*NURSING > EXAM REVIEW > Chamberlain College of Nursing - ACCT 562 Week 4 Midterm Exam Review Questions and Answers Rated A (All)

Chamberlain College of Nursing - ACCT 562 Week 4 Midterm Exam Review Questions and Answers Rated A

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Midterm Review for ACCT562 TCO’s A-D and F will be covered in the Midterm. The Midterm will consist of M/C questions, from all the TCO’s covered and Essay Questions, each over broad topics ... listed below. (TCO A) The Three "E's" of operational auditing – Be ready to discuss and give examples. (TCO B) The Planning Phase and the critical problem areas – Expect thorough discussion of these in relation to administrative and operational controls. (TCO C) The Work Program – how it is developed, procedural steps, and their purpose. You will be given a particular area to relate these to actual practice. (TCO D) The Fieldwork Phase – Be ready to discuss attributes of evidence, elements of workpapers, and factors to consider in reaching conclusions including examples of each. (TCO F) Be prepared to answer high level questions concerning case studies, the fraud triangle and scale, management responsibilities, and fraud investigations. You will be able to find some parts of these questions in your text for specific requirements, but you will have to be very comfortable with the texts, materials, the Threaded Discussions, and our case studies from the course to be able to express your perspective on the complete answer to these questions. Examples from your own experiences and relating some of the theories from the course will validate your answers. Good luck to each of you! (TCO D) Commonly used field work techniques include all of the following except: Student Answer: Ratio analysis Systems flowchart Layout flowchart All of the above are commonly used techniques. Instructor Explanation: Reider Chapter 4 Points Received: 5 of 5 Comments: Question 2. Question : (TCO F) Which of the following is not a red flag in a fraudulent shipment scheme? Student Answer: Unusually high levels of reorders for inventory items Shipments with missing sales documents An increase in bad debt expense All are red flags Instructor Explanation: Wells, Chapter 9 Points Received: 5 of 5 Comments: Question 3. Question : (TCO F) During an interview, when an interviewee repeatedly fiddles with a pen or picks lint from her clothing, he/she is giving non-verbal clues called: Student Answer: Tells Signals Manipulators Exemplifiers Instructor Explanation: Wells, Chapter 15 Points Received: 5 of 5 Comments: Question 4. Question : (TCO F) When the subject of an investigation has been accused of misconduct, establishing a morally acceptable rationalization might allow the accused to reconcile his actions with his conscience. Which of the following is not an example of an acceptable rationalization? Student Answer: The accused has been unfairly treated by his management. The accused felt that he needed to get back at someone in the organization. The accused engaged in the misconduct for the benefit of others. The accused has personal demons that can't be overcome. Instructor Explanation: Wells, Chapter 15 Points Received: 5 of 5 Comments: Question 5. Question : (TCO F) In one of the case studies in the Wells textbook (page 49), Brian Lee, a top-notch plastic surgeon, collected payments from his patients without giving a cut to the clinic where he practiced. How was he punished? Student Answer: Allowed to continue with the practice and make restitution. Terminated and required to make full restitution. Sued in civil court for the amount of loss. Convicted of larceny and sentenced to prison. Instructor Explanation: Wells, Chapter 2 Points Received: 5 of 5 Comments: Question 6. Question : (TCO F) Andy Kaplan is a foreman for JCP Enterprises, a regional construction company. He recently ordered some plumbing supplies from the company warehouse for an office building project he is overseeing. When the supplies arrived at the job site, however, he loaded them in his truck and took them home to use in remodeling his master bathroom. What kind of inventory theft scheme did Andy commit? Student Answer: False shipments Unconcealed larceny Asset requisition None of the above Instructor Explanation: Wells, Chapter 9 Points Received: 5 of 5 Comments: Question 7. Question : (TCO F) According to the 2009 Global Fraud Survey, the theft of which type of non-cash asset was the least common but caused the highest median loss? Student Answer: Equipment Proprietary information Securities Inventory Instructor Explanation: Wells, Chapter 9 Points Received: 5 of 5 Comments: Question 8. Question : (TCO F) In an interview situation, the process of observing behavior before critical questions are asked is called: Student Answer: Calibrating Leading Attribution None of the above Instructor Explanation: