Question 1

Which of the following definitions of fraud is NOT true?

Accepted Answer

All the provided definitions accurately describe aspects of fraud, including misrepresentation, concealment, and the intention to induce detrimental action, making none of them incorrect.

Question 2

According to the 2020 Association of Certified Fraud Examiners Report to the Nations, organizations lose around

Accepted Answer

The 2020 Association of Certified Fraud Examiners (ACFE) Report to the Nations states that organizations lose an estimated 5% of their revenues to fraud annually.

Question 3

Which of the following could help a company manage fraud?

Accepted Answer

All of the options listed are effective strategies for managing fraud within a company. Creating an anti-fraud culture helps to deter fraudulent behavior by promoting ethical values. Establishing and maintaining an effective system of internal controls is crucial for preventing and detecting fraud. Performing fraud risk assessments allows a company to identify and address specific vulnerabilities. Therefore, all these measures collectively contribute to managing fraud.

Question 4

Which law or regulation requires companies to evaluate their systems of internal controls to prevent and detect fraud?

Accepted Answer

The Sarbanes-Oxley Act (SOX) requires companies to evaluate their systems of internal controls to prevent and detect fraud, aiming to protect investors by improving the accuracy and reliability of corporate disclosures.

Question 5

Which of the following is an example of external fraud?

Accepted Answer

External fraud involves a third party, such as a vendor, deceiving a company for financial gain. In this case, the vendor is billing for services not performed, which is an act of fraud against the company.

Question 6

Which of the following represents an accurate definition of external fraud?

Accepted Answer

External fraud is committed by individuals or entities outside the organization, such as customers, vendors, or other external parties, against the company.

Question 7

Occupational fraud is committed by

Accepted Answer

Occupational fraud can be committed by individuals at any level within an organization, including owners, management, and employees.

Question 8

Occupational fraud can

Accepted Answer

Occupational fraud, also known as internal fraud, refers to fraudulent activities committed by employees against their employers. It can indeed be committed in numerous ways, often with the intent of personal enrichment at the company's expense.

Question 9

Juan Martin is a purchasing manager for North Industries. Juan Martin chose not to award a $1 million-dollar contract to his brother's firm because another firm was more qualified to perform the services required. What type of corruption scheme did Juan Martin avoid by choosing the most qualified vendor to provide services for North Industries?

Accepted Answer

Juan Martin avoided a conflict of interest by not awarding the contract to his brother's firm, ensuring that his personal relationships did not interfere with his duty to make decisions in the best interest of North Industries.

Question 10

Daniil is evaluating vendor bids for office furniture for his company's new building. A vendor called Daniil and offered season tickets to the professional basketball team's upcoming season if he were to consider awarding the contract to their firm. What type of fraud would be occurring if Daniil selects the vendor offering the season tickets?

Accepted Answer

This scenario is an example of commercial bribery, where a vendor offers something of value to influence the decision-making of a buyer in their favor.

Question 11

Leylah threatens Alta, Inc. with awarding a contract to another vendor if Alta does not invite Leylah to the next Alta company retreat in Bali. What type of occupational fraud is Leylah committing?

Accepted Answer

Leylah is committing economic extortion by threatening to take her business elsewhere unless she receives a personal benefit (an invitation to the company retreat), which does not involve a direct bribe but rather a coercion for personal gain.

Question 12

Garbine, an internal auditor for XYZ, examined purchases made for the previous year. Garbine found that several contracts were awarded to the same vendor despite several bids coming in with more favorable terms. Upon questioning those in the purchasing department, Garbine learned that Amanda always handled the contracts with that vendor and seems to have received gifts from the vendor. What kind of corruption may be between Amanda and the vendor?

Accepted Answer

Amanda receiving gifts from the vendor suggests illegal gratuities, where a vendor gives something of value to influence the decision-making process.

Question 13

Taylor's mother owns a commercial cleaning business that bid on the job for Taylor's office building. By awarding the cleaning contract to her mother's cleaning company without considering the competing bids, Taylor is engaging in what type of corruption?

Accepted Answer

Taylor is engaging in a conflict of interest by awarding the cleaning contract to her mother's company without considering other bids, as it involves a situation where Taylor's personal interests could improperly influence the decision-making process.

Question 14

Novak accepted an offer of payment from Iga to help sway a business decision. Who is in the wrong in this situation?

Accepted Answer

Both Novak and Iga are guilty because Novak accepted a payment to influence a business decision, which constitutes corruption, and Iga offered the payment, which constitutes bribery.

Question 15

Alexander, the purchasing manager for Express Limited, recently received a luxury watch in the mail from Matteo, a salesman from VidStar. Alexander awarded a large contract to VidStar last week. Alexander should not accept the watch as it is a(n)

Accepted Answer

The answer of Alexander, the purchasing manager for Express Limited,...

Question 16

Ons is a purchasing agent for a large casino organization. The organization is reviewing many bids for security services. The two bids with the best cost benefit analysis are very close. Ons has informed one of the companies that they are the second choice but could be the first if they were to provide Ons with a vacation package for the weekend. What type of corruption is Ons guilty of in this situation?

Accepted Answer

The answer of Ons is a purchasing agent for a...

Question 17

What type of individual is most likely to commit occupational fraud?

Accepted Answer

Members of the management team often have the access, authority, and opportunity to commit occupational fraud, making them more likely than the other options listed to engage in such activities.

Question 18

Elana works in internal audit and take her job very seriously. So seriously that she rarely takes any time off and insists that she will complete any work when she returns and for no one else to touch her work. Which behavior red flag is being exhibited by Elana?

Accepted Answer

Elana's insistence on not taking time off and not allowing anyone else to handle her work are signs of control issues. This behavior can indicate a desire to maintain tight control over her work environment and tasks, possibly to conceal errors or fraudulent activities.

Question 19

Casper brags and often shares negative comments about his coworkers to sway the management team into assigning him the projects that he prefers. What type of behavioral red flag does Casper exhibit?

Accepted Answer

Casper's behavior of bragging and sharing negative comments about his coworkers to influence management decisions is indicative of an unscrupulous attitude, which involves a lack of moral principles and readiness to act unethically to achieve one's goals.

Question 20

Jannik visits with a good customer of the firm frequently at their place of business but never leaves the office to visit other customers. Is Jannik's behavior a red flag?

Accepted Answer

A close association with a customer, similar to a vendor, can be a red flag because it might indicate potential biases, conflicts of interest, or unethical behavior in business dealings.

Quiz 15: Fraud