Fraud Examination Test #2

Front 1

T/F Data-driven analysis uses the company's database to search for normal relationships between numbers.

Back 1

False

Front 2

T/F Digital analysis using Benford's law can be performed on databases of any size.

Back 2

True

Front 3

T/F ODBC is the best approach to import because it achieves a direct, rich connection to the source database.

Back 3

True

Front 4

T/F Vertical analysis is a more direct method than horizontal analysis in focusing on changes in financial statements from one period to another.

Back 4

False

Front 5

T/F Balance sheets must be converted to change statements before they can be used in detecting fraud.

Back 5

True

Front 6

T/F Vertical analysis is a useful detection technique because percentages are easily understood.

Back 6

True

Front 7

T/F Understanding the kinds of frauds that can occur is not important when using a data-driven detection method.

Back 7

False

Front 8

T/F Data-driven fraud detection can pay large dividends and is an effective way to reduce the cost of fraud in any organization.

Back 8

True

Front 9

T/F According to Benford's law, the first digit of natural sets of numbers will begin with a 9 more often than with an 8.

Back 9

False

Front 10

An advantage of ODBC to import data into a data warehouse is that:
a) ODBC doesn't require the use of corporate database servers.
b) ODBC compresses data when stored on a CD or DVD.
c) ODBC automatically retrieves column names and types from the database.
d) ODBC keeps the investigator from dealing with the difficult SQL language.

Back 10

c) ODBC automatically retrieves column names and types from the database.

Front 11

The Soundex algorithm:
a) Uses consonants but ignores vowels.
b) Creates a numerical score representing how a word sounds.
c) Is useful when fuzzy matching values.
d) All of the above.

Back 11

d) All of the above.

Front 12

T/F The z-score calculation is the best way to stratify data.

Back 12

False

Front 13

When trying to identify outliers, what is one of the best statistical approaches?
a) A pie graph indicating the relative amounts.
b) Stratification of cases by value.
c) Time trending using the high-low slope method.
d) The z-score calculation.

Back 13

d) The z-score calculation.

Front 14

T/F Unusual patterns always indicate the existence of fraud.

Back 14

False

Front 15

T/F Unexplained changes are common in financial statements.

Back 15

False

Front 16

T/F When using Benford's law, potential suspects are less likely to know you are trying to detect fraud than if you use more direct detection techniques.

Back 16

True

Front 17

If a search reveals that an employee and a vendor have the same telephone number, this result may indicate that:
a) Vendors are overcharging for goods purchased.
b) Employees may be establishing dummy vendors.
c) Contractors are billing at the wrong rates.
d) A vendor is receiving kickbacks or other favors.

Back 17

b) Employees may be establishing dummy vendors.

Front 18

Benford's Law is:
a) The most expensive of all the digital analysis methods to implement and use.
b) The most effective way to identify actual frauds.
c) A method that uses vertical financial statement analysis.
d) An effective way to identify anomalies in data sets.

Back 18

d) An effective way to identify anomalies in data sets.

Front 19

When vertical analysis is performed:
a) Ratios are used to detect fraud.
b) Changes in significant balance totals are examined.
c) Financial statement balances are converted to percentages.
d) Total revenues are compared to total expenses.

Back 19

c) Financial statement balances are converted to percentages.

Front 20

T/F A single symptom (red flag) is almost always enough information to identify the type of fraud scheme occurring.

Back 20

False

Front 21

A detection method that focuses on the kinds of frauds that can occur and then uses technology to determine whether those frauds actually exist is called:

a) Fishing fraud detection.
b) Data mining.
c) Data-driven fraud detection.
d) Benford's law.

Back 21

c) Data-driven fraud detection.

Front 22

Horizontal analysis is different from vertical analysis in that:

a) There is no difference between horizontal and vertical analysis.
b) Horizontal analysis calculates the percentage change in balance sheet and income statement numbers from one period to the next, while vertical analysis converts balances in a single period to percentages.
c) Horizontal analysis converts balances in a single period to percentages, while vertical analysis calculates the percentage change in balance sheet and income statement numbers from one period to the next.
d) Key ratios are compared from one period to the next.

Back 22

b) Horizontal analysis calculates the percentage change in balance sheet and income statement numbers from one period to the next, while vertical analysis converts balances in a single period to percentages.

Front 23

Profit margin, return on assets, and return on equity are all examples of:

a) Vertical analysis.
b) Key financial statement ratios.
c) Horizontal analysis.
d) None of the above.

Back 23

b) Key financial statement ratios.

