QUESTION 1

1. Data such as laundromat electricity usage and cycle time, beer purchase quantities, and travel dates are examples of:
2. Tend to be "corrupted" sources of data
3. Red flags that have little to no potential value in verifying or disproving fraud
4. Nonfinancial numerical performance data
5. Accounting anomalies

QUESTION 2

1. In an electronic environment that captures a huge amount of transactions annually, many transactions and data relationship anomalies appear to be a potential fraud or error. To utilize the computer environment effectively, _________________ must be completed.
2. The targeted fraud risk assessment process
3. CAATT training by the auditor or examiner
4. A hypothesis/null hypothesis matrix
5. A Benford analysis on all journal en

QUESTION 3

1. ____________ are part of the day-to-day operations of most organizations and are often observed by auditors.
2. Earnings management
3. Transaction adjustments
4. Risks
5. Anomalies

QUESTION 4

1. In most cases, asset misappropriation, corruption, and financial statement fraud last about ____________ from inception to conclusion.
2. 24 months
3. 2.4 months
4. 6 months
5. 16 months

QUESTION 5

1. __________________ is an attempt to identify the fraud as early as possible, in contrast to the optimal situation in which the fraud is prevented or deterred.
2. Implementing internal controls that prevent collusion
3. Conducting an annual fraud risk assessment
4. Separation of duties
5. Effective fraud detection

QUESTION 6

1. Who takes the lead in establishing, implementing, and maintaining a formal fraud risk management program?
2. Board and management
3. Regulatory agencies such as the PCAOB and SEC
4. Corporate shareholders
5. Internal auditors

QUESTION 7

1. The targeted fraud risk assessment approach assumes that there should be a direct relationship between the ________________ and the _________________________.
2. specific industry involved; risk levels typically associated with that industry
3. Level of risk associated with a material weakness in the company's controls; amount of attention devoted to that area during an audit
4. Organization's tolerance for risk; implementation of appropriate internal controls
5. Accounts receivable department; accounts payable department

QUESTION 8

1. Generally, three procedures are effective in identifying breakdowns in internal controls due to override and collusion: journal entries recording in the books and records, as well as other adjustments to financial information should be examined for proper back-up document; significant accounting estimates needs to be reviewed; and___________________________.
2. Unusual "one-time" transactions should be scrutinized to ensure they have an appropriate underlying business rationale
3. A properly functioning board-operated audit committee that has the ability to investigate anomalies independently should be established
4. A robust whistleblower mechanism should be implemented, and its existence widely published throughout the organization
5. Care should be taken by the board to ensure that the external auditor is indeed independent, in fact, and appearance