Deck 14: Fraud Against Organizations

Question 1

An employee who doesn't record customer sales and pockets the customer payments is perpetrating which kind of fraud?

A) Larceny
B) Disbursement fraud
C) Skimming
D) Illegal gratuities

Answer 1

C
A: Incorrect; Larceny involves stealing money after it enters into a company's accounting system
B: Incorrect; Disbursement fraud uses false vendors, employees, and expenses to funnel money out of the company.
C: Correct
D: Incorrect; Illegal gratuities involves schemes in which a person offers, gives, receives, or solicits something of value for, or because of, an official act or business decision without the knowledge or consent of the principal.

Question 2

Which of the following frauds cannot be performed with collusion?

A) Stealing Receipts
B) Stealing Assets on Hand
C) Stealing Through Disbursements
D) All of the above can be performed with collusion

Answer 2

D
D: All of the above frauds can be performed with collusion

Question 3

A recent study indicated that U.S. Organizations lose approximately ____ % of their annual revenues to fraud.

A) 5
B) 10
C) 17
D) 25

Answer 3

A
A: Correct

Question 4

Which of the following fraud scheme will cause missing inventory?

A) False refunds
B) Check tampering
C) Expense schemes
D) Cash skimming

Question 5

Bid-rigging is a form of a:

A) Conflict of interest
B) Bribery
C) Extortion
D) Illegal gratuity

Question 6

Bribery involves offering, giving, receiving, or soliciting anything of value in order to influence a/an

A) Decision of government agents
B) Official act
C) Decision of employees
D) All of the above

Question 7

Which is not a type of fraudulent disbursement?

A) Expense reimbursement Scheme
B) Check tampering
C) Payroll Schemes
D) Larceny

Question 8

Which of the following is one of the three main categories of occupational fraud and abuse?

A) Corruption
B) Bid-rigging
C) Check tampering
D) Lapping

Question 9

Lapping is:

A) Stealing one customer's payment and then crediting that customer's account with a subsequent customer's payment.
B) Stealing cash from an organization prior to the organization's accounting system recording the cash receipt.
C) Helping a vendor illegally obtain a contract that should have involved competitive bidding.
D) None of the above.

Question 10

When an employee demands payment from a vendor in order to conduct business with the vendor, he or she is committing a ________.

A) Bribery scheme
B) Conflict of interest scheme
C) Economic extortion scheme
D) Illegal gratuity scheme

Question 11

Theft of cash through fraudulent disbursements includes which of the following?

A) Check tampering
B) Register-disbursement schemes
C) Billing Schemes
D) All of the above

Question 12

Skimming is easier to detect than larceny because

A) Cash is stolen after it has been recorded in the company's accounting system
B) Cash is stolen before it has been recorded in the company's accounting system
C) Skimming involves fraudulent cash receipts
D) Skimming is not easier to detect than larceny

Question 13

Asset misappropriation is defined as theft that is committed by

A) Offering, giving, receiving, or soliciting anything of value to influence an official act.
B) Demanding payment from a vendor in order to make or influence a decision in a vendor's favor.
C) Deceiving individuals into putting their money into a fake investment.
D) Stealing receipts, stealing assets on hand, or by committing any type of disbursement fraud.

Question 14

Which of the following is not a skimming scheme?

A) Misappropriate customer payments and write off the receivable as "uncollectible'
B) Intercept checks intended for a third party and convert the checks to cash for their own use
C) Understate sales and collections by recording false or larger-than-reality sales discounts
D) Collude with customers so that they either pay later than required or less than required

Question 15

Which of the following statements regarding larceny is NOT true?

A) Larceny is easier to detect than skimming and is less common.
B) Larceny occurs when employees or others steal cash before the amounts have been recorded in the accounting system.
C) Smaller occurrences of larceny are often written off as "shorts" or "miscounts".
D) Perpetrators of larcenies must have direct access to inventory or other assets

Question 16

Which of the following is not one of the four types of corruption?