Front 24

Which of the following is an advantage of using data analysis software to detect fraud?
a) It is a static approach, and results cannot be recombined in different ways.
b) Data analysis software can only be used to analyze small data sets.
c) Data analysis software can analyze entire populations rather than just samples.
d) Significant numbers of hits can occurr, requiring iterative refinement of analyses.

Back 24

c) Data analysis software can analyze entire populations rather than just samples.

Front 25

When detecting fraud, it is important that fraud investigators:

a) Remain objective and neutral.
b) Assume guilt.
c) Assume innocence.
d) None of the above.

Back 25

a) Remain objective and neutral.

Front 26

Fraud is best detected through financial statements by focusing on:
a) Unexplained changes in financial statement balances.
b) Consistencies.
c) Intuition.
d) Management's behavior when financial statements are released.

Back 26

a) Unexplained changes in financial statement balances.

Front 27

Once a buyer starts accepting kickbacks from a supplier:

a) Prices often increase.
b) Purchases from other vendors often decrease.
c) The supplier usually takes control of the purchasing relationship.
d) All of the above.

Back 27

d) All of the above.

Front 28

When deciding which detection method to use, it is important to:

a) Determine the advantages and disadvantages of each approach.
b) Identify the costs involved.
c) Determine which method will meet the client's objectives.
d) All of the above.

Back 28

d) All of the above.

Front 29

T/F Surveillance logs should always be drafted before an investigation begins.

Back 29

False

Front 30

T/F Invigilation is a theft act investigative technique that involves close supervision of suspects during an examination period.

Back 30

True

Front 31

T/F Surveillance is a theft investigation technique that relies on the examination of documents.

Back 31

False

Front 32

T/F During invigilation, no controls are imposed on any activities.

Back 32

False

Front 33

Surveillance logs should include all of the following except:
a) Time the observation began and ended.
b) Cost of the surveillance equipment used.
c) Movements and activities of the suspect.
d) Distance the observation was from the scene.

Back 33

b) Cost of the surveillance equipment used.

Front 34

Surveillance, when properly performed, is done:
a) Without the perpetrator's knowledge.
b) During nonworking hours.
c) Only by law enforcement agents.
d) None of the above.

Back 34

a) Without the perpetrator's knowledge.

Front 35

T/F Investigation of fraud should only place when predication has first been established.

Back 35

True

Front 36

When beginning an investigation, fraud examiners should use techniques that will:
a) Not arouse suspicion.
b) Identify the perpetrator.
c) Determine the amount of fraud.
d) Identify when the fraud occurred.

Back 36

a) Not arouse suspicion.

Front 37

T/F The fraud triangle plus inquiry paradigm is an effective way to understand the various types of investigative methods.

Back 37

True

Front 38

A snapshot of active memory should be done:
a) Before seizure of the computer.
b) After seizure of the computer but before turning off the computer.
c) After turning off the computer but before calculation of the checksum number.
d) After calculation of the checksum number but before searching.

Back 38

b) After seizure of the computer but before turning off the computer.

Front 39

T/F If possible, when using theft act investigation methods, interviewing the prime suspects should happen last.

Back 39

True

Front 40

T/F Tailing includes the use of video, email, wire-tapping, and access to PCs.

Back 40

False

Front 41

Who should be consulted before any form of surveillance takes place?
a) Public Investors and the company's board of directors.
b) State attorney general.
c) Legal counsel and human resources.
d) All company executives.

Back 41

c) Legal counsel and human resources.

Front 42

T/F Electronic surveillance is often of limited value in the investigation of employee fraud because of concerns regarding employees' privacy rights.

Back 42

True

Front 43

T/F Seizing and searching computers is illegal because it infringes on the rights guaranteed by the Fourth Amendment to the Constitution.

Back 43

False

Front 44

T/F In determining which investigative method to use, it is most important that investigators focus on the costs of each possible method.

Back 44

False

Front 45

A vulnerability chart:
a) Forces investigators to explicitly consider all aspects of a fraud.
b) Shows the history of fraud in a company.
c) Identifies weaknesses in every aspect of a company's internal control.
d) Gives a detailed record of all the movements and activities of the suspect.

Back 45

a) Forces investigators to explicitly consider all aspects of a fraud.

Front 46

T/F The SHA-1 checksum method is more advanced and is considered more robust than the MD5 method.

Back 46

True

Front 47

Fixed-point, or stationary, observations can be conducted by:
a) Certified Fraud Examiners.
b) Company personnel.
c) Private investigators.
d) Anyone.

Back 47

d) Anyone.

Front 48

Which of the following is not included in a vulnerability chart?
a) Explanations of the fraud triangle in relation to suspects of fraud.
b) Breakdowns in key internal controls that may have created fraud opportunities.
c) Internal controls that a company plans to institute in the future.
d) Theft investigation methods.

