Cia Part Ii Section Iii Mcq: Fraud

Front 1

What are the components of the fraud triangle?

Back 1

motive, opportunity, rationalization

Front 2

How is rationalization effectively limited?

Back 2

through fraud awareness training by supporting the ethical "tone-at-the-top", promoting an anti-frau environment, and sending the message that the organization will not tolerate misconduct of any kind

Front 3

The effectiveness of what is not assessed in a fraud risk assessment?

Back 3

governance effectiveness

Front 4

With respect to computer security and fraud, a legal liability exists to an organization under which of the following conditions?

Back 4

"
When estimated security costs are less than estimated losses

Front 5

"
According to the IIA Standards, a fraud report is required at the conclusion of which phase?

Back 5

investigation phase

Front 6

At the conclusion of which phase is a fraud report authorized?

Back 6

detection phase

Front 7

Who is responsible for reporting a fraud to senior management and the board?

Back 7

CAE

Front 8

Why are control weakness considered significant findings to be reported to senior management and the board?

Back 8

control weaknesses could be indicators of opportunities for committing fraud

Front 9

If several employees are suspected of having committed a fraud how should they be interviewed?

Back 9

seperately, not in a group

Front 10

How is a written or printed statement of a defamatory nature called?

Back 10

libel

Front 11

How is a spoken statement of a defamatory nature called?

Back 11

slander

Front 12

What should the IA determine before proceeding with an investigation of a complaint of an alleged illegal act by management?

Back 12

determine if litigation has commenced or is anticipated

Front 13

If litigation has commenced or is anticipated in an alleged fraud whom should the IA recommend to conduct the investigation?

Back 13

recommend an outside law firm to conduct the investigation

Front 14

Whenever contracts are involved in a case of fraud, the use of whom would be necessary to determine of the suspected activity is in violation of the contract?

Back 14

legal counsel

Front 15

When IA wants to report about a significant case of fraud, to whom should IA send the draft of its report for review before sending the final report to to senior management and the board?

Back 15

send the draft to legal counsel for review

Front 16

What is compouding a felony?

Back 16

Compounding a felony is, for example, agreeing not to prosecute an employee guilty of fraud if the employee repays the amount stolen

Front 17

Is compouding a felony legal?

Back 17

no

Front 18

What is malicious prosecution?

Back 18

Malicious prosecution is the groundless institution of criminal proceedings

Front 19

Which sampling method is used to detect fraud?

Back 19

discovery sampling

Front 20

How does discovery sampling work?

Back 20

the sample size is selected based on the assumption that the sample will contain at least one critical exception if critical exceptions in the population are contained at a level aussmed by the auditor

Front 21

Does discovery sampling allow to evaluate the effectiveness of an antifraud control?

Back 21

no

Front 22

Benford's Law is the cornerstone of which type of analysis to search for potential fraud as it is a probability principle using observations about the frequency of occurrence of the leading digit in a series of numbers?

Back 22

numerical analysis

Front 23

what are the four types of audit evidence?

Back 23

"- physical evidence
- documentary evidence
- testimonial evidence
- analytical evidence

Front 24

"
What does constitute physical evidence?(3)

Back 24

"- observations
- inspections
- graphical items (maps, graphs, charts)

Front 25

"
By how many IAs should physical observations be made if it is the only info about a significant condition?

Back 25

it should be viewed by at least two internal auditors

Front 26

Which assertion is observation only able to satisfy?

Back 26

existence assertion

Front 27

How is observation useful with regard to written policies and processes?

Back 27

it provides evidence if processes differ from that specified in written policies

Front 28

How may physical evidence by documented?

Back 28

- taking a photo

Front 29

What does contitute documentary evidence?

Back 29

physical documents (accounting records, contracts, invoices)

Front 30

What kind of statements do constitute testimonial evidence?

Back 30

written or spoken statements received from others in response to inquiries (interviews, questionnaires, letters)

Front 31

For what does the individual providing testimonial evidence need to be evaluated?(2)

Back 31

"if the individual providing the testimonial evidence
- is biased
- has only partial knwoledge

Front 32

"
By which kind of evidence can a written instrument not be disputed?

Back 32

oral evidence

Front 33

Which kind of testimonial evidence is more credible: evidence obtained under conditions where persons may speak freely or evidence obtained under compromising conditions?

Back 33

evidence obtained under conditions where persons may speak freely

Front 34

what should be done with testimonial evidence to increase its sufficiency?

Back 34

it should be corrobarated by other info when possible

Front 35

What does analytical evidence include?

Back 35

"- computations
- reasonableness tests

Front 36

"
What is analytical evidence in the case of control?

Back 36

the particular policies and procedures of which the control is composed

Front 37

What is a cutoff bank statement and what is it used for?

Back 37

a cutoff bank statement is showing transactions that an audit client’s bank account received in the 7– to 14–days after the end of the financial period.it is used for testing if outstanding transactions were recorded in the correct period

Front 38

What is the best audit activity for determining if fraud is occuring at stores with high costs of goods sold?

Back 38

a suprise inventory audit

Front 39

What should be followed by the law enforcement officer once evidence is seized?

Back 39

the chain of custody

Front 40

As the chain of custody looks at the positive side of the evidence, it deals with the questions who did what with the evidence?(3)

Back 40

Who collected, stored, and controlled the evidence?

