Question

Which of the following would least likely prevent a computer hacking?

Select one:

a. Encryptions are used for sensitive data files, password files, and sensitive computer programs.

b. Passwords of transferred or terminated employees are changed immediately.

c. Security policies that include training for all employees, customers, and others who do not need to access the network.

d. Hacker publications and communications are reviewed to learn the current hacking methods.

Question 3

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Which of the following is not a duty of the PCAOB (Public Company Accounting Oversight Board) under the Sarbanes-Oxley Act of 2002?

Select one:

a. The PCOAB has a duty to register public accounting firms that audit publicly traded companies.

b. The PCOAB has a duty to ensure that all audit work papers of CPA firms are maintained for at least seven years.

c. The PCOAB has a duty to conduct an inspection once every three years of CPA firms that regularly audit more than 100 public companies.

d. The PCOAB has a duty to establish or adopt auditing, quality control, ethics, independence and other standards relating to audits of publicly traded companies.

Question 4

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In investigating insurance fraud, an accounting fraud examiner would least likely use which of the following computer-assisted detection methods?

Select one:

a. An accounting fraud examiner would use the computer to compare administrative files with payroll files to determine whether the insurance company is distributing payrolls to people who have changed their insurance policies.

b. An accounting fraud examiner would use the computer to generate an exception report for all exceptions to normal insurance policy procedures.

c. An accounting fraud examiner would use the computer to mail confirmation requests on delinquent premiums and change of address to verify that the insurance company’s records agree with the policyholders’ records.

d. An accounting fraud examiner would use the computer to compare insurance policy issue files with disbursement files to determine whether funds that are used to place new policies fraudulently come from the equity of old policies.

Question 5

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It is usually more difficult to identify and trace off-book bribery payments than on-book bribery payments. Which of the following is the best approach when examining off-book bribery payments?

Select one:

a. The suspected off-book bribery payments are best approached from the point of payment (payer of bribery).

b. The suspected off-book bribery payments are best approached from the point of receipt (recipient of bribery).

c. The suspected off-book bribery payments are best approached by determining whether employees have failed to execute tax withholding forms, or have not elected to receive any health benefits or other optional withdrawals, such as enforced saving plans.

d. The suspected off-book bribery payments are best approached by reviewing the exit interviews and comparing the vendor addresses with addresses of subsequent employers.

A conflict of interest occurs when an employee of a company has an undisclosed economic or personal interest in a transaction that adversely affects his/her employer. Which of the following methods is least effective in detecting a conflict of interest between an employee and a vendor?

Select one:

a. Matching the vendor address with the employee address to check whether the vendor and the employee are the same business entity.

b. Comparing the vendor tax files with the employee tax files to reveal whether the vendor and the employee have the same tax evasion scheme.

c. Reviewing the employee’s exit interview to check whether he/she is has obtained employment from the vendor.

d. Listening closely to complaints from competing vendors to check whether a particular vendor is being favored.

Question 7

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Which of the following is not a true statement regarding the detection of bank employee embezzlement?

Select one:

a. If the dollar amount of the embezzlement is so small that the bank’s financial statements will not be materially affected, the embezzlement can best be detected through a count of cash on hand.

b. If the dollar amount of the embezzlement is so large that the bank’s financial statement will be materially affected, the embezzlement can be best be detected through an analysis of the financial statements.

c. The bank should detect all bank employee embezzlement whether the dollar amount of the embezzlement will/will not materially affect the bank’s financial statements.

d. If the dollar amount of the embezzlement is so small that the bank’s financial statements will not be materially affected, the embezzlement can best be detected through a review of source documents.

Question 8

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The California Security Breach Information Act (SB-1386) is a state law requiring organizations that maintain personal information about individuals to inform those individuals if the security of their information is compromised. Which of the following is the least likely step that organizations in California can take to comply with the Act?

Select one:

a. Appoint a bank lawyer or legal personnel to ensure SB-1386 compliance.  

b. Identify the location of all databases that contain personal information and implement access controls and physical security measures for data security.

c. Develop and implement procedures for rapid assessment of suspected security breaches, referral of suspected criminal acts to law enforcement agencies, notification of affected California residents and for appropriate public announcements to stakeholders and other interested parties to minimize the negative impact of the security breach.

d. Review arrangements with all third parties who store, process or transmit personal information and take steps to require them to adopt equivalent measures.

Question 9

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In April 2005, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (Section 256) was signed into law. The Act affects any person involved in a bankruptcy proceeding. Which of the following statements is not true concerning the effects of the Act?

Select one:

a. A person in debt will have to work out a repayment plan instead of having his/her obligations erased in bankruptcy court.

b. A person with insufficient assets or income could still file a Chapter 7 bankruptcy, which, if approved by a judge, erases debts entirely after certain assets are forfeited.

c. A state bankruptcy judge determines whether an individual must repay some or all of his/her debt.

d. A person with an income above his/her state's median income will have to pay some or all of his/her credit-card charges, medical bills and other obligations under a court-ordered bankruptcy plan.