Back 48

c) Internal controls that a company plans to institute in the future.

Front 49

When beginning a fraud investigation, which of the following methods is most useful in identifying possible suspects?
a) Preparing an identification chart.
b) Preparing a vulnerability chart.
c) Preparing a surveillance log.
d) None of the above.

Back 49

b) Preparing a vulnerability chart.

Front 50

T/F Not only are undercover operations both legal and valid, but they are also inexpensive.

Back 50

False

Front 51

T/F One advantage of using a vulnerability chart is that it forces investigators to consider all aspects of a fraud.

Back 51

True

Front 52

T/F To get an accurate reading, it is generally agreed that the invigilation period should be at least four days in length.

Back 52

False

Front 53

T/F Mobile observation is usually much more risky than stationary surveillance.

Back 53

True

Front 54

Which theft investigative method is most limited in value during employee fraud investigations because of concerns regarding employees' privacy at work?
a) Electronic surveillance.
b) Invigilation.
c) Forensic accounting.
d) Interviewing and interrogation.

Back 54

a) Electronic surveillance.

Front 55

Wiretapping, a form of electronic surveillance, can be used by:
a) Internal auditors.
b) Company controllers.
c) CPAs.
d) All of the above.
e) None of the above.

Back 55

e) None of the above.

Front 56

Which of the following is not a category used in the fraud triangle plus inquiry paradigm?
a) Theft investigative techniques.
b) Concealment investigative techniques.
c) Action investigative techniques.
d) Conversion investigative techniques.

Back 56

c) Action investigative techniques.

Front 57

Invigilation:
a) Is most commonly associated with crimes such as robbery, murder, and property offenses.
b) Can create tremendous amounts of documentary evidence.
c) Provides evidence to help determine whether fraud is occurring.
d) All of the above are true.

Back 57

c) Provides evidence to help determine whether fraud is occurring.

Front 58

When deciding whether or not to investigate, which of the following factors should an organization not consider?
a) Possible cost of the investigation.
b) Perceived strength of the predication.
c) Possible public exposure resulting because of the investigation.
d) All of the above should be considered.

Back 58

d) All of the above should be considered.

Front 59

When seizing computers, a calculation (also called a hash) that ensures you have an exact clone and have not changed data is called a(n):
a) NIST number.
b) ODBC connection.
c) Internet packet calculation.
d) CRC checksum number.

Back 59

d) CRC checksum number.

Front 60

T/F It is impossible to retrieve the data from a file that has been deleted on a computer.

Back 60

False

Front 61

When conducting interviews during an investigation, which of the following words should usually be avoided?
a) Audit.
b) Inquiry.
c) Investigation.
d) Record examination.

Back 61

c) Investigation.

Front 62

Which of the following is not a theft investigative method?
a) Invigilation.
b) Honesty testing.
c) Seizing and searching computers.
d) Surveillance and covert operations.

Back 62

b) Honesty testing.

Front 63

T/F Bates numbers are identifying numbers used by attorneys involved in litigation to track all documents.

Back 63

True

Front 64

Chain of custody refers to:
a) Marking on a document so it can be identified later.
b) A record of when a document is received and what has happened to it since its receipt.
c) Databases used in trials to assist lawyers.
d) The way in which courts are organized.

Back 64

b) A record of when a document is received and what has happened to it since its receipt.

Front 65

Discovery sampling:
a) Is a type of variables sampling.
b) Is one of the more difficult statistical smpling methods to understand.
c) Is never used in conducting a fraud examination.
d) Deals with the probability of discovering at least one error in a given sample size if the population error is a certian percentage.

Back 65

d) Deals with the probability of discovering at least one error in a given sample size if the population error is a certian percentage.

Front 66

T/F Concealment is the covering of tracks, obscuring of evidence, and removal of red flags to hide a perpetrator's fraud.

Back 66

True

Front 67

T/F Using a computer to access records (data mining) can be a very effective approach for determining if fraud exists because the auditor can look at entire populations.

Back 67

True

Front 68

What can a fraud examiner conclude if one or more instances of fraud are found in a sample taken from a population?
a) There is a slight risk that fraud exists in the population.
b) The population contains fraud.
c) The sample may not have been randomly selected, and thus no conclusions can be drawn.
D) The sample is most likely not representative of the population as a whole.

Back 68

b) The population contains fraud.

Front 69

T/F Concealment investigative methods sometimes involve the study of documents that have been manipulated.

Back 69

True

Front 70

T/F Evidence should be uniquely marked so it can be easily identified later.