Wells, Chapter 15 Points Received: 5 of 5 Comments: Question 9. Question : (TCO A) Benefits derived from operational reviews include Student Answer: reviewing compliance to legal requirements assessing management information systems locating opportunities to increase revenue All of the above Instructor Explanation: Reider Chapter 1 Points Received: 5 of 5 Comments: Question 10. Question : (TCO B) Financial analysis using common-size balance sheet and income statements are used in the _____ phase to identify audit opportunities. Student Answer: Survey Work Program Reporting Planning Instructor Explanation: Reider Chapter 2 Points Received: 5 of 5 Comments: Question 11. Question : (TCO A-D) Reviewing high level processes, interviewing, understanding the business is part of the _____ phase. Student Answer: Survey Planning Work program Reporting Instructor Explanation: Reider Chapter 1 Points Received: 0 of 5 Comments: Question 12. Question : (TCO A) Operational areas eligible for review include: Student Answer: fleet fuel management depreciation processes inventory-raw material and finished goods database access Instructor Explanation: Reider Chapter 1 Points Received: 5 of 5 Comments: Question 13. Question : (TCO F) Richard Moore is the controller for Ajax Company. Recently, he has suffered several large losses at the race track, causing him to incur enormous personal debts. Which type of non-sharable financial problem best describes Richard’s situation? Student Answer: Business reversal Physical isolation Violation of ascribed obligations Status gaining Instructor Explanation: Wells, Chapter 1 Points Received: 5 of 5 Comments: Question 14. Question : (TCO F) Albrecht's Fraud Scale differs from Cressey’s Fraud Triangle by utilizing the factor of _____. Student Answer: Rationalization Perceived non-sharable financial need Perceived opportunity Personal integrity Instructor Explanation: Wells, Chapter 1 Points Received: 5 of 5 Comments: Question 15. Question : (TCO F) Which of the following is not part of the fraud theory approach? Student Answer: Analyze available data. Develop what-if scenarios. Identify who committed the fraud. Refine the hypothesis. Instructor Explanation: Wells, Chapter 1 Points Received: 5 of 5 Comments: Question 16. Question : (TCO F) The technique for analyzing the percentage change in individual financial statement items from one accounting period to the next is known as: Student Answer: Ratio analysis Horizontal analysis Vertical analysis None of the above Instructor Explanation: Wells, Chapter 12 Points Received: 5 of 5 Comments: Question 17. Question : (TCO F) In the Fraud Tree, asset misappropriations are broken down into cash and non-cash schemes. Which of the following is not considered a misappropriation of cash? Student Answer: Larceny Skimming Concealed expenses Fraudulent Disbursement Instructor Explanation: Wells, Chapter 2 Points Received: 5 of 5 Comments: Question 18. Question : (TCO A) _____ and converting cash allow a business to survive. Student Answer: Customer service Debt management Employee satisfaction None of the above Instructor Explanation: Reider Chapter 1 Points Received: 5 of 5 Comments: Question 19. Question : (TCO F) The most important factor in preventing cash larceny from the deposit is: Student Answer: Having a visible management presence in the mailroom Separating the duties of the deposit function Having two employees deliver the deposit to the bank None the above Instructor Explanation: Wells, Chapter 3 Points Received: 5 of 5 Comments: Question 20. Question : (TCO F) Dorothy McNally stole $232 from the company deposit while on the way to the bank. She can conceal the theft by recording the missing amount on the bank reconciliation as a(n): Student Answer: Deposit in transit Credit memo Outstanding check None of the above Instructor Explanation: Wells, Chapter 3 Points Received: 5 of 5 Comments: Question 21. Question : (TCO F) According to a study by COSO, which of the following groups is the most likely to commit financial statement fraud? Student Answer: Organized criminals Mid-level employees Senior management Lower-level employees Instructor Explanation: Wells, Chapter 11 Points Received: 5 of 5 Comments: Question 22. Question : (TCO B) One of the primary purposes of the planning is to: Student Answer: Interview senior management on risk. Start to develop the basis for the operational review work program. Identify competitive pressures. Interview senior managers new to their responsibilities. Instructor Explanation: Reider Chapter 2 1. Question : (TCO A) Operational review procedures embrace the concept of conducting operations for economy, efficiency, and effectiveness. Provide a brief description of the ECONOMY aspect, and provide an example. Student Answer: Economy refers to the cost of operations. It talks about whether the organization