Deck 12: The Fraud Report, Litigation, and the Recovery Process

Question 1

What is the expert witnesses major exception under testimony rules?

A) They are fact witnesses.
B) They are hearsay witnesses.
C) They are personal knowledge witnesses.
D) They are friends of the prosecution witnesses.

Answer 1

C

Question 2

By filing Form 3949-A with the IRS, what might this do for the owners of a company?

A) It can help delay interest and penalties on the taxes due.
B) It can help the IRS initiate proceedings against the fraudster
C) It can help bolster an argument that the owners and managers were victims.
D) All of the above

Answer 2

C

Question 3

Who do most companies choose not to pursue fraudsters for repayment?

A) Most fraudsters do not have the assets to repay even if found guilty.
B) Most companies have insurance to cover the loss.
C) Most fraudsters voluntarily repay what they have stolen.
D) Both A and B

Answer 3

D

Question 4

Which of the following is not a criteria for being qualified as an expert witness?

A) Education, including degrees, specialized training, and professional certifications.
B) Recognized by both the prosecution and defense as an expert in their field.
C) Experience in the subject area of testimony.
D) Publications: books, proceedings, technical papers, and so on.

Question 5

If an employer fires an employee for fraud, what might that employee do?

A) Continue their fraud from outside the company.
B) Sue for wrongful termination of employment, defamation, or discrimination.
C) Start a bad PR campaign in the news against the company.
D) Be hired by a competitor.

Question 6

What are the two primary roles a forensic accountants play in forensic matters?

A) Valuator and estimator.
B) Mediator and arbitrator.
C) Expert consultants and expert witnesses.
D) Rented judge and rented jury.

Question 7

For income tax purposes fraudulent losses may be classified as:

A) Deductions.
B) Offsets to reportable revenues.
C) Reductions in retained earnings.
D) Both A and
B)

Question 8

What can the opposing party do to prevent expert testimony if they feel the expert is not qualified?

A) File a batson petition.
B) File a motion for miss-trial.
C) File an appeal.
D) File a motion in limine.

Question 9

Which of the following is NOT found in a fraud investigation report?

A) The address section.
B) Background information.
C) The approach.
D) The statement of guilt or innocence.

Question 10

If the expert consultant is not expected to testify in a formal trial, how is all pre-trail work treated?

A) It is treated as if the expert is going to testify.
B) It is subject to discovery.
C) It is treated as if the expert had no part in the pre-trial work.
D) It is not subject to discovery.

Question 11

Which of the following is typically contained in the Exhibits section of a fraud report?

A) The resume of the investigator.
B) The resume of the fraudster.
C) Copies of the investigators credentials
D) Letters of reference for the investigator.

Question 12

If the fraud involves payroll taxes collected for submission to the IRS, it is referred to as:

A) Trust liability taxes.
B) Pass through taxes.
C) Withholding entity taxes
D) Trust fund taxes.

Question 13

Who is § 1233.3 (a) of Title 12 (Banks and Banking) of the U.S. Electronic Code of Federal Regulations applicable to?

A) All businesses
B) Federal and State Agencies
C) Regulated entities
D) Local and County Agencies

Question 14

If payroll taxes are embezzled, who does the IRS hold responsible?

A) The fraudster.
B) The owners and officers of the company.
C) The employees whose taxes were not paid.
D) .The lost funds are forgiven by the IRS.

Question 15

Employees who are fired for fraud are entitled to which of the following unemployment benefits?

A) None
B) 6 weeks
C) 12 weeks
D) 90 days

Question 16

Why do police or prosecutors sometimes not process with their fraud investigation?

A) It is perceived as a victimless crime. b They are overwhelmed with other violent crimes.
C They feel fraud investigators should bring the case to them.
D) They do not find a clear statement of guilt in the fraud investigators report.

Question 17

Once the fraud investigation is complete, the investigator will:

A) Provide a formal out brief.
B) Write a formal report.
C) Submit a final bill.
D) All of the above.

Question 18

The Trust Fund Recovery Penalty holds responsible persons accountable. Who are they?

A) Owners
B) Officers
C) Supervisors
D) All of the above

Question 19

Instead of firing fraudster employees, what do some employers do?