Back 70

True

Front 71

T/F Programs like i2's Analyst's Notebook and Xanalys Link Explorer perform link analysis.

Back 71

True

Front 72

T/F Random number tables are ineffective and should not be used when selecting random samples from a population.

Back 72

False

Front 73

T/F Traditional chain of custody evidence procedures are not appropriate when used with electronic evidence.

Back 73

False

Front 74

T/F There is no difference between forensic document experts and graphologists.

Back 74

False

Front 75

T/F As long as a sample is selected randomly, it will always be representative of the population as a whole.

Back 75

False

Front 76

T/F A canceled check typically shows the account number of the maker, the teller who processed the check, and the sequence number of the transaction.

Back 76

True

Front 77

Which of the following is usually the best way to obtain documentary evidence?
a) Computer-based queries of full-population accounting and other databases.
b) A statistically sound sampling approach like discovery sampling.
c) Chance, accident, or tip discovery.
d) None of the above are effective methods of discovering evidence.

Back 77

a) Computer-based queries of full-population accounting and other databases.

Front 78

How are most frauds concealed?
a) By shredding source documents.
b) By converting to a paperless office without paper transactions.
c) By creating fictitious documents or altering source documents.
d) By firing employees who will not go along with the fraud.

Back 78

c) By creating fictitious documents or altering source documents.

Front 79

Programs like CaseMap, CaseCentral, ZANTAZ, Ringtail, and DatiCon are examples of:
a) Software that implements discovery sampling techniques.
b) Link analysis software.
c) Software packages used to index and store evidence.
d) Forensic software used to investigate hard drives and other digital devices.

Back 79

c) Software packages used to index and store evidence.

Front 80

T/F The best way to obtain documentary evidence in a computer database is to use discovery sampling to find the appropriate records.

Back 80

False

Front 81

What can a fraud examiner conclude if his or her tests confirm that no instances of fraud are present in a sample taken from a population?
a) There is virtually no risk that fraud exists in the population.
b) The population contains no fraud.
c) Only that no fraud is present in that particular sample.
d) The sample is most likely not representative of the population as a whole.

Back 81

c) Only that no fraud is present in that particular sample.

Front 82

T/F Photocopies are always preferable to original documents as evidence.

Back 82

False

Front 83

T/F Discovery sampling is probably the most difficult of all statistical sampling variations to understand.

Back 83

False

Front 84

T/F Even if photocopies of original documents are allowed to be introduced as evidence in a court of law, they are still considered secondary evidence.

Back 84

True

Front 85

In a fraud investigation, documents:
a) Usually contain extremely valuable information.
b) Are rarely used in court.
c) Are not reliable sources of information.
d) Are only valuable in obtaining a confession.

Back 85

a) Usually contain extremely valuable information.

Front 86

Marking documentary evidence is important to ensure that:
a) Documents are legal.
b) Databases can be created with valuable information.
c) Documents can be identified later.
d) Marking documentary evidence is not important.

Back 86

c) Documents can be identified later.

Front 87

Documentary evidence such as private tax returns can usually be obtained only by:
a) Subpoena.
b) Search warrant.
c) Voluntary consent.
d) All of the above.

Back 87

d) All of the above.

Front 88

Which of the following is not a benefit of statistical sampling?
a) It allows auditors to be certain that fraud does not exist in a population.
b) It is helpful when populations are large.
c) It allows quantification of risk.
d) It allows inference about a population.

Back 88

a) It allows auditors to be certain that fraud does not exist in a population.

Front 89

Which of the following is true of graphologists?
a) They can only perform their work in laboratory settings.
b) They perform the same type of work as forensic document experts.
c) They study handwriting as a way to interpret and identify personalities.
d) They are required to be members of the ABFDE organization.

Back 89

c) They study handwriting as a way to interpret and identify personalities.

Front 90

Which of the following is not true regarding document experts?
a) They can usually determine whether a document was written by the person whose signature the document bears.
b) They can usually determine whether a document has been forged.
c) They can usually determine whether the date the document bears is the date the document was written.
d) All of the above are true statements.

Back 90

d) All of the above are true statements.

Front 91

Which of the following methods of gathering documents is based primarily on luck?
a) Documents discovered during audits.
b) Hard-to-get private documents that are subpoenaed.
c) Documents discovered through searching public sources.
d) Documents provided by tipsters.

Back 91

d) Documents provided by tipsters.

Front 92

T/F Several publicly available databases provide information that can be helpful in investigations.

Back 92

True

Front 93

T/F When people convert stolen cash by entering into financial transactions, such as buying assets, they usually leave tracks that investigators can follow.