Question 10

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Most states now expressly provide penalties for fraud perpetrated by using a computer and the internet. In 2005, California passed a state law on internet “spamming” - The Anti-Spam Law of 2005 (Senate Bill No.97) that

Select one:

a.
makes it a civil offense for anyone to create a website or domain name that seems like a legitimate online business and use it to ask, induce, request, or solicit any person to transmit, submit, or provide any means of identification without the authority or approval of the person.

b.

the victim to recover damages of $500,000 per unsolicited commercial e-mail advertisement transmitted in violation of the act, up to one million per incident, subject to reduction by the court.

c.
the perpetrator shall be punished by a fine of not more than $500,000, imprisonment in a county jail for not more than twelve months, or by both the fine and imprisonment.

d.
makes it a civil offense for anyone to create commercial e-mail advertisements containing certain falsifies, misrepresented, obscured, or misleading information.

Which of the following is a correct statement concerning the difference between a ponzi fraud and an illegal pyramid fraud?

Select one:

a. A ponzi fraud usually involves marketing of products and services; whereas, an illegal pyramid fraud usually involves marketing of financial instruments.

b. A ponzi fraud is an illegal business in which new investors’ money is used to make payments to earlier investors; whereas an illegal pyramid fraud is an illegal business in which new members are continually recruited to offer merchandise or services for sale, but only 70% of the business revenue comes from the sales whereas 30% of the business revenue comes from recruitment of new members.

c. A ponzi fraud requires a steady supply of new investors; whereas an illegal pyramid fraud does not require a steady supply of new members.

d. A ponzi fraud is an illegal business; whereas, a pyramid fraud can be a legal or illegal business.

Question 12

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Which of the following is not a precaution that an accounting fraud examiner should take when gathering computer evidence relating to an insider computer fraud?

Select one:

a. Do not eat, drink, or smoke close to the computer system or near any of the storage devices.

b. Do not fingerprint magnetic media; the fingerprint powder could permanently damage the drive equipment.

c. Do not fold or bend disks, or touch the magnetic media inside the disk cover.

d. Do not connect or disconnect any of the cables when the computer is not in operating mode.

Answer 1

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Which of the following would least likely prevent a computer hacking?

c. Security policies that include training for all employees, customers, and others who do not need to access the network.

Which of the following is not a duty of the PCAOB (Public Company Accounting Oversight Board) under the Sarbanes-Oxley Act of 2002?

c. The PCOAB has a duty to conduct an inspection once every three years of CPA firms that regularly audit more than 100 public companies.

In investigating insurance fraud, an accounting fraud examiner would least likely use which of the following computer-assisted detection methods?

a. An accounting fraud examiner would use the computer to compare administrative files with payroll files to determine whether the insurance company is distributing payrolls to people who have changed their insurance policies.

It is usually more difficult to identify and trace off-book bribery payments than on-book bribery?

b. The suspected off-book bribery payments are best approached from the point of receipt (recipient of bribery).

A conflict of interest occurs when an employee of a company has an undisclosed economic or personal interest in a transaction that adversely affects his/her employer. Which of the following methods is least effective in detecting a conflict of interest between an employee and a vendor?

b. Comparing the vendor tax files with the employee tax files to reveal whether the vendor and the employee have the same tax evasion scheme.

Which of the following is not a true statement regarding the detection of bank employee embezzlement?

b. If the dollar amount of the embezzlement is so large that the bank’s financial statement will be materially affected, the embezzlement can be best be detected through an analysis of the financial statements.

The California Security Breach Information Act (SB-1386) is a state law requiring organizations that maintain personal information about individuals to inform those individuals if the security of their information is compromised. Which of the following is the least likely step that organizations in California can take to comply with the Act?

d. Review arrangements with all third parties who store, process or transmit personal information and take steps to require them to adopt equivalent measures.

In April 2005, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (Section 256) was signed into law. The Act affects any person involved in a bankruptcy proceeding. Which of the following statements is not true concerning the effects of the Act?

d. A person with an income above his/her state's median income will have to pay some or all of his/her credit-card charges, medical bills and other obligations under a court-ordered bankruptcy plan.

Most states now expressly provide penalties for fraud perpetrated by using a computer and the internet. In 2005, California passed a state law on internet “spamming” - The Anti-Spam Law of 2005 (Senate Bill No.97) that

d. makes it a civil offense for anyone to create commercial e-mail advertisements containing certain falsifies, misrepresented, obscured, or misleading information.

Which of the following is a correct statement concerning the difference between a Ponzi fraud and an illegal pyramid fraud?

d. A Ponzi fraud is an illegal business; whereas, a pyramid fraud can be a legal or illegal business.

Which of the following is not a precaution that an accounting fraud examiner should take when gathering computer evidence relating to an insider computer fraud?

a. Do not eat, drink, or smoke close to the computer system or near any of the storage devices.