A) Reassign them.
B) Provide them favorable recommendations to other jobs.
C) Give them a paid leave of absence.
D) Rehabilitate them.

Question 20

Once the IRS provides notice of TFRP, how many days does the business have to respond?

A) 60
B) 45
C) 30
D) 10

Question 21

Forensic accountants serve one primary role as experts in forensic matters: as expert witnesses.

Question 22

What must the fraud investigator avoid in his report?

A) Any inferences of guilt.
B) Any financial data for the company.
C) The methods of proving fraud.
D) All of the above.

Question 23

Which of the following is a key word to imply fraud, but not actually accuse someone of it?

A) Apparent
B) Consistent
C) Accused
D) Guilty

Question 24

Which of the following is NOT an option for Fraud Loss Recovery?

A) Accept the loss.
B) Collect Insurance if available.
C) Litigate
D) Have law enforcement seize personal assets of the fraudster.

Question 25

In some cases, a fraud investigation report may trigger mandatory reporting of the fraud to a government agency.

Question 26

Instead of firing an employee, an employer may provide them with excellent references to obtain a new job.

Question 27

Why would some loss prevention measures not be worth implementation?

A) Some corporations have poor internal control policies and implementation of some loss prevention measures would notify employees of these poor controls.
B) The IRS does not allow deductions for loss prevention measures.
C) Only court ordered loss prevention measures can me implemented.
D) Some measures, such as excessively tight security to prevent shoplifting, would cost more in sales and manpower costs than would save in shoplifters being caught.

Question 28

When preparing for a trail, the fraud investigator's report may be:

A) All that is needed for a solid case.
B) Just the beginning of evidence needed.
C) Resubmitted with a statement of guilt.
D) Suppressed during discovery.

Question 29

The investigator should write the report in such a ways so as to avoid litigation.

Question 30

A judge may request additional information involves consequential damages prior to ruling on the case.

Question 31

Typical business insurance for occupational fraud includes coverage for which the following items:

A) Proof of loss
B) Loss of valuable papers and records
C) Embezzled losses
D) All of the above.

Question 32

For income tax purposes, IRS form 9408 must be filed for all fraud losses, along with a copy of the investigators report.

Question 33

Before releasing the report to the client, the investigator shoud:

A) Have their legal counsel review it.
B) Have the fraudster review it.
C) Have a professional liability insurer review it.
D) Have a District Attorney review it.

Question 34

The fraud investigators report should be constructed for insurance claim purposes, not to withstand a court trial.

Question 35

A fired employee who is denied unemployment compensation can typically demand an administrative hearing.

Question 36

The problem with the investigator making statements before an investigation is complete stems from the principle of:

A) Reverse Proof.
B) Benford's Law
C) Ratio Analysis of Financial Statements
D) Double Jeopardy

Question 37

Prior to trial, the prosecution or plaintiff may ask that the fraud be presented in _______ form.

A) hierarchical
B) linear
C) laymen's
D) chronological

Question 38

A good practice is for the investigator to discuss any doubtful wording with her insurance company before releasing it to the client.

Question 39

Proof of loss claims may not be paid until:

A) A confession is signed.
B) The fraudster is found guilty in a court of law.
C) The fraud investigation is complete.
D) All of the above.

Question 40

A fraud investigation report can sometimes be more helpful in ruling out fraud than in ruling it in.

Question 41

Outline the different options for fraud loss recovery

Question 42

Why should an employee not be fired prior to the investigators report being finalized or even court proceedings complete?

Question 43

What are consequential damages? Provide an example of the additional work that may be needed to prove them.

Question 44

Explain what a chronology of the fraud is and how it typicaly differs from how a fraud investigator constructs his report.

Question 45

How does the IRS view unpaid payroll taxes as a result of embezzlement under the Trust Fund Recovery Penalty (TFRP)?

Question 46

Explain the different uses of fraud investigation reports

Question 47

Outline the elements of a fraud investigation report and explain the purpose three of them.

Question 48

Explain the three methods of dealing with fraud loss.

Question 49

What happens to some businesses if they have been the victim of payroll tax embezzlement and how can the fraud investigators report assist them?

Question 50

Provide an example of when a fraud investigation would trigger mandatory reporting to a federal agency?