Back 93

True

Front 94

A database of criminal records maintained by the FBI is:
a) The CIA.
b) The III.
c) The NCIC.
d) Both a and c.
e) Both b and c.

Back 94

e) Both b and c.

Front 95

How useful are local and country records in fraud investigations?
a) Very useful
b) Not useful
c) Somewhat useful
d) Aren't allowed in the investigation of fraud

Back 95

a) Very useful

Front 96

T/F One common investigation procedure determines how perpetrators convert or spend their time.

Back 96

False

Front 97

T/F Before financial institutions can sell or disclose confidential customer information, they must provide customers with the opportunity to "opt out" from information sharing.

Back 97

True

Front 98

Which of the following laws regulates activities of credit, insurance, and employment investigations?
a) Fair Investigation Act of 1980
b) Fair Credit Reporting Act of 1971 and Fair and Accurate Credit Transactions Act of 2003.
c) Credit, Insurance, and Employment Investigation Act
d) There is no governing law

Back 98

b) Fair Credit Reporting Act of 1971 and Fair and Accurate Credit Transactions Act of 2003.

Front 99

T/F An increase in a person's net worth plus living expenses equals the person's total income.

Back 99

True

Front 100

T/F Conversion is the third element of the fraud (investigation) triangle.

Back 100

True

Front 101

T/F The net worth method cannot help in determining the extent of stolen funds.

Back 101

False

Front 102

T/F Private financial institutions can usually sell confidential customer information.

Back 102

True

Front 103

Known income subtracted from total income gives a reasonable estimate of:
a) Unknown funds
b) Liabilities
c) Living expenses
d) Net worth

Back 103

a) Unknown funds

Front 104

Each of these agencies is correctly matched with the type of information the agency provides except:
a) Department of Justice: Maintains records relating to the detection, prosecution, and rehabilitation of offenders.
b) The Secret Service: Deals with counterfeiting, theft of government checks, interstate credit card violations, and some computer crimes.
c) State Attorney General: Maintains birth records and information about people's social security numbers.
d) Central Intelligence Agency: Investigates security matters outside the United States.
e) Department of Business Regulation: Maintains licensing information about various professionals.

Back 104

c) State Attorney General: Maintains birth records and information about people's social security numbers.

Front 105

T/F It is always necessary to involve a federal law enforcement agent when accessing federal databases.

Back 105

False

Front 106

Who among the following are usually some of the best and most helpful federal fraud investigators?
a) Officers of the Secret Service
b) Employees of the Bureau of Prisons
c) Officers of the Department of Vital Statistics
d) Postal Inspectors

Back 106

d) Postal Inspectors

Front 107

T/F Private credit records are maintained on both individuals and organizations by various credit reporting companies.

Back 107

True

Front 108

T/F The Gramm-Leach-Bliley Act of 1999 made it more difficult for officials and private citizens to access information from financial institutions.

Back 108

False

Front 109

Each of these statements is true about the net worth method for determining embezzled amounts except:
a) The net worth method generally understates amounts stolen.
b) Much of the information necessary for determining an individual's assets, liabilities, living expenses, and income is available through public searches.
c) Courts are generally suspicious of dollar amounts determined by the net worth method because courts realize that the net worth method can provide only approximations of the amount stolen.
d) The net worth method is useful for obtaining confessions from suspects during interviews or interrogations.

Back 109

c) Courts are generally suspicious of dollar amounts determined by the net worth method because courts realize that the net worth method can provide only approximations of the amount stolen.

Front 110

Which of the following organizations maintain public information that can be accessed in record searches?
a) Local agencies
b) State agencies
c) Federal agencies
d) All of the above

Back 110

d) All of the above

Front 111

Which of the following is a possible use of conversion-based investigation techniques?
a) Searching public records to trace purchases of assets and payments of liabilities.
b) Attempting to locate previous spouses' bank account records.
c) Locating significant amounts of money held by related parties.
d) All of the above.

Back 111

d) All of the above.

Front 112

T/F The Secretary of State maintains many types of records relating to business and Uniform Commercial Code filings.

Back 112

True

Front 113

T/F Perpetrators usually save what they steal.

Back 113

False

Front 114

T/F Investigations of perpetrators' net worth and lifestyles help investigators know what class of society the perpetrators are from.

Back 114

False

Front 115

The net worth method is a calculation based on a person's:
a) Assets, liabilities, equity, and living expenses.
b) Assets, liabilities, equity, and income.
c) Assets, liabilities, income, and living expenses.
d) Assets, income, and living expenses.

Back 115

c) Assets, liabilities, income, and living expenses.

