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Chapter: 7 -Problem: 1 >> 1 . As stated at the beginning of the chapter, it was discovered that the McDonald's Monopoly game was a fraud. Simon Marketing, which ran the game on behalf of McDonald's, was responsible for the fraud. During the investigation to uncover the fraud, the FBI used several different forms of surveillance. Using the lntemet, find newspapers and other sources of information that describe these forms o
Answer Preview: 1. a. The FBI used several different forms of surveillance to gather evidence, including wi…

, Chapter: 13 -Problem: 10 >> On a beautiful spring morning in 2015, Stephen Lowber, chief financial officer of Cutter and Buck, Inc., slowly arose from his bed, walked across the bedroom floor, and gazed out the window. It was a surprisingly clear, sunny day in Seattle, Washington.Despite the beauty of the day, the expression on Mr. Lowber's face was not positive. Cutter and Buck, a company that designs and markets upscale sp
Answer Preview: 1. Revenue recognition: Cutter and Buck improperly recognized as revenue $5 7 …

, Chapter: 16 -Problem: 16 >> The U.S. Department of Treasury is a branch of the IRS.  True/False
Answer Preview: False. The Internal Revenue Serv…

, Chapter: 3 -Problem: 3 >> 1. Part of avoiding fraud is to create a positive work environment. Describe a few conditions mentioned within the case that could contribute to a poor work environment.2. What symptoms should an auditor look for to determine if fraud is occurring within the retention department?3. There are five primary control procedures or activities. List and explain which two procedures you feel would be most
Answer Preview: 1. Conditions that could contribute to a poor work environment: High Turnover: The ABC retention department has recently experienced a high level of management turnover, which makes it impossible for …

, Chapter: 13 -Problem: 11 >> In November 2017, Wehav Funds, a profitable engineering firm, signed a Joan guarantee as a third party for No Certainty Company, a newly formed organization focused on pharmaceutical research and development. Because Wehav Funds was a reputed and successful company, the Joan was processed and approved by National Bank at the end of November 2017.Due to the nature of the pharmaceutical industry, No
Answer Preview: 1 & 2 FASB Statement 5 requires the recording of contingent liabilities on the balance sheet i…

, Chapter: 8 -Problem: 15 >> Programs like IBM's i2 Analyst's Notebook and Xanalys Link Explorer perform link analysis. True/False
Answer Preview: …

, Chapter: 17 -Problem: 3 >> Together with other students from your class, identify a small, local company that does e-business and whose owner or manager is willing to talk with you about its operations. With your professor's approval, meet with the company manager and explain to him or her that you are studying fraud examination and would like to discuss the company's vulnerability to fraud Follow the following steps to pro
Answer Preview: Endeavor to Understand the Business or Operation of the Organization The first step in proactive fraud examination is to endeavor to understand the business or operation of the organization. This invo…

, Chapter: 6 -Problem: 1 >> 1. Prepare a project plan for implementing the six-step data-driven approach. List the types of team members who should be involved in each step, how long each step will take, and cost estimates for each step.2. What software package will you need to purchase to complete the process? Provide arguments for your decision.3 . What techniques should be run in Steps 4 and 5? You are in your first month
Answer Preview: 1. You based on their plan, but each plan should include the six steps to the data-driven ap…

, Chapter: 5 -Problem: 5 >> The internal control system of an organization is comprised of the control environment, the accounting system, and control procedures (activities). True/False
Answer Preview: …

, Chapter: 2 -Problem: 5 >> Which of the following is probably the least common type of fraud pressure?a. Vices.b. Work-related pressures.c. Financial pressures.d. Pressure to outsmart peers.
Answer Preview: d. Pre…

, Chapter: 12 -Problem: 3 >> The following information is provided for TechnoWorld, a company specializing in providing Internet technology assistance for clients:Perform a horizontal analysis of this balance sheet and identify any accounts that may be questionable. Take into account technology industry trends when performing the analysis. Transcribed
Answer Preview: After performing the analysis, the accounts that raise questions are Accounts Receivable and Retaine…