A) Bribery
B) Larceny
C) Extortion
D) Illegal gratuities

Question 17

The following are all types of corruption except:

A) Extortion
B) Conflicts of interest
C) Lapping
D) Bribery

Question 18

Frauds against organizations are most likely to be perpetrated by:

A) Customers
B) Vendors
C) Employees
D) Management

Question 19

Check tampering is a form of

A) Stealing receipts of cash
B) Stealing cash on hand
C) Committing disbursement fraud
D) Committing a corruption fraud

Question 20

A conflict of interest exists when

A) An employer knows of an employees interest in a business deal or negotiation
B) An employee's interest in a transaction is undisclosed
C) Employees offer, give, receive or solicit anything of value in order to influence an official act
D) Employees demand payments from vendors for deciding in the vendors' favor

Question 21

Asset Misappropriations occur in which way

A) Stealing receipts
B) Stealing Assets on hand
C) Stealing through disbursements
D) All of the above

Question 22

Corruption involves which of the following schemes:

A) Bribery
B) Conflicts of interest
C) Economic extortion
D) Illegal gratuities
E) All of the above

Question 23

What is skimming?

A) Removal of cash from a victim organization before entry into an accounting system
B) Very similar to bribery
C) Submission of a false or altered invoice that causes an employer to willingly issue a check
D) None of the above

Question 24

Which of the following disbursement fraud schemes occurs most frequently?

A) Billing schemes.
B) Check tampering.
C) Payroll schemes.
D) Expense reimbursement schemes.

Question 25

A conflict of interest is corruption that can be defined as:

A) Offering, giving, receiving or soliciting anything of value in order to influence an official act
B) Corrupt employees demand payments from vendors for deciding in the vendors' favor
C) Corrupt employees are rewarded for making favorable decisions
D) The employee has an undisclosed economic or personal stake in a transaction that adversely affects the company

Question 26

Removal of cash from a victim organization prior to its entry in an accounting system would be considered:

A) Extortion
B) Disbursement Fraud
C) Skimming
D) Larceny
E) Check tampering

Question 27

All of the following are possible ways to commit fraud by using a payroll scheme except:

A) Overstating expenses that will be reimbursed
B) Falsify hours worked
C) Creating ghost employees
D) Commission scheme

Question 28

Tyco's former CEO sold his house to Tyco with a price three times fair market value. What type of fraud it this?

A) Economic extortion and illegal gratuities
B) Conflicts of interest
C) Cash skimming
D) Bribery

Question 29

Which of the following is representative of a conflict of interest?

A) The owner of the company is aware of an employee's relationship with a vendor
B) The owner of the company is unaware of the employee's relationship with a vendor
C) When the employee accepts kickbacks from a vendor
D) When the employee makes fraudulent disbursements to him or herself though a fictitious vendor

Question 30

The term Larceny means:

A) Intentionally taking an employer's cash or other assets without the consent and against the will of the employer, before it has been recorded in the company's accounting system.
B) Creating ghost employees and overpaying wages
C) Intentionally taking an employer's cash or other assets without the consent and against the will of the employer, after it has been recorded in the company's accounting system.
D) Both A and C are correct

Question 31

Claiming personal travel as a business expense, altering a receipt to reflect a higher amount than was actually paid, or submitting fictitious receipts is an example of a:

A) Billing scheme
B) Check tampering
C) Register-disbursement scheme
D) None of the above

Question 32

Skimming exhibits which of the following fraudulent characteristics:

A) Intentionally taking an organization's cash without the organization's consent
B) Removing cash prior to its entry into the accounting system
C) Stealing a payment and then crediting that account with a subsequent customers payment
D) Submission of a false or altered invoice that causes an employer to willingly issue a check

Question 33

The highest percent of asset misappropriation occurs through:

A) Larceny
B) Skimming
C) Asset borrowing
D) Fraudulent disbursements

Question 34

Thefts of inventory are divided into which of the following two groups:

A) Corruption and bribery
B) Expense scheme and skimming
C) Economic extortion and illegal gratuities
D) Larceny and misuse

Question 35

The most basic skimming schemes occurs when:

A) Fraudulent checks are prepared for personal use
B) Money taken from the cash register is disguised as a false return
C) Money is taken from the sale of goods or services but not recorded as a sale
D) None of the above

Question 36

Fraudulent financial reporting and misappropriation of assets differ in that fraudulent financial reporting is committed by:

A) Management, to deceive financial statement users while misappropriation of assets is committed against an entity, most often by employees.
B) Employees, to deceive financial statement users while misappropriation of assets is committed against an entity, most often by management.
C) Both A & B
D) None of the above

Question 37

According to the text, which of the following is the least costly of all disbursement schemes?

A) Check tampering schemes
B) Personal expense schemes
C) Billing schemes
D) Payroll schemes

Question 38

True of False: Bribery schemes usually benefit the employee who accepts the vendor bribe, but the company rarely suffers economic loss?

Question 39

What are the four types of corruption?

A) Bribery, conflicts of interest, extortion, and illegal gratuities
B) Bribery, larceny, extortion, and conflicts of interest
C) Skimming, larceny, extortion, and conflicts of interest
D) Conflicts of interest, check tampering, skimming, and illegal gratuities

Question 40

According to the text, skimming is a subset of which type of asset misappropriation?

A) Theft of cash
B) Theft of inventory
C) Theft of receipts
D) Disbursement fraud

Question 41

Which of the following is the BEST example of a register-disbursement scheme?

A) A perpetrator who processes transactions as if a customer were returning merchandise, even though there is no actual return.
B) A perpetrator uses the expense register to falsely record expenses that are then paid out by the A/P department.
C) A perpetrator physically prepares a check from the check register claiming it is a legitimate expense when it is not.
D) A perpetrator slowly takes money from the register drawer after making regular sales - often showing that a discount was given to a customer on the receipt.

Question 42

Which of the following examples is NOT a billing scheme?

A) Mark purchases a new laptop computer for his brother-in-law with company funds.
B) Mark submits a receipt of his cab fare for reimbursement, which includes an extra $10.
C) Mark double pays a vendor for the purchase of inventory and then pockets the second payment when it is returned.
D) All of the above are billing schemes

Question 43

When suppliers are engaged in bid-rigging, they vie for contracts in cutthroat environments, and usually only gain an advantage over competitors through bribing an employee with inside influence.

A) True
B) False

Question 44

Which of the following is not an example of a billing scheme?

A) Submitting invoices to the victim organization for dummy companies
B) Altering a non-accomplice vendor's statements
C) Making a claim for reimbursement of a fictitious or inflated business expenses
D) Making personal purchases with company funds
E) All of the above are examples of billing schemes

Question 45

Thefts of inventory and other assets can be broken into the subcategories of:

A) Larceny
B) Fraudulent disbursements
C) Misuse
D) Both A and C

Question 46

Identify the statement that does NOT represent one of the four types of corruption.

A) Offering, giving, receiving, or soliciting anything of value in order to influence an official act.
B) False documents cause the victim company to unknowingly make a fraudulent disbursement.
C) Employees demand payments from vendors for deciding in the vendors' favor
D) An employee, manager, or executive has an undisclosed economic or personal interest in a transaction that adversely affects the company.
E) Corrupt employees are rewarded for favorable decisions after deals are approved.

Question 47

Which of the following is the best example of theft of cash through skimming?

A) Preparing fraudulent checks
B) Understating sales by recording false or larger-than reality sales discounts
C) Setting up dummy companies
D) Stealing cash after it has already been recorded

Question 48

Which of the following is not a type of corruption?

A) Bribery
B) Extortion
C) Check tempering
D) Conflict of interest.