Front 116

T/F The net worth method is rarely, if ever, helpful in actual fraud investigations.

Back 116

False

Front 117

Conversion investigations focus on how suspects:
a) Had opportunities to steal.
b) Had motives to commit fraud.
c) Spent stolen money.
d) Committed the actual theft.

Back 117

c) Spent stolen money.

Front 118

Evidence gathered from public records can be useful in:
a) Identifying with the suspect.
b) Obtaining a confession.
c) Making the suspect feel at ease.
d) None of the above.

Back 118

b) Obtaining a confession.

Front 119

Although most perpetrators begin their thefts because of a perceived critical need, they usually continue to embezzle in order to:
a) Beat the system.
b) Fulfill an inner desire to commit fraud.
c) Improve their lifestyle.
d) Achieve a higher self-esteem.

Back 119

c) Improve their lifestyle.

Front 120

The net worth method of analyzing financial information can help to determine:
a) The suspect's feelings about the organization.
b) Possible perpetrators of the fraud.
c) The suspect's personality characteristics.
d) The amount of embezzled funds.

Back 120

d) The amount of embezzled funds.

Front 121

Which source could be used to access valuable financial information in a fraud investigation?
a) Financial institutions
b) Internet sites
c) The former spouse of a suspected fraud perpetrator
d) Trash
e) All of the above

Back 121

e) All of the above

Front 122

T/F Counties and other local agencies that contain records are usually not useful in fraud investigations.

Back 122

False

Front 123

T/F For various reasons, the net worth method tends to be a conservative estimate of amounts stolen.

Back 123

True

Front 124

The net worth method is effective:
a) As evidence in court.
b) To help obtain a confession.
c) To conduct an interview of suspects.
d) All of the above.

Back 124

d) All of the above.

Front 125

The formula to calculate funds from unknown sources is:
a) Assets - Liabilities - Prior Year's Net Worth + Living Expenses - Funds from Known Sources
b) Assets - Liabilities - Prior Year's Net Worth - Living Expenses - Funds from Unknown Sources
c) Assets - Liabilities - Prior Year's Net Worth + Living Expenses + Funds from Unknown Sources
d) Assets - Liabilities - Prior Year's Net Worth - Living Expenses + Funds from Unknown Sources

Back 125

a) Assets - Liabilities - Prior Year's Net Worth + Living Expenses - Funds from Known Sources

Front 126

Most conversion investigations involve searching public records and other sources to trace:
a) Purchases of assets.
b) Payments of liabilities.
c) Changes in lifestyle.
d) Net worth.
e) All of the above.

Back 126

e) All of the above.

Front 127

Under the net worth method, a person who has an increase in net worth of $100,000, known expenses of $80,000, and a salary of $60,000, would have unknown income of:
a) $0
b) $110,000
c) $120,000
d) $140,000

Back 127

c) $120,000

Front 128

T/F Federal agencies provide better records than state or county agencies for conversion investigations.

Back 128

False

Front 129

The Gramm-Leach-Bliley Act allows:

a) Banks to sell customer information.
b) Financial institutions to share information.
c) Customers to "opt out" and ask that their information not be shared.
d) All of the above.

Back 129

d) All of the above.

Front 130

T/F With respect to investigations of theft and concealment, the CFE would generally prefer an eye witness to documentary evidence.

Back 130

False

Front 131

T/F The most important thing about admissibility is relevance.

Back 131

True

Front 132

T/F U.S. Postal Inspectors may monitor and record the outside of a suspect's incoming and outgoing mail. This is termed a mail cover.

Back 132

True

Front 133

T/F The chain of custody applies to evidence obtained voluntarily and through search warrants.

Back 133

True

Front 134

T/F Photocopies are always preferable to original documents as evidence.

Back 134

False

Front 135

T/F Increasingly evidence is in digital form and rules of evidence are evolving to accommodate this change. A company's computerized accounting records are generally admissible if they were kept in the normal course of business and can be authenticated (i.e., shown that they have not been tampered with).

Back 135

True

Front 136

T/F Even if photocopies of original documents are allowed to be introduced as evidence in a court of law, they are still considered secondary evidence.

Back 136

True

Front 137

This privilege may only be waived by the prosecutor/government.
a) Attorney / Client
b) Law Enforcement Officer / Informant
c) Husband / Wife
d) Priest / Penitent
e) Accountant / Client

Back 137

b) Law Enforcement Officer / Informant

Front 138

T/F Statements made by the witnesses about what defendants said are hearsay and therefore not admissible.

Back 138

False

Front 139

T/F The hearsay rule is extremely rigid with very few exceptions.