, Chapter: 18 -Problem: 15 >> You have recently been asked to be a damages expert witness in a large Ponzi scheme. The lawyers have asked you to calculate actual damages, what-if damages, and pre-judgment interest damages. How would you go about preparing to testify?
Answer Preview: You would need to conduct substantial analysis of the case to determine the amount…

, Chapter: 17 -Problem: 2 >> Conduct a random survey of at least 30 people. From the survey responses, draw several conclusions about attitudes of consumers toward e-commerce. Write a brief essay summarizing your conclusions.Attach to it any spreadsheets or charts used in your analysis. The survey should include, but not necessarily be limited to, the following questions:1. How often do you purchase products or services over
Answer Preview: I can provide you with some general insights into the attitudes of consumers towards e-commerce based on existing research and surveys. According to recent studies, the attitudes of consumers towards …

, Chapter: 15 -Problem: 1 >> Recently, Experience published the findings of an online survey about identity theft. Findings from the survey are found online at http://www.experian.com/blogs/ask-experian/survey-findings-are-consumers-makingit-easier-for-identity-thieves/?pc=prt_exp_O&cc=prt_0817 itpsurvey. Review the findings of this survey and identify four to six highlights identified by the survey-especially focusing on ins
Answer Preview: They should verify that the student has reported on four to six highlights …

, Chapter: 2 -Problem: 1 >> The introduction to this chapter discusses the case of Dennis Greer, an individual who became involved in a large-scale check kiting scheme. The fraud literature suggests that when an individual becomes involved in fraud (such as Dennis did), he or she should get the maximum punishment available. By doing so, other individuals who may consider committing fraud would be deterred from doing so. Afte
Answer Preview: I believe that Dennis should receive some len iency i…

, Chapter: 1 -Problem: 14 >> Advances in technology have had no effect either on the size or frequency of fraud or on the detection or investigation of fraud.  True/False
Answer Preview: False. Technolog…

, Chapter: 3 -Problem: 12 >> Investigating fraud is the most cost-effective way to reduce losses from fraud. True/False
Answer Preview: False. Preventing …

, Chapter: 3 -Problem: 10 >> Why might pursuing civil remedies be ineffective against employee fraud? When might civil actions be more useful?
Answer Preview: Civil proceedings seek to reclaim the assets stolen in the fraud. Often, with em…

, Chapter: 12 -Problem: 6 >> What are common-size financial statements?
Answer Preview: Common-size financial statements are balance sheets and income st…

, Chapter: 13 -Problem: 7 >> The following two comparative balance sheets and statements of income are for XYZ Company for the years 2015-2017: Calculate all ratios needed to determine if XYZ is possibly under reporting accounts payable. If you detect possible fraud, explain why you think it might exist. Transcribed Image Text:
Answer Preview: All ratios focus on the reasonableness of the accounts pay…

, Chapter: 6 -Problem: 4 >> Using the financial information in the following tables, compute the required ratios list on the ratio analysis sheet and then complete the horizontal and vertical analyses worksheets. Transcribed Image Text: ABC COMPANY BALANCE SHEET AS OF DECEMBER 31, 2018 ASSETS 2018 2017 2016 Current assets Cash
Answer Preview: ABC Company Ratio Analysis As of December 31, 2012 PROFITABILITY/PE…

, Chapter: 17 -Problem: 1 >> Identify a local company that conducts e-commerce, preferably one with whom you have previously done business or are otherwise familiar. Research the company and become knowledgeable in its basic operations and services. Contact the company and inform it of your interest as a student, in learning more about its business. Inquire as to how the company guarantees the security of its site and consume
Answer Preview: I recently contacted a local e-commerce company, ABC Company, with whom I have previously done busin…

, Chapter: 1 -Problem: 1 >> All frauds that a re detected by organizations are made public. True/False
Answer Preview: False. In many cases, companies …

