1. If a first-two digit test is run, and if the calculated chi-square statistic exceeds 112.02, then we would conclude that the data _________.

a. contains material errors

b. needs a continuity correction term

c. does conform to Benford

d. does not conform to Benford

2. With respect to the critical values for the MAD in Table 4.2, the smallest MADs in each case (first digits, second digits, and so on) give us a(n) _________ conclusion.

a. close conformity

b. nonconformity

c. equal to that of the chi-square test

d. materiality-based

3. Figure 4.6 shows 13 large spikes depending on your definition of large. Choose the best definition of a spike.

a. The actual proportion exceeds the expected Benford proportion by a large margin.

b. The expected Benford proportion exceeds the actual proportion by a large margin.

c. The actual proportions for the 10, 20, 30, , 90 first-two digits.

d. A calculated chi-square above 112.02.

4. With Benford-based sampling the positive and the negative amounts are tested separately because ___.

a. Excel is limited in the number of rows that it can process.

b. Excels COUNTIF function can only work on positive numbers.

c. Benfords Law does not apply to negative numbers.

d. the way that they are manipulated is diametrically opposite.

5. The HealthSouth fraud scheme is discussed in the journal entries section. The company knew that the external auditors only tested journal entries that were _______.

a. over the 126,000 norm per quarter

b. $2,000 to $4,999

c. $5,000 and higher

d. above a MAD of 0.0022