Back 139

False

Front 140

T/F Character evidence might be admissible in a criminal case if entered to prove motive, opportunity, or ability.

Back 140

True

Front 141

T/F Evidence that proves or disproves facts by inference is called circumstantial evidence.

Back 141

True

Front 142

T/F The attorney-client privilege ensures that an employee's conversations with corporate counsel will remain confidential.

Back 142

False

Front 143

Privilege tends to reside with the defendant. In which of the following cases does the privilege rest not with the defendant but with the government / state?
a) Clergy - penitent
b) Physician - patient
c) Law enforcement officer - informant
d) Accountant - client

Back 143

c) Law enforcement officer - informant

Front 144

Which one of the following types of evidence includes flowcharts and diagrams that are produced as visual aids to help the judge and jury understand the fraud scheme?
a) Real
b) Testimonial
c) Circumstantial
d) Demonstrative

Back 144

d) Demonstrative

Front 145

T/F Original copies of documents should be carefully preserved for court. Photocopies should be used during interviews and elsewhere in the investigation.

Back 145

True

Front 146

T/F Character evidence is generally less useful in a civil case than in a criminal case.

Back 146

True

Front 147

What type of evidence is surveillance?

Back 147

Personal observation

Front 148

What type of evidence is tire marks?

Back 148

Physical

Front 149

What type of evidence are interviews?

Back 149

Testimonial

Front 150

What type of evidence is a computer hard drive?

Back 150

Physical

Front 151

What type of evidence is a financial statement analysis?

Back 151

Documentary

Front 152

What type of evidence is invigilation?

Back 152

Personal observation

Front 153

What type of evidence is a paper report?

Back 153

Documentary

Front 154

What type of evidence are identification numbers on vehicles?

Back 154

Physical

Front 155

What type of evidence is an audit of financial statements?

Back 155

Documentary

Front 156

What type of evidence are check stubs?

Back 156

Documentary

Front 157

What type of evidence are fingerprints?

Back 157

Physical

Front 158

What type of evidence is forensic analysis of a computer hard drive?

Back 158

Physical

Front 159

Chain of custody issues can result in relevant evidence being deemed inadmissible, or the weight of admissible evidence being diminished. All of the following could create chain of custody issues except:
a) A photocopy if produced because the original is filed at the county courthouse.
b) A computer was seized from the defendant but was taken home over the week by a court clerk.
c) A handwriting expert testifies that certain writings on a document appear to have been made after the document was seized for the investigation.
d) A photocopy of a document is produced because the fraud examiner mistakenly shredded the original.

Back 159

a) A photocopy if produced because the original is filed at the county courthouse.

Front 160

The critical item in determining admissibility is _____________; the weight attached to admissible evidence depends upon its _____________.
a) Competence; Relevance
b) Relevance; Prejudice
c) Competence; Prejudice
d) Relevance; Competence

Back 160

d) Relevance; Competence

Front 161

My trash would be safe (in the sense that anything obtained from it would not be admissible in court) in all of the following places except:
a) Sitting on my porch just outside my kitchen door
b) Sitting on the street side of the sidewalk in front of my house.
c) Sitting in my basement inside my house.
d) Sitting inside my unattached two-car garage.

Back 161

b) Sitting on the street side of the sidewalk in front of my house.

Front 162

Testimony that merely repeats what some other person has said is known as:

a) Prejudicial testimony
b) Third-hand testimony
c) Hearsay testimony
d) Correct answer not provided.

Back 162

c) Hearsay testimony

Front 163

Which of the following standards of proof is required to obtain a search warrant for financial records in a criminal trial?
a) Beyond a reasonable doubt
b) Probable cause
c) Preponderance of evidence
d) Clear and convincing evidence

Back 163

b) Probable cause

Front 164

When is a photocopy not acceptable as evidence in a court of law?
a) When the original document has been lost or destroyed without the intent or fault of the party seeking to introduce the copied document as secondary evidence.
b) When the original has been lost by the fraud examiner.
c) When the document or record is in the custody of a public officer.
d) When the original documents are too voluminous to permit careful examination.

Back 164

b) When the original has been lost by the fraud examiner.

Front 165

The process of marking, identifying, and preserving evidence is called the:
a) Preservation rule
b) Evidentiary rule
c) Voire Doi rule
d) Chain of custody

Back 165

d) Chain of custody

Front 166

Which of the following represents the highest standard of proof?
a) Preponderance of evidence
b) Suspicious situation
c) Probable cause
d) Judicial notice

Back 166

a) Preponderance of evidence

Front 167

Well known facts, such as how many feet there are in a mile, are readily accepted into evidence based upon what concept?
a) Hearsay exceptions
b) Clear and convincing evidence
c) Judicial notice
d) Chain of custody

Back 167

c) Judicial notice

Front 168

Anything that is perceptible by the five senses legally presented at trial to prove a contention and induce a belief in the mind of the jury is called:

a) Testimony
b) Point of Law
c) Evidence
d) Correct answer not provided.