, Chapter: 7 -Problem: 14 >> As a recent college graduate, you land a job with a local accounting fum. The firm hired you because of your expertise in computer forensics (a skill you gained during school). Up to this point, the firm has had no internal knowledge of forensics, and your first assignment at work is to create a 15-page slide s how and presentation on the subject. You will give the presentation at the next firm- w
Answer Preview: Slide 1: Introduction to Computer Forensics Slide 2: Backg…

, Chapter: 12 -Problem: 1 >> Mendoza is considering investing in IBM. However, he is captivated by IBM's growth. IBM had made a remarkable change from a struggling company to a leading company in the personal computer market. Mendoza has asked for your advice as to whether or not the growth is genuine. He suspects there might have been some fraudulent or ethical actions taken by IBM to increase its income.After a brief look a
Answer Preview: In order to answer Mendoza's question about the ethical nature of IBM's growth, it is important to …

, Chapter: 5 -Problem: 1 >> How many different Web sites can you find dealing with fraud auditing and detection? Try a few different search strings in Google, YouTube, the ACFE or another search engine and see what sites are available.
Answer Preview: Many Web site matches can be found that …

, Chapter: 2 -Problem: 6 >> Fraud opportunity involves:a. Opportunity to conceal fraud.b. Opportunity to avoid being punished for fraud.c. Opportunity to commit fraud.d. All of the above.e. None of the above.
Answer Preview: d. A…

, Chapter: 3 -Problem: 1 >> Fred is a friend of yours and works with you at the same company. He is a well-respected and trusted employee. He has two young children and is a leader in his community. You have discovered that Fred has embezzled $3,000 over a period of several years.Although this is not much money for such a large company, you suspect that if you don't report him, the problem may get worse. On the other hand, h
Answer Preview: Reporting Fred should be a last resort . Before doing so , you should t…

, Chapter: 8 -Problem: 4 >> Marlin Company has suspected something "fishy" for several months. It has noticed that its profits have been slowly decreasing, while reven ues have been increasing. After consulting with you, a fraud expert, the company has decided to investigate the purchasing patterns of its three purchasing agents-Curly, Larry, and Moe. You decide that a good method for investigation into the matter is examini
Answer Preview: In order to investigate the purchasing patterns of Curly, Larry, and Moe, you could take the followi…

, Chapter: 2 -Problem: 8 >> In October 2014, the following case was heard in New Jersey. A former optometrist was sentenced to seven years in state prison for conspiracy, theft by deception, falsifying records, and falsification of records relating to medical care, as part of a massive health insurance fraud. In addition to his prison sentence, the optometrist was ordered to pay a criminal insurance fraud fine of $100,000 an
Answer Preview: The major fraud opportunity in this case was the inabilit…

, Chapter: 15 -Problem: 1 >> Identity theft is the most frequent type of consumer fraud. True/False
Answer Preview: …

, Chapter: 18 -Problem: 2 >> Refer back to the beginning of this chapter to the excerpt from a Los Angeles Times article about Reed Slatkin's fraud. The article insinuates that the FBI and IRS's raiding of Slatkin's office marked the beginning of the government's investigation of Slatkin's financial activities. In fact, Slatkin was under investigation for at least four years prior to the raid, and nearly a year and half previ
Answer Preview: 1. This deposition was conducted in the Securities and Exchange Commission, Los Angeles Office. 2. T…

, Chapter: 12 -Problem: 7 >> Tool Co. is a medium-sized company that buys copper rod and plastic materials to produce insulated copper wiring. Tool Co. operates out of a single building of about 500,000 square feet that includes office space (3%), production area (57%), shipping and receiving (15%), and finished goods and raw materials inventory warehousing (25%). You have gathered the following data about the company's inven
Answer Preview: 1. One way to search for possible red flags of fraud would be to determine if the market value of in…

