Questions and Answers of Fraud Examination

Input the IRS Schedules C from the 2013–2015 income tax returns into a spreadsheet.a. Add percent columns to the right of dollar column for each year.b. Calculate common-sized percentages in the
Input the other metrics from the individual tax returns (e.g., income from wages and salaries, interest earned, and estimated tax payments).a. Review the dollars horizontally across the three years
Because you did not observe the inventory, which was destroyed in the fire, estimate ending inventory using the 2013 and 2014 dollars and percentages.a. Because you did not observe the inventory,
How does the estimated ending inventory impact the individual income tax return ending inventory, cost of goods sold, net profit, and net income? Find out by adding an additional column for 2015 and
Compare your recalculated ending inventory to that given to Sharptop Bank and to Southern Appalachian Insurance. Is either estimated ending inventory materially different from that reported on the
Go to a business library or university librarian and locate RMA Annual Financial Statement Studies or a similar publication and locate convenience stores and comparable ratios (e.g., cost of goods
Input information from the SBA Personal Financial Statements given to Sharptop Bank into a spreadsheet.a. Separate personal items (e.g., residence) from business items (e.g., inventory).b. Calculate
If the tax return or insurance claim is misstated, did Greg Larsen commit some form of financial statement fraud?
What accuracy certifications on the tax return and bank financial statement address providing materially inaccurate information?
Was Larsen Convenience solvent on January 7, 2016? Solvency is defined three ways:(a) having more assets (particularly current assets) than liabilities (particularly current liabilities), or(b)
How does Greg Larsen’s business solvency impact his wife Tonya Larsen?
In the case scenario, Greg Larsen lost a wrongful death lawsuit for killing his nephew and is required to pay $$500,000.$ The Georgia Supreme Court denied certiorari in May 2015 to hear an appeal
Which types of financial statements do not have certifications about the accuracy of information listed on or submitted with the financial statements?A. Income tax forms (e.g., IRS Forms 1040, 1065,
In calculating common-sized ratios in a vertical and horizontal analysis, what is the base for calculating common-sized ratios for the balance sheet?A. Total assets B. Gross receipts C. Total
In calculating common-sized ratios in a vertical and horizontal analysis, what is the base for calculating common-sized ratios for the income statement?A. Gross receipts B. Total assets C. Total
When analyzing financial statements (e.g., unaudited financial statements and income tax returns), which of the following is correct?A. Vertically analyze only the dollars.B. Vertically and
Perform a bank reconciliation as of April 1, 2016, using the bank statement for March 2016, cash receipts journal, and cash disbursements journal.
Compare the front and back of checks and the deposit slips to the cash receipts and cash disbursement journals and identify:a. Checks where payees do not matchb. Irregular disbursementsc. Irregular
Review the bank statements for disbursements not involving checks and trace to the cash disbursements journal.a. What are these transactions?b. Where and when (date and day of the week) were these
Review the deposits.a. How often and when were the deposits made?b. Is anything missing from the deposits?c. How do deposits relate to the bank reconciliation?
List the items (e.g., check numbers, transaction dates, and individual amounts) and totals of each category of fraud.
What are the alleged frauds (e.g., accounts receivable skimming, disbursement fraud, embezzlement, larceny, payroll fraud, skimming, other)?Discuss each one.
How were each of the frauds concealed?
What circumstances allowed the frauds to happen (e.g., internal control failures, lack of background checks, missing policies and procedures)? Discuss and be specific.
What would you recommend (e.g., controls, monitoring) to deter future frauds from happening? Discuss and be specific.
Is there anyone you would like to interview? If so, what do you want to learn from them?
Are there any additional steps you would like to take with respect to the fraud examination?
In the case scenario, it states that when two or more bank reconciliations (e.g., prior and current reconciliation) result in large unaccounted for differences, the differences might be what?A. Cash
If a lawyer for the suspect in a fraud examination states that he/she represents the suspect and no one will be allowed to talk with their client, can you interview the suspect or his/her spouse?A.
Who is a payee on a check?A. The person(s) who signs the front of the check.B. The person(s) who signs the back of the check.C. The person(s) named on the front of the check who is to receive the
In the case, the new office manager found cash, patient and insurance company checks, and two business debit cards in Tonya Larsen’s file cabinet. When preparing the bank reconciliation, where do
3/28 $398.56 POS DEB 16:53 3/26/16 Grocery-City 21108888 Marietta, GA on the bank statement means?A. $398.56 was paid by a point-of-sale use of a debit card.B. Grocery City in Marietta, Georgia, was
When scheduling checking account transactions for subsequent analysis you perform all of the following except?A. Input the dates on the check.B. Schedule the dollar amounts, including decimals.C.
When you analyze the checking account disbursement paid by a financial institution, what should you do?A. Compare the names and dollar amounts on the front and back of the checks to the cash
Identify the individual, monthly total number and dollars, grand total number and dollars of the irregularities. Was there a trend in average irregularity as well as monthly total number and dollars?
Data can be corrupted by which of the following?A. Everyday computer activity (e.g., errors in reading, writing, storing, processing data)B. Redundant data stored in more than one location C.
Examples of input errors that make data analysis challenging include all of the following, except?A. QuikTrip, QuickTrip, QT, QwickTrp.B. Johnson, Johnson, Johnson.C. Durango, Durango, Dorango.D.
When adding categories to summarize data, you should perform all, except which of the following?A. Research payee business names on the Internet to gain a better understanding of what the payee
Scrubbing involves which of the following?A. Correcting spelling errors.B. Collapsing different variations of a name (e.g., Sloppy’s, Sloppy’s Mid-Town, and Northside Sloppy’s) into a single
Is Fairmont in compliance with its payroll rates schedule: $65, $80, $100, and $125?