carrying out its responsibilities in the most economical manner. It consider following aspects: • Following sound purchasing practices • Overstaffed as related to performing necessary functions • Allowing excess materials to be on hand • Using equipment that is more expensive than necessary • Avoiding the waste of resources (Reider 12) An textbook example about following sound purchasing practices is reviewing the Purchasing Department’s methods and procedures that vendors could be allowed to ship the ordered quality plus or minus 10 percent (Reider 98). Reider, Rob. Operational Review Workbook: Case Studies, Forms, and Exercises. John Wiley & Sons P&T, 2002-08-23. VitalBook file. Instructor Explanation: Economy is basically the cost of operations and attempts to determine whether operations, procedures, and personnel are performing in the most economical manner. This concept applies to all functions and operations of a business entity and seeks to determine optimal performance (this does not necessarily mean the lowest possible cost alternative, but the optimum approach given the overall business operations and results). Points Received: 10 of 10 Comments: Question 2. Question : (TCO F) The operational reviewer typically has multiple personal attributes that make them and mold them into an operational reviewer. List and describe at least three, and tell why they are positive attributes for the operational reviewer. Student Answer: The operational reviewer should has following positive attributes: 1). Good analytical ability, which can help them to explain operational problems to different audience. 2). Good business judgment, which can help them to identify the financial and management risk. 3). Good communication skills, which can help them getting clearly information about what they need to review. Instructor Explanation: Attributes include: curiosity (imagination), analytical ability, persuasiveness, good business judgment, common sense, objectivity, communication skills, initiative, confidence, and independence. See Reider Chapter pages xv and xvi. Expansion should include description and application. Points Received: 10 of 10 Comments: Question 3. Question : (TCO F) Albrecht, in his research, developed the “fraud scale” and furnished a list of the reasons employees and executives commit occupational fraud. How are Albrecht’s conclusions similar to Cressey’s? How are they different? Student Answer: Cressey’s three factors were a non-shareable financial need, perceived opportunity, and rationalisation. Albrecht’s consisted of financial pressure, perceived opportunity, and personal integrity. They both point out perceived opportunity. In my opinion, although their research describe is different, it could be viewed as the same. I think financial pressure is also a kind of financial need, and the ability to rationalise illegal conduct similar with personal integrity. The only different is personal integrity is hardly to identify. Instructor Explanation: Answer: Cressey’s three factors were: a non-shareable financial need, perceived opportunity, and rationalization. Albrecht’s consisted of: financial pressure, perceived opportunity, and personal integrity. One of the factors, perceived opportunity, was identical. Cressey’s non-shareable financial need is similar to Albrecht’s financial pressure; however, Cressey’s is more specific. Nearly everyone suffers financial pressures of some kind, but most do not turn to fraud in order to alleviate them. The ability to rationalize illegal conduct and personal integrity could be viewed as one and the same. However, personal integrity is difficult to measure, while specific rationalizations are easier to identify. Points Received: 10 of 10 Comments: Question 4. Question : (TCO F) Liability/expense omission is the preferred and easiest method of concealing liabilities/expenses. Why? Discuss how to detect this type of fraud. Student Answer: Failing to record liabilities/expenses is easy to conceal and hard to detect. These behaviour can be espected to be covered in the future. For example, use future profit to cover their fraud. Instructor Explanation: Failing to record liabilities/expenses is very easy to conceal and very difficult to detect. The perpetrators of liability and expense omissions believe they can conceal their fraud in future periods. They often plan to compensate for their omitted liabilities with visions of other income sources, such as profits from future price hikes. For example, the perpetrators may have planned to conceal the fraud by increasing the sales price in future periods when the expense would actually be recorded. These frauds can be discovered through a thorough review of all post-financial-statement-date transactions, such as accounts payable increases and decreases. [Show More]

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