eliminated
  4. Which type of financial statement fraud method is the most common?
    Improper revenue recognition
  5. Incentive packages offered to many executives caused the attention of many CEOs to shift from
    Managing the firm to manage the stock price
  6. Unachievable expectations of Wall Street analysts targeted
    short-term behavior
  7. Which is not an element of the fraud exposure rectangle?
    Financial results and Operating Characteristics
    Management and Directors
    Organization and Industry
    Strategic Reasoning
    Strategic Reasoning
  8. The basic concept behind strategic reasoning is similar to
  9. Which of the following is a relationship to investigate as an auditor
  10. When looking into management and the board of directors, you want to understand which of the following?
    all of the above
  11. Financial statement fraud is usually committed by
    executives and managers
  12. Which officer in a company is most likely to be the perpetrator of financial statement fraud?
  13. When looking for financial statement fraud, auditors should look for indicators of fraud by:
    examining fianncial statements
    evaluating changes in financial statements
    examining relationships the company has with other parities
    examining operating characteristics of the company
    all of the above
  14. The three aspects of management that a fraud examiner needs to be aware of include all of the following except:
    Their backgrounds
    their motivations
    their religious convictions
    their influence in making decisions
    religious convictions
  15. Which of the following is least likely to be considered a fianncial reporting fraud symptom or red flag
    grey directors
  16. Many indicators of fraud are circumstantial. This fact can make convicting someone of fraud difficult. Which of the following would be most helpful
    a repeated pattern of similar fradulent act
  17. In the phar mor fraud case, several different methods were used for manifpulating the financial statements. These included all of the following except
    funneling losses into unaudited subsidiaries
  18. Most financial statement frauds occur in smaller organizations with simple managmenet structures rather than in large historically profitable organizations, this is because
    management fraud is more difficult to commit when there is a more formal organizational strucutre of management
  19. Management fraud is usually committed on behalf of the organization rather than against it. Which of the following would not be a motivation of fraud on behalf of an organzation
    CEO needs a new car
  20. All of the following are indivators of financial statement fraud except:
    Unusually rapid growth of profitability
    Threat of a hostile takeover
    Dependence on one or two products
    Large amounts of available cash
    threat of a hostile takeover
  21. During an audit, an auditor considers the conditions of the auditee and plans the audit accordingly. This is an example of
    first-order reasoning
  22. In the context of strategic reasoning, if an auditor only follows the established audit plan and does not consider other factors relating to the auditee then this is an example of
    zero order reasoning
  23. In reason years, many SEC investigations have taken place on the improper issuance of stock options to coporate executives. These practices increase executive compensation at the expense of shareholders. This practice is known as:
    Backdating stock options
Card Set
Fraud Ch 11
Fraud Ch 11