What is meant by the acronym CAATTs and what are they used for?
A government official may include which of the following: 1 Candidates for public office (e.g., a school board member) 2 Company agent YN e ZO S
For the FCPA, which of the following can be considered something of value? Ye N S ZO
Does the payroll disbursements file being analyzed appear to have all of the payroll records disbursed during the period January 3, 2018 to June 28, 2019?
The forensic audit has identified three accounting/payroll personnel with disbursements in the payroll system for which clients may have been inappropriately billed: Christine Alexander, Mary Perez,
How do (digital) viruses work?
The forensic audit has identified ghost employee with disbursements in the payroll system for which clients may have been inappropriately billed: Theresa Angelina. The forensic audit did not reveal
Use a chart or graphical tools and techniques to present a robust compliance and fraud deterrence environment. Include on the chart or graphic:1. The key players on the compliance and fraud risk
Do the payroll disbursement hours comply with Benford’s Law?
Following the example in the book, assume that the company represented that overhead was 100% fixed and zero percent variable. The following data are applicable to these assertions. Techniques 1
Why are manhole covers round?
What are the two categories of data mining and knowledge discovery software?
What is the purpose of timelines in an investigation?
What is the difference between a predator and a “situational (accidental) fraudster?”
Why does collusion pose unique prevention and detection challenges?
What are the different types of schemes associated with complex frauds?
How are computers and digital devices used in cybercrime?
Which types of economic damages are related to digital crimes?
How might a hacker access and manipulate a digital device for illegal purposes? Are the Internet of Things (IoT) devices at risk for hacker access and manipulation?
What are some indicators that a digital device has been infected?
Compare and contrast the ethical approaches of “it’s legal, therefore, it’s ok” and “the ends justify the means.” Are there similarities? Are there differences?
Why is an ethical culture considered necessary for fraud prevention and deterrence?
Several professionals are listed as being part of compliance efforts with regard to participation in the examination of potential compliance violations. Identify at least three other categories of
Do analytical efforts, big data examinations, and textual analyses impact compliance and fraud deterrence? Provide an explanation for your opinion.
Fraud deterrence is centered on the fear of getting caught and the fear of getting punished. In your opinion, which is stronger and why?
Describe the role of an organization’s personnel in compliance and antifraud efforts.
Describe the six categories of early warning signs of potential fraud.
Identify and describe the key attributes that might mitigate a red flag, suggesting that no bad act or compliance issues exist.
FRAUD PREVENTION AND DETERRENCE IN ACTION Assume the following facts:thirty-day collection period. The invoice is used to post-sales to the accounting system. Checks are received in the mailroom and
What is the purpose of practice aids in forensic and valuation services?
What are the different types of consulting and litigation support activities for fraud and forensic accounting professionals?
Which of the following is an activity not usually associated with forensic accounting and fraud examination consulting and litigation support?1. A. Assessing fraud risk associated with internal
What is meant by corporate governance and why is it important?
Continuing to focus on evidence associated with the act, concealment, and conversion, use the evidentiary material to continue the examination. In addition, the examiner also starts to think of terms
A construction contract has the following language: “It is the responsibility of the contractor to inspect and become familiar with the Project and to acquaint itself thoroughly with all conditions
Continuing to focus on evidence associated with the act, concealment, and conversion, use the evidentiary material to continue the examination. In addition, as the examiner also start to think of
Can you create a graphic of the Fairmont payroll system’s company expenses that highlight general accounting clerk, Mary Perez, has company expenses for FICA (social security), Medicare and 401K,
Given the background reading, list three verbal deception and three non-verbal deception cues that you believe that Aldrich Ames might exhibit and describe why
Have you ever read in the newspapers about the types of people who engage in company misdeeds?
How long have you been working in your current position?
I spent time with you. It seems that this deed is out of character for you. You were not awarded your normal annual bonus. I would probably feel the same. Is that what happened? You normally
I’m gathering some information about the sales/collection process and how it is supposed to work. Okay?
If you had been treated with respect, this would never have happened, would it?
If you were trying to examine this issue, how would you proceed? Any suggestions for me to take next steps?same. Is that what happened? You normally wouldn’t borrow money from the company, would
It looks to me that you have devoted everything to this company and they have treated you badly. Is that right?
It would be helpful to me if I could start by asking you to basically tell me about your job. Okay?
It’s not like what you’ve done has really hurt anyone.At most, the missing money might cost earnings-pershare, maybe a penny. Is that what caused you to write those checks in the name of your
Mr. Jenkins, this is typical question: Do you feel that I have treated you fairly in this interview?
Some of the prior interviews suggest that the company is so cheap that they won’t pay people what they are worth. Have you had similar experiences?
Sometimes people who act inappropriately are just trying to save their jobs and the company. How do you feel about those types of persons?
The company is committed to ethical conduct and has no tolerance for fraud and unethical behavior. There are some concerns about abuses in your department.Do you know anything about the concerns I am
The Foreign Corrupt Practices act can levy fines of more than five hundred million against companies our size that do not eliminate corruption in their operations abroad. Can you understand why the
What do you like best about working at this company?
What is the “expectations gap”?
Does Fairmont have any contactor personnel whose have terminated but are being paid through payroll after termination (e.g., ghost employees)?
Can you present a graphic that presents the payroll disbursement amounts by date for the contact employee who has been terminated but has been paid after termination (i.e., ghost employees)?
Does Fairmont have any personnel whose last name is similar?
The payroll disbursements were for “two persons” named Ciotty and Ciotti with the same first name and address. The interesting observation is that Ciotty is dated February 28, 2019, or after
What is the primary purpose of admission-seeking questions?
Why is it advisable to obtain a written confession from the subject of an investigation?

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