, Chapter: 1 -Problem: 1 >> Clever, Inc., is a car manufacturer. Its 2018 income statement is as follows:Clever, Inc. Income Statement for the YearEnded December 31, 2018Sales revenue ......................................................................     $20,000Less cost of goods sold ......................................................        10,000Gross margin .........................................................
Answer Preview: Clever, Inc., would have to generate up to another $10,000, calculated as follows, to recover the lo…

, Chapter: 1 -Problem: 3 >> For each of the following examples, identify whether the fraud is employee embezzlement, management fraud, investment scam, vendor fraud, customer fraud, or miscellaneous fraud.1. Marcus bought a $70 basketball for only $30, simply by exchanging the price tags before purchasing the ball.2. Craig lost $500 by investing in a multilevel marketing scam.3. The Bank of San Felipe lost over $20,000 in 20
Answer Preview: 1. Customer fraud 2. Investme…

, Chapter: 1 -Problem: 20 >> Fraud fighting can include which of the following type(s) of careers?a. Professors.b. Lawyers.c. CPA firms.d. All of the above.
Answer Preview: d. A…

, Chapter: 1 -Problem: 8 >> Which of the following is not true of civil litigation?a. It usually begins when one party files a complaint.b. The purpose is to compensate for harm done to another.c. It must be heard by 12 jurors.d. Only "the preponderance of the evidence" is needed for the plaintiff to be successful.
Answer Preview: c. It m…

, Chapter: 11 -Problem: 1 >> 1. Calculate the 2017 and 2016 liquidity ratios identified using the ratio analysis table below. Also calculate the change and the percentage change for the ratios and complete the table. (Formulas are given to shorten the time spent on the assignment.)2. Analyze the Chipmunk Company's ratios for both years and compare the figures with the given industry ratios. Based on the ratios identified, whe
Answer Preview: 1. The Chipmunk Company Ratio Analysis 2. Analysis: The current ratio has declined by more than 7 pe…

, Chapter: 1 -Problem: 1 >> What is fraud?
Answer Preview: Fraud always involves deception, confidence, and trickery. The following is one …

, Chapter: 3 -Problem: 8 >> A method of classifying investigative approaches into testimonial evidence, documentary evidence, physical evidence, and personal observations is referred to as the:a. Investigative square of evidence.b. Investigation square.c. Evidence square.d . Fraud triangle plus.
Answer Preview: c. E…

, Chapter: 1 -Problem: 14 >> What is the best way to minimize fraud expense within an organization?a. Effective early detection of fraud.b. Effective investigation of fraudulent behavior.c. Effective prevention of fraud.d. Effective research of fraud.
Answer Preview: c. Effe…

, Chapter: 7 -Problem: 16 >> Now that many companies are storing their data "in the cloud" it is easier to access the electronic data of suspected perpetrators. True/False
Answer Preview: False. Because the data (and even …

, Chapter: 2 -Problem: 7 >> Bob's Country Kitchen, a small family-owned restaurant in northern New York, has seen a drop in profitability over the past three years and the owners want to know why. Bob's has been a local favorite for the past 20 years . Two brothers opened it in the early 1980s because they couldn't find a burger they liked Bob's initially served only hamburgers, but has rapidly expanded to almost all types o
Answer Preview: 1. Joel has many opportunities to commit fraud. He is a trusted friend of the family. At the restaur…

, Chapter: 12 -Problem: 10 >> How can comparing financial statement amounts with actual assets they are supposed to represent help determine if fraud is present?
Answer Preview: When we compare financial statement amounts with actua…

, Chapter: 18 -Problem: 16 >> It is usually the case that depositions for expert witnesses are much more difficult than the actual trial. Why do you think this is the case?
Answer Preview: In a deposition, the expert witness is on defense, answering only questions a…

, Chapter: 15 -Problem: 1 >> In this chapter, we have discussed the GrammLeach-Biiley Act, which gives credit unions, savings and loans, banks, insurance agencies, mortgage companies, and other financial institutions the right to sell customer information to marketing companies, affiliates, and others. Some individuals believe that doing this is ethical since customer s have the right to opt out of having their information so
Answer Preview: 1. The purpose of this activity is to help students understand the diff…

