Details Title: AC 534 Description: Test 2 Total Flash Cards: 18 Created: 03/31/2008 13:20:58		New Users: To study from this flashcard set, or to create your own your own study flash cards, REGISTER HERE. Existing Users: CLICK HERE. Additional Accounting Flashcards
Cards in this set: Term What are 3 ways to detect fraud? Definition Chance, Tips/Complaints, Proactive Auditing Term What are the 3 parts of proactive auditing, and what does each of these parts contain? Definition 3 parts: 1) accounting anomalies (source documents, faulty entries, ledger inaccuracies) 2) analytical anomalies (financial statements, ratios) 3) IC Weaknesses Term What does detection depend upon? Definition Existence of red flags, skill in recognizing red flags, knowledge of what to do next, willingness to do it Term What are 2 forms of "proactive" fraud detection? Definition Deductive (Laser) Methods and Inductive (Shotgun) methods Term What do deductive (laser) methods entail? Definition Understandin specific business, types of fraud that could occur, and searching for specific symptoms, deductive is general to specific (theory, hypothesis ,then gather info. to support it) Term What do inductive (shotgun) methods entail? Definition Data mining and digital analysis, large databases and search for anomalies, Benford's law, look for specific things that are unusual then look for a general theory Term What kind of indicators are background checks? Definition Leading Term What is the definition of analytical procedures? Definition The study or comparison of relationships among financial and nonfinancial data to assess reasonableness Term What are 3 ways to perform financial statement analysis? Definition Trend analysis, Common size statements (vertical and horizontal analysis), and ratio analysis Term What should the relationship be between operating cash flows (OCF) and NI? Definition They should remain fairly stable Term What should the relationship be between COGS and Sales, OCF and Sales? Definition Parallel Term What should be the relationship between A/R, Inventory, and Sales? Definition A/R and inventory should parallel sales Term What should the relationship be between A/P, COGS, and Inv? Definition A/P and COGS should parallel Inv Term What should the relationship be between Acc. Depr. and fixed assets? Definition Parallel! Term What should the relationship be between Allowance for Bad Debts and A/R? Definition Parallel Term What should the relationship be between Sales, Prepaid Exp. and SG&A? Definition Sales and prepaid expenses should parallel SG&A Term What is the difference between time series analysis and cross series analysis? Definition Time series: within the company Cross series: comparing to other companies Term How do you calculate the days sales in receivables index? Definition [AR(Year 1)/Sales(Year 1)]/[AR(Year 0)/Sales (Year 0)]