Front 41

Which type of evidence should be gathered to determine if purchases were billed to company A but delivered to company B?

Back 41

documentary evidence (receiving reports)

Front 42

Which type of evidence should be gathered when evaluatiing the propriery of a payment to a consultant?

Back 42

documentary evidence (contract)

Front 43

On what does legal evidence heavily rely?

Back 43

oral testimony

Front 44

On what does audit evidence rely?

Back 44

documentary evidence

Front 45

What does legal evidence permit in contrast to audit evidence?

Back 45

presumptions

Front 46

What does the fact imply that audit evidence does not permit any presumptions?

Back 46

that IAs have to questions all evidence until they are satisfied with its truth or falsity

Front 47

What are the eight forms of legal evidence?

Back 47

"- best evidence
- secondary evidence
- conclusive evidence
- direct evidence
- circumstantial evidence
- corroborative evidence
- opinion evidence
- hearsay evidence

Front 48

"
To what kind of evidence is best (primary) evidence confined?

Back 48

documentary evidence (e.g. documents, ecordings, papers)

Front 49

Which records should be examined to gather best evidence about the collectibility of accounts receivable?

Back 49

aged accounts receivable listing

Front 50

Which records should be examined to gather best evidence about the collectibility of notes receivable?

Back 50

examination of cash receipt records to determine promptness of interest and principal payments

Front 51

What should be reconciled with each other to gather best evidence about the completeness of recorded revenues?

Back 51

shipping records to recorded sales

Front 52

What is the best evidence of the effectiveness of a credit-granting function?

Back 52

review of the trend in receivables write-offs

Front 53

What is the best evidence that purchase transaction actually has occurred?

Back 53

receiving report documenting the receipt of the goods

Front 54

What is the best evidence of a a sales team's increased productivity?

Back 54

increase in revenue per sales team member

Front 55

What is the best evidence of the actual flow of data regarding cash processing?

Back 55

walk-through of the processing and copies all documents used

Front 56

Which trend should be evaluated to gather best evidence about the acceptability of benefit programs to employees?

Back 56

the trend of voluntary participation ratio over time

Front 57

What is the best evidence in testing the write-off of a deteriorated piece of equipment?

Back 57

physical inspection

Front 58

To whom should incoming bids returned to first in a competitive bidding procedure?

Back 58

to the bid registrar as an independent third party for recording and control purposes

Front 59

What evidence does secondary evidence represent?(2)

Back 59

copies of best evidence and oral testimony

Front 60

In which cases only is secondary evidence admissible?

Back 60

when the originals of best evidence are not available

Front 61

Without using what to establish the proof does direct evidence prove a fact?(2)

Back 61

without presumptions or inference to establish that proof (e.g. a witness' observation)

Front 62

What would be the most likely source of direct evidence indicating employee theft in a warehouse?

Back 62

the employee's verbal charge of theft by a witness

Front 63

How does circumstancial evidence prove the existence of the primary fact?

Back 63

indirectly (a flat tire MAY indicate that it was sabotaged; but the tire may have been damaged accidently)

Front 64

What kind of evidence constitutes an absolut proof and overbears all other kinds of evidence?

Back 64

conclusive evidence (a watch in the desert proves incontrovertibly that someone must have put it there)

Front 65

What does conclusive evidence not need in order to be established as an absolute proof?

Back 65

corroboration by another type of evidence as conclusive evidence cannot be contradicted by any other evidence (e.g. infant is incapable of judging whether a contract is or is not against his interest)

Front 66

What does corroborative evidence confirm?

Back 66

a fact that can be inferred from other evidence

Front 67

Whose opinion is permissible as opinion evidence?

Back 67

expert's opinion

Front 68

Whose statement does serve as hearsay evidence?

Back 68

a statement by someone else but the witness himself

Front 69

What is an example for hearsay evidence in a trial?

Back 69

cross-examination

Front 70

When is a photograph accepted as hearsay evidence?

Back 70

when authenticated by a witness familiar with the subject of the photograph

Front 71

Which kind of audit evidence is highly valid but limited in usefulness due to its limited scope?

Back 71

recomputation

Front 72

Which type of evidence is submitted in a computer crime most?

Back 72

documentary evidence

Front 73

In a computer‐related crime investigation, computer evidence has which features?

Back 73

"- invisible (i.e. not apparent or visible)
- highly volatile (i.e. subject to change)

Front 74

"
What determines whether a computer crime has been committed?

Back 74

A computer crime is committed when the allegation is substantiated with proper evidence that is relevant, competent, and material.

Front 75

What kind of legal document is required for anything to be collected by the investigator?

Back 75

a search warrant

Front 76

In a fraud case, a search warrant is required after substantiating and establishing what?

Back 76

after substantiating the allegation and after establishing the probable cause of the fraud

Front 77

Are an investigator's handwritten notes considered valid evidence in court of law?

Back 77

yes, as longs as the affected parties can read and understand the notes as Handwritten notes are no different from typed or printed versions

Front 78

Is the writing of a computer virus considered a crime?

Back 78

no

Front 79

Which items does the concept of the admissibility of evidence include?(3)

Back 79

"- relevance
- competence
- materiality

Front 80

"
How may internal transfer pricing be subject to fraud?

Back 80

transfer pricing could allow values of transferred goods to be misstated in order to lower tax liabilities or to manipulate financial statements