, Chapter: 1 -Problem: 3 >> One of the most common responses to fraud is disbelief by those around the fraud.  True/False
Answer Preview: …

, Chapter: 11 -Problem: 1 >> The Internet is a great place to find additional information about financial statement fraud. Using your favorite Internet search engine, try various word combinations to see what you can find about financial statement fraud. For example, type in the search window "financial statement fraud" and check out some of the results. what did you find that interested you? Now go to the following Web addre
Answer Preview: The first part of the assignment has no prescribed answer because student searchers will go several …

, Chapter: 1 -Problem: 1 >> For the past year, you have been working as a secretary processor for a local construction company, XYZ Homes, which specializes in the building of low-cost, limited-option homes. You left a comfortable, good-paying job to work for XYZ because it was family owned and operated by longtime friends.Soon after you began working for XYZ, you noticed questionable behavior on the part of Mr. and Mrs. XYZ
Answer Preview: In this situation, it is important to consider the legal and ethical implications of your actions. O…

, Chapter: 7 -Problem: 1 >> Assuming you are an agent with the Federal Bureau of Investigation, do the following:I. Plan and coordinate an investigation in a manner that would not arouse suspicion fro m Cummings and Baptiste.2. Create a vulnerability chart to coordinate the various elements of the possible fraud.3. Assuming your investigation used surveillance and/or covert investigation techniques, what types of surveillanc
Answer Preview: 1. They should highlight methods discussed in the chapter, such as physic…

, Chapter: 1 -Problem: 11 >> Which of the following is the least reliable resource for fraud statistics?a. FBI agencies.b. Health agencies.c. Insurance organizations.d. Fraud perpetrators.
Answer Preview: d. Fr…

, Chapter: 8 -Problem: 1 >> Today, many data analysis tools are available to provide assistance to fraud examiners when searching for possible fraudulent activities within a company. Visit the Association of Certified Fraud Examiners' Web site (www.acfe.com) and list some of the computer-aided data analysis tools and services available to fraud examiners.
Answer Preview: In the Resources menu, choose Fraud Mall, and the…

, Chapter: 5 -Problem: 9 >> What is conversion?
Answer Preview: Conversion has to do with selling st…

, Chapter: 6 -Problem: 2 >> What are the differences between errors and fraud?
Answer Preview: Anomalies are unintentional errors caused by control weaknesses. When th…

, Chapter: 3 -Problem: 6 >> Because of the ability to override internal controls, it is usually most difficult to prevent which type of fraud?a. Investment scams.b. Fraud committed by a company president.c. Employee fraud.d. Customer fraud.
Answer Preview: b. Fraud …

, Chapter: 5 -Problem: 5 >> You have received a lip that the manager over the purchasing department of your company is taking kickbacks from one of your vendors. What fraud symptoms might you look for to determine if the manager is actually accepting bribes?
Answer Preview: When kickbacks are being accepted from a vendor, the control of the purchasing transaction…

, Chapter: 8 -Problem: 9 >> What are different ways investigators can obtainhard-to-get documentary evidence?
Answer Preview: Answers: There are a number of ways that investigators can obtain hard to get documentary evidence . …

, Chapter: 1 -Problem: 23 >> Intentional manipulation of financial statements describes which kind of fraud?a. Management fraud.b. Criminal fraud.c. Stock market fraud.d. Bookkeeping fraud.
Answer Preview: a. M…

, Chapter: 6 -Problem: 7 >> What is Benford's Law?
Answer Preview: Benfords Law is a mathematical algorithm that accurately predicts, fo…

, Chapter: 11 -Problem: 6 >> Why are CEOs the most frequent perpetrators of financial statement fraud?
Answer Preview: CEOs are often perpetrators of financial statement fraud because t…