Back 168

c) Evidence

Front 169

Which of the following is not generally a useful way to impeach the credibility, or competence, of witness testimony?
a) Witness has been divorced.
b) Witness has made prior inconsistent statements.
c) Witness has entered a plea agreement with prosecutors in exchange for his or her testimony in this case (i.e., self-interest).
d) Witness has been convicted of a felony.

Back 169

a) Witness has been divorced.

Front 170

All of the following are exceptions to the general hearsay rule except:
a) Business and government records duly authenticated and kept in the normal course of day-to-day operations.
b) Witness Bob recounts his ex-girlfriend Mary told him that the defendant was making false journal entries to conceal a fraud.
c) A defendant claims she received a loan from the company but there is no record in the company books of the loan being recorded.
d) A defendant's loan application claimed three times as much monthly income as she is now asserting to be her monthly income.

Back 170

b) Witness Bob recounts his ex-girlfriend Mary told him that the defendant was making false journal entries to conceal a fraud.

Front 171

Relevant evidence could nonetheless be ruled inadmissible if the judge determines it is:

a) unduly prejudicial (e.g., if the jury knows the defendant has a history of child abuse, they may not be able to fairly determine guilt or innocence in an unrelated embezzlement case).
b) confusing or misleading to a lay jury.
c) repetitive in the sense that the same element has already been demonstrated with previously admitted evidence.
d) all of the above could be cited by a judge to rule relevant evidence nonetheless inadmissible.

Back 171

d) all of the above could be cited by a judge to rule relevant evidence nonetheless inadmissible.

Front 172

Which one of the following would be privileged under the husband - wife privilege?
a) Communications between the two parties before they were married.
b) What the nondefendant spouse saw the defendant spouse do while they were married.
c) What the nondefendant spouse communicated to the defendant spouse in front of a group of friends at a party one night.
d) Confidential communications between the couple while they were married.

Back 172

d) Confidential communications between the couple while they were married.

Front 173

All of the following are legal classifications of evidence except:

a) Probable Cause
b) Real
c) Testimonial
d) Documentary

Back 173

a) Probable Cause

Front 174

The legal term that refers to the area where I can have a reasonable expectation of privacy for my trash.
a) Judicial notice
b) Curtilage
c) Smith and Wesson
d) Tenant privilege

Back 174

b) Curtilage

Front 175

Evidence having any tendency to make the existence of any fact that is of consequence to the determination of the action more probable or less probable that it would be without the evidence is called:

a) Relevant evidence.
b) Material evidence.
c) Direct evidence.
d) Correct answer not provided.

Back 175

a) Relevant evidence.

Front 176

A statement, other than that made by the declarant while testifying at trial or hearing, offered in evidence to prove the truth of the matter asserted is called _________.

a) Circumstantial evidence.
b) Hearsay evidence.
c) Indirect evidence.
d) Correct answer is not provided.

Back 176

b) Hearsay evidence.

Front 177

Which one of the following privileges is not recognized in federal courts?
a) Attorney - client privilege
b) Accountant - client privilege
c) Clergy - penitent privilege
d) Spousal privilege

Back 177

b) Accountant - client privilege

Front 178

Benford's law:

a) Is usually unsuccessful as a fraud detection tool.
b) Predicts that the first digit of random number sets will begin with a 1 more often than a 2, a 2 more often than a 3, and so on.
c) Applies to personal ID numbers.
d) All of the above.

Back 178

b) Predicts that the first digit of random number sets will begin with a 1 more often than a 2, a 2 more often than a 3, and so on.

Front 179

When conducting financial statement analysis, which ratio will be the most useful in determining whether a company has erroneously inflated accounts receivable?
a) Current ratio
b) Profit margin
c) Accounts receivable turnover
d) Debt percentage

Back 179

c) Accounts receivable turnover

Front 180

Data-driven fraud detection:


a) Determines the cost of fraud.
b) Identifies possible fraud suspects.
c) Looks for anomalies in databases.
d) All of the above.

Back 180

c) Looks for anomalies in databases.

Front 181

The most obvious disadvantage of the data-driven approach is:

a) Databases are very large and often can not be analyzed using analysis packages like ACL, IDEA, or Picalo.
b) High cost.
c) The decrease in employee morale.
d) None of the above.

Back 181

d) None of the above.