What Is Your Fraud IQ? Think You Can Spot Corruption in Any of Its Many Forms? Take This (Deceptively) Simple Test to Find out Just How Much You Know
1. Which of the following assets are most often pilfered? a. Cash b. Accounts receivable c. Inventory d. Intellectual property 2. Which of the following techniques are used to detect cash frauds? a. Bank reconciliations b. Review of cost trends c. Investigation of customer complaints d. All of the above 3. Corruption payments usually begin with cash and currency because they are less obvious. However, eventually, the payments will be made with gifts and favors. a. True b. False 4. The type of companies LEAST susceptible to financial statement fraud are: a. Startup companies b. Companies transitioning from fast growth to slower growth c. Companies dealing with a period of constant growth d. Companies struggling to maintain their market position 5. Which of the following audit steps would be used in searching for a ghost employee? a. Compare a listing of current and former employees to the payroll b. Determine if all employees have executed tax withholding forms c. Verify the existence of the reported Social Security number d. All of the above 6. In a bribery case, it is enough to prove that a thing of value was given. It is not necessary to prove that it was given with the intent to influence the receiver. a. True b. False 7. -- is the crediting of one account through the abstraction of money from another account. a. Skimming b. Lapping c. Rigging d. Padding 8. Jones is a buyer for Smith & Co. He buys exclusively from Brown despite the fact that other suppliers are better and cheaper. Jones has an undisclosed interest in Brown's business. This situation would be classified as-- a. Embezzlement b. Larceny c. Conflict of interest d. Bribery 9. The criminologist responsible for the well-known hypothesis of the "fraud triangle" is: a. Immanuel Kant b. Marshall B. Clinard c. Donald R. Cressey d. Jeremy Bentham 10. If you wanted to compare the amount spent on various expenses relative to the total expense amount, which of the following techniques would you be most likely to employ? a. Horizontal analysis b. Vertical analysis c. Reasonableness tests d. None of the above ANSWERS 1. (a) Cash defalcations are the most common of all employee embezzlement schemes. However, since most companies keep relatively good control over cash, the schemes are frequent but rarely result in large losses. 2. (d) There are several basic accounting techniques that are used to detect cash frauds. They include bank reconciliations, cut-off bank statements, surprise cash counts, investigation of customer complaints, journal entry review, and review of historical sales and cost trends. …