CFF Exam 7

1.

2 points

________ should provide assurances to the board (via the audit committee) that fraud controls are sufficient for the risks and functioning effectively.

The CEO

The CFO or controller

The internal auditor

None of the above.

2.

2 points

Which of the following is not associated with identity theft?

Hackers

Shoulder surfers

Street thieves

All of the above

3.

2 points

Management should appoint a risk assessment team to include accounting and finance personnel, legal counsel, risk management personnel, internal audit staff, and, in general, anyone who may be helpful. The team should brainstorm to identify fraud risks. In order to accomplish this task, the team must understand _________.

The likelihood of each relevant fraud.

The population of fraud risks.

A reasonable sample of fraud risks.

None of the above.

4.

2 points

The practitioner should closely supervise staff and be ready to testify that the work, exhibits, analysis, and other items were prepared under _________.

The direct control of the attorney

The practitioner's direct control.

The Client's direct control.

None of the above.

5.

2 points

Which type of question is used to calibrate the subject's response?

Informational.

Assessment.

Admission-seeking.

Introductory.

6.

2 points

Generally speaking which is the most likely to detect fraud?

Internal audits.

External audits

Hotlines.

None of the above.

7.

2 points

Which of the following is not a standard area or type of fraud preventative control?

Human resources.

Antifraud training.

Authority limits.

All of the above are standard areas or types of fraud preventative controls.

8.

2 points

Given a strong governance structure, the focus should be on effective processes for ______ (which, in turn, must be followed by a focus on fraud prevention, fraud detection, and fraud investigation.)

Enterprise risk management.

Fraud auditing.

Fraud risk assessment

None of the above.

9.

2 points

From an organizational standpoint, fraud is managed as part of the _______.

Enterprise risk management strategy.

Audit and review process.

CFO's and CFE's explicit obligation under SOX.

None of the above.

10.

2 points

The first line of defense in minimizing fraud risk is ______.

Fraud detection

Fraud investigation

Fraud correction

None of the above.

11.

2 points

The primary person the audit committee should consult when fraud is suspected is ________.

The external auditor.

Legal counsel.

The controller.

None of the above.

12.

2 points

Which type of question seeks to assess the interviewee's honesty?

Informational

Assessment

Admission-seeking

Introductory

13.

2 points

Conflicting out an expert means _______.

Firing an expert due to a conflict of interest.

The court removal of an expert for a conflict of interest.

The loss of an expert due to a failure to consider conflicts of interest in the engagement letter.

None of the above.

14.

2 points

Generally speaking, the most likely issue in production fraud is _______.

Improper hiring of production employees.

Inventory losses.

A lack of adequate supervision

None of the above.

15.

2 points

The concept of career risk is most applicable to _____?

Expert consulting services.

Expert testimony services.

Investigative services.

All of the above.

16.

2 points

Subjects who show deception _______.

Are asked concluding or closing questions after admission seeking questions.

Are asked concluding or closing questions after assessment questions.

Are asked concluding or closing questions depending on the results of the admission-seeking questions.

None of the above.

17.

2 points

The process of evidence collection must proceed according to a correct sequence. Which of the following is a correct sequence?

Review documents and other relevant information and then conduct interviews.

Conduct interviews and then review documents and other relevant information.

Conduct interviews while reviewing documents and other relevant information.

None of the above.

18.

2 points

Which of the following is not a general standard that applies to CPA client services?

Client interest.

Due professional care.

Professional competence

All of the above are general standards applicable to CPA client services.

19.

2 points

Which is not a vector of attack in electronic systems?

Input manipulation

Program alteration

Sabotage

All of the above are vectors of attack in electronic systems.

20.

2 points

Normally, it's adequate to assign ______ likelihoods to each identified inherent risk; remote, reasonably possible, or probable.

Two

Three

Four

Many

21.

2 points

Repeating an interviewer's question may best be described as a sign of ______.

Cooperation.

Deception.

Guilt.

None of the above.

22.

2 points

Which of the following is not an example of an external fraud?

An outsider giving a kickback to a purchasing officer.

An offshore hacker stealing customer credit card data.

A customer opens a credit account under a fake name.

All of the above are external fraud.

23.

2 points

The absence of a voucher package would most likely be associated with a (an) _______ fraud scheme.

Sales skimming

Corrpuption

Expenditure cycle.

None of the above.

24.

2 points

POS schemes are a form of _______.

Sales skimming schemes.

Corruption schemes.

Lapping schemes.

None of the above.

25.

2 points

Which of the following is not a litigation service?

Expert witness.

Litigation consulting.

Special master.

All of the above are litigation services.

26.

2 points

With respect to an engagement to provide expert testimony, contingency fees are _______?

Not a problem if disclosed under Rule 26.

Not a problem if disclosed under FRE 702,703,704,705 or 706.

A problem even if disclosed.

Never a problem.

27.

2 points

In planning and preparing for engagements, paramount considerations include ___________.

Understanding the client and the client's needs.

