MGMT 642 chapter 6

  1. unusual patterns always indicate the existence of fraud
  2. ODBC is the best approach to import because it achieves a direct, rich connection to the source database
  3. data-driven analysis uses the company's database to search for normal relationships between numbers.
  4. according to Benford's law, the first digit of natural sets of numbers will begin with a 9 or more often than with an 8
  5. when using Benford's law, potential suspects are less likely to know you are trying to detect fraud than if you use more direct detention techniques
  6. Understanding the kinds of frauds that can occur is not important when using a data-driven detection method
  7. digital analysis using Benford's law can be performed on databases of any size
  8. data-driven fraud detection can pay large dividends and is an effective way to reduce teh cost of fraud in any organization
  9. unexplained changes are common in financial statements
  10. balance sheets must be converted to change statements before they can be used in detecting fraud
  11. vertical analysis is a more direct method than horizontal analysis in focusing on changes in financial statements from one period to another
  12. vertical analysis is a useful detection technique because percenteages are easily understood
  13. the z-score calculation is the best way to stratify data
  14. a single symptom (red flag) is almost always enough information to identify the type of fraud scheme occuring
  15. When detecting fraud, it is important that fraud investigators:
    a. remain objective and neutral
  16. data-driven fraud detection:
    c. looks for anomalies in databases
  17. once a buyer starts accepting kickbacks from a supplier:
    d. all of the above
  18. teh most obvious disadvantage of teh data driven approach is:
    b. high cost
  19. benford's law
    b. predicts that the first digit of random number stes will begin with a 1 more often than a 2, and a 2 more often than a 3 and so on
  20. a detection method that focuses on the kinds of frauds that can occur and then uses technology to determine whether those frauds actually exist is called:
    c. data-driven fraud detection
  21. when deciding which detection method to use, it is important to:
    d. all of the above
  22. fraud is best detected through the financial statements by focusing on:
    a. unexplained changes in financial statement balances
  23. teh most effective way to convert balance sheets and income statements from position and period statements to change statements is to:
    c. perform horizontal and vertical analyses
  24. profit margin, return on assets, and return on equity are all examples of:
    b. key financial statement ratios
  25. when vertical analysis is performed:
    c. financial statement balances are converted to percentages
  26. horizontal analysis is different from vertical analysis in that:
    b. HA calculates the percentage change in balance sheet and income statement numbers from one period to the next, while vertical analysis converts balances in a single period to percentages
  27. which of the following is an advantage of using data analysis software to detect fraud?
    c. data analysis software can analyize entire populations rather than just samples
  28. Benford's law is:
    d. an effective way to identify anomalies in data sets
  29. if a search revelsa that an employee and a vendor have the same telephone number, this result may indicated that:
    b. employees may be establising dummy vendors
  30. when conducting financial statement analysis, which ratio will be the most useful in determining whether a company has erroneously inflated AR?
    c. accounts receivable turnover
  31. when trying to identify outliers, what is one of the best statistical approaches?
    d. teh z-score calculation
  32. an advantage of using ODBC to import data into a data warehouse is that:
    c. ODBC automatically retrieves column names and types from the database
  33. teh Soundex algorithm:
    d. all of the above
Card Set
MGMT 642 chapter 6
642 - 6