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LSU Fraud Final Exam MC questions well answered to pass
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LSU Fraud Final Exam MC questions well answered to pass
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LSU Fraud Final Exam MCFinancial statement fraud is usually committed by:
a. executives
b. managers
c. stockholders
d. outsiders
e. both a and b - correct answer ✔✔e. both a and b
which officer in a company is most likely to be the perpetrator of financial statement fraud?
a. chief financial officer (CFO)
b. controller
c. chief operating officer (COO)
d. chief executive officer (CEO) - correct answer ✔✔d. Chief executive officer (CEO)
When looking for financial statement fraud, auditors should look for indicators of fraud by:
a. examining financial statements
b. evaluating changes in financial statements
c. examining relationships the company has with other parties
d. examining operating characteristics of the company
e. all of the above
f. none of the above - correct answer ✔✔e. all of the above
The three aspects of management that a fraud examiner needs to be aware of include all of the
following except:
a. their backgrounds
b. their motivations
c. their religious convictions
,d. their influence in making decisions for the organization - correct answer ✔✔c. their religious
convictions
Which of the following is least likely to be considered a financial reporting fraud symptom, or red flag?
a. grey directors
b. family relationships between directors or officers
c. large increases in accounts receivable with no increase in sales
d. size of the firm - correct answer ✔✔d. size of the firm
Many indicators of fraud are circumstantial: that is they can be caused by nonfraud factors. This fact can
make convicting someone of fraud difficult. Which of the following types of evidence would be most
helpful in proving that someone committed fraud?
a. missing documentation
b. a general ledger that is out of balance
c. analytical relationships that dont make sense
d. a repeated pattern of similar fraudulent acts - correct answer ✔✔d. a repeated pattern of similar
fraudulent acts
Most financial statement frauds occur in smaller organizations with simple management structures,
rather than in large, historically profitable organizations. This is because:
a. it is easier to implement good internal controls in a small organization
b. smaller organizations do not have investors
c. management fraud is more difficult to commit when there is a more formal organizational structure of
management
d. people in large organizations are more honest - correct answer ✔✔c. management fraud is more
difficult to commit when there is a more formal organizational structure of management
Management fraud is usually committed on behalf of the organization rather than against it. Which of
the following would not be a motivation of fraud on behalf of an organization?
, a. CFO needs a new car
b. a highly competitive industry
c. Pressure to meet expected earnings
d. restructure debt covenants that cant be met - correct answer ✔✔a. CFO needs a new car
All of the following are indicators of financial statement fraud except:
a. unusually rapid growth of profitability
b. threat of a hostile takeover
c. dependence on one or two products
d. large amounts of available cash - correct answer ✔✔d. large amounts of available cash
During an audit, an auditor considers the conditions of the auditee and plans the audit accordingly. This
is an example of which of the following?
a. zero-order reasoning
b. high-order reasoning
c. first-order reasoning
d. fraudulent reasoning - correct answer ✔✔c. first-order reasoning
In the context of strategic reasoning, if an auditor only follows the established audit plan and does not
consider other factors relating to the auditee, then this is an example of which of the following?
a. zero-order reasoning
b. higher-order reasoning
c. first-order reasoning
d. fraudulent reasoning - correct answer ✔✔a. zero-order reasoning
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