Establishing a clear understanding regarding the scope and nature of the services to be provided and the responsibilities of both the member and the client.

Establishing a clear understanding regarding any issues relating to confidentiality of materials and possible conflicts of interest.

All of the above.

28.

2 points

A scheme in which a vendor seeks to over bill involves ________.

Balanced billing.

Balance billing.

Invoice billing.

None of the above.

29.

2 points

The board typically delegates its fraud risk management responsibilities to the audit committee. The committee should comprise independent board members, with at least one financial expert (preferably an accountant), and should regularly meet _______.

With the internal auditor alone.

With the internal auditor and a designated representative of management.

With the internal auditor and the controller or CFO.

With the internal auditor and the controller.

30.

2 points

Verbal reports to a testifying expert to retaining counsel are _____.

Exempt from discovery under the work-product doctrine.

Exempt from discovery under the work-product privilege.

Exempt from discovery under attorney-client privilege.

None of the above.

31.

2 points

Only suspects who show deception are asked ______.

Informational questions.

Assessment questions.

Admission-seeking questions.

Introductory.

32.

2 points

The profile of the typical fraudster in the organization suggests ______.

A criminal background.

A dysfunctional psychological background.

Antisocial tendencies

None of the above.

33.

2 points

Red flags indicating fraud should be understood by ______.

Top management.

Top management and middle management.

All levels of management and staff.

None of the above.

34.

2 points

Generally speaking, testifying experts ma y be liable to ______.

The retaining party.

The opposing party.

The opposing attorney.

None of the above.

35.

2 points

Which of the following is not a type of occupational fraud?

Corruption.

Asset missappropriation

Conflict of interest.

All of the above are types of occupational fraud.

36.

2 points

Calculation of judgments would be most applicable to which of the following parts of the litigation process?

Discovery.

Interrogatories

Trial

Post trial.

37.

2 points

Which money laundering scheme involves making small deposits in different locations?

Currency structuring

Smurfing

The use of a financial intermediary

None of the above

38.

2 points

In an effective corporate governance structure, ______ should be responsible for implementing an effective business ethics system.

The CEO.

The CFO or controller.

The board of directors.

None of the above.

39.

2 points

All violations of the organization's code of conduct should be reported and dealt with in a timely manner. Appropriate punishment should be applied _____.

To all violators, except for the CEO.

To all violators except for the internal auditor.

To all violators except the CFO.

None of the above.

40.

2 points

Fraud detection is furthered by process controls. Such controls are designed to detect ______.

Fraud only.

Errors only.

Both fraud and errors.

None of the above.

41.

2 points

Valuation services (VS) section 100, Valuation of a business, Business ownership interest, security, or intangible asset (AICPA, Professional standards) does not apply?

To cases in which the value of a subject interest is provided to the member by the client or a third party, and the member does not apply valuation approaches and methods, as defined in VS section 100.

To cases of internal use assignments from employers to employee members not in practice of public accounting.

When it is not practical or reasonable to obtain or use relevant information, and as a result the member is unable to apply valuation approaches and methods that are described in VS section 100.

All of the above situations.

42.

2 points

_______ provides an exemption for workplace investigations for suspected misconduct relating to employment, a suspected violation of state or federal laws, or a violation of a preexisting written company policy.

The Internet False Identification Prevention Act

The fair credit reporting act.

The Fair and Accurate Credit Transaction Act (FACTA)

None of the above.

43.

2 points

When estimating significance of a given fraud risk, the team should consider _______.

The significance to the organization's operations, brand value, and reputation.

Legal liability (criminal, civil, regulatory)

Both A & B

None of the above.

44.

2 points

The practitioner should _______.

Destroy all records except formal reports, at the end of litigation.

Immediately destroy all records, except for formal reports, as they are contained in reports.

Adopt a formal policy for retaining records.

None of the above.

45.

2 points

Which of the following may not be an element of spoliation?

Accidental destruction of evidence.

Intentional destruction of evidence.

Both A & B

Neither A & B

46.

2 points

Investigations should always end with a report of the investigation. If a suspect has confessed to fraud, it would _________.

Be appropriate to indicate the suspect's guilt in the report.

Be appropriate to indicate the suspect's guilt in the report if the suspect has freely signed a written confession that is absolutely clear, properly drawn, and witnessed.

Not be appropriate to indicate the suspect's guilt in the report.

None of the above.

47.

2 points

Which type of question seeks to asses the interviewee's honesty?

Informational.

Assessment.

Admission-seeking.

Introductory.

48.

2 points

Which of the following is not an option for management in dealing with residual fraud risk?

Simply accept a given risk.

Increase the level of control to compensate for a given risk.

Both A & B

None of the above.

49.

2 points

The professional is _______ personally direct and supervise the work performed in support of his or her expert opinions.

Required by law to.

Required by AICPA authoritative standards to.

Is not required to.

Is required in criminal cases only.

50.

2 points

Check washing is most likely associated with ________.

A payroll fraud scheme.

Identity theft.

Fake credit card accounts.

None of the above.

CFF Exam 7 - 9