, Chapter: 16 -Problem: 10 >> Look up the U.S. Trustee Program's 2012 AnnualReport at http://www.justice.gov/ust/eo/public_affairs/annualreport/docs/ar2012.pdf.1. How is a trustee defined?2. What are the functions of the trustee program?3. The program routinely hires bankruptcy analysts of what two certifications?4. What initiative did the program latmch in 2001? For what purpose?5. What specific actions can the program take u
Answer Preview: 1. According to the U S. Trustee Program's 2012 Annual Report, a trustee is defined as an individual or entity appointed by the U S. Department of Jus…

, Chapter: 5 -Problem: 6 >> Answer the following questions regarding this tip.1. Which law(s) are you concerned that the company may be violating and what are the consequences of violating this (these) law(s)?2. As audit committee chair, what action should you take to investigate the lip?3. If you find through whatever initiatives you take that the allegations are true, what should you do and what are the pros and cons of se
Answer Preview: 1. This is an FCPA case. The law that you are concerned that is being violated is the Foreign Corrupt Practices Act (FCPA). This is a major concern of corporations because not only are there potentially large fines but also your CEO could be incarcerated. 2. You cannot afford to take this tip lightly, especially because of the specificity of the tip and the potential …

, Chapter: 6 -Problem: 10 >> Large frauds can often be detected by performing financial statement analysis. Although such analysis can raise areas of concern, not all red flags are the result of fraudulent activities. Reasonable explanations often exist for errors in financial statements.The statement of cash flows is one financial statement that is analyzed in order to identify possible fraud. This statement for Kelly Enterp
Answer Preview: 1. Some areas of concern are the rapid growth of recei…

, Chapter: 7 -Problem: 7 >> What are the steps involved in collecting electronic evidence?
Answer Preview: The steps may vary from case to case, depending upon the media being seize…

, Chapter: 15 -Problem: 1 >> Using an Internet browser such as Google, type in telemarketing schemes or similar words. Find an example of a telemarketing scheme and answer the following questions about that scheme:a. How was the scam perpetrated?b . What were some of the common characteristics of each of the scams?c. What was the dollar amount lost to the victim? d . What other interesting facts did you notice?
Answer Preview: Telemarketing schemes: Telemarketing fraud is fraudulent selling conducted over the telephone. The term is also used for telephone fraud not involving selling. Telemarketing fraud often involves some …

, Chapter: 6 -Problem: 2 >> 1. The Vendor column contains the names of the vendors from which the purchases were made. Use a fuzzy matching algorithm to find any vendors with similar names. Do you suspect any purchases were made from phantom vendors?2. Find any vendors who are charging too much for their product compared with other vendors. In addition to average prices for each product and vendor, do you see any increasing
Answer Preview: 1. Use either the Soundex (ACL and IDEA) or Fuzzy Match (Picalo) functions to join the JanitorialPurchases to itself on the Vendor column. In other words, use the software to join two tables, but use …

, Chapter: 1 -Problem: 17 >> Which of the following is not a common type of fraud?a. Direct employee embezzlement.b. Employee bribes.c. Executives embezzling from petty cash.d. Investment scams.
Answer Preview: c. Execut…

, Chapter: 1 -Problem: 19 >> Occupational fraud is fraud committed on behalf of an organization.  True/False
Answer Preview: False. Occupat…

, Chapter: 13 -Problem: 9 >> ABCDE Technologies, Inc., designs, manufactures, and markets an extensive line of PC cards. The company sells its PC cards primarily to original equipment manufacturers (OEMs) for industrial and commercial applications in a market with intense competition. In fact, many OEM companies ran into financial difficulty in 2017 because of fierce competition. The following tables are part of the company's
Answer Preview: 1. There are three main red flags of financial statement fraud. a. Sales may be overstated, because …

, Chapter: 16 -Problem: 12 >> A "planned bankruptcy" is usually referred to as a bust-out. True/False
Answer Preview: …

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