Term
| True/False: Fraud auditors should be equally concerned with liabilities being overstated as well as understated. |
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Definition
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Term
| True/False: Proactive searching for analytical symptoms means that we are looking for accounts that appear too high or too low or that are unusual in some other way. |
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Definition
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Term
| True/False: Confirmations with vendors are an effective way to discover unrecorded liabilities. |
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Definition
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Term
| True/False: Accrued liabilities are important accounts to look at when searching for fraud because it is easy to understate liabilities in these accounts. |
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Definition
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Term
| True/False: Symptoms of unrecorded contingent liabilities can be found by performing analytical procedures on certain financial statement ratios. |
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Definition
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Term
| True/False: Some misleading footnotes have no effect on financial statement balances. |
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Definition
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Term
| True/False: Understatement of liability fraud is usually more difficult to find than overstatement of asset fraud. |
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Definition
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Term
| True/False: When searching for unrecorded liabilities, investigating vendors with zero balances would be just as important as as investigating vendors with large balances. |
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Definition
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Term
| True/False: Assets most often improperly capitalized are fixed assets such as property or equipment. |
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Definition
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Term
| True/False: Financial statement fraud involving footnote disclosures can be either frauds of omission or frauds of commision |
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Definition
| False (not sure on this one...the commission thing threw me off) |
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Term
| True/False: A company that claims to be something it is not in a 10-K report is committing a kind of financial statement fraud. |
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Definition
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Term
| True/False: Financial statement frauds most often occur in large, well-established companies. |
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Definition
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Term
| True/False: Documentary symptoms provide the best opportunity to find contingent liabilities that should be recorded. |
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Definition
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Term
| True/False: Comparing financial relationships such as interest expense and debt, or the amount of warranty expense as a percentage of sales, is not helpful in identifying fraud symptoms of understating liabilities. |
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Definition
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Term
| True/False: One of the best ways to detect inappropriate capitalization of costs is by making comparisons with other similar companies. |
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Definition
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Term
| True/False: Comparing cash and marketable securities balances with those of similar companies is usually very helpful when looking for analytical symptoms of fraud. |
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Definition
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Term
| Which of the following is a primary type of transaction that can create liabilities for a company? |
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Definition
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Term
| When accounts payable-related liabilities are understated, purchases and inventory are often _______, or the financial statements don't balance. |
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Definition
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Term
| Recognizing something as a revenue instead of as a liability has a positive effect on the reported financial statements because: |
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Definition
| f. a, b, and c are correct. |
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Term
| The most common fraud involving car companies and the warranties they offer would most likely be: |
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Definition
| c. Not recording or underrecording future obligations |
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Term
| FAS 5 requires contingent liabilities to be recorded as liabilities on the balance sheet if the likelihood of loss or payment is: |
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Definition
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Term
| Analytical symptoms of accounts payable fraud most often relate to reported "accounts payable" balances that appear: |
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Definition
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Term
| Proactively searching for analytical symptoms related to financial statement fraud means that we are looking for accounts that appear: |
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Definition
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Term
| When focusing on changes, you should consider changes from period to period in: |
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Definition
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Term
| Overstating cash is usually difficult because: |
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Definition
| a. Cash balances can be easily confirmed with banks and other financial institutions. |
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Term
| Inadequate disclosure fraud usually involves: |
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Definition
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Term
| When examining whether a company has underrecorded accounts payable, each of the following ratios is helpful except: |
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Definition
| d. Unearned revenue/Accounts payable. |
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Term
| Each of the following is a symptom relating to understatement of liability frauds except: |
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Definition
| e. All of the above are documentary symptoms of understatement liability fraud. |
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Term
| Each of the following assets is correctly linked with how it can be overstated except: |
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Definition
| a. Inventory can be overstated by improperly capitalizing these assets. |
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Term
| Which of the following factors does not make fraud more difficult to detect? |
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Definition
| d. All of the above make fraud more difficult to detect. |
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Term
| A form 1099 with missing withholdings (where they should be reported) may be a fraud symptom for which liability account? |
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Definition
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Term
| In liability fraud, liabilities are most often: |
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Definition
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Term
| Which of the following is usually the hardest fraud to detect? |
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Definition
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Term
| You observe that company's current ratio is dramatically increasing. This may indicate fraud in that: |
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Definition
| e. Two of the above are true. (not sure on this one) |
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Term
| Of the following, the most difficult account management to intentionally misstate is: |
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Definition
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Term
| Which of the following is not a way to underrecord liabilities? |
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Definition
| d. All of the above are ways to underrecord liabilities. |
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Term
| When looking for accounting or documentary symptoms of fraud when a merger occurs, one of the first steps should be to: |
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Definition
| d. Make sure that the accounting methods used were appropriate and consistent with accounting standards. |
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Term
| Which of the following is a good place to look for inadequate disclosures? |
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Definition
| e. All of the above are good places to look for inadequate disclosure. |
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