Forensic Accounting Systems
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Course Introduction
Forensic Accounting Systems explores the application of specialized accounting methods and tools to detect, investigate, and prevent fraud and financial crimes within organizations. This course covers the integration of accounting systems with forensic technologies, focusing on computerized auditing techniques, data analysis, evidence gathering, and internal controls. Students will learn how to use software platforms and digital methodologies to trace illicit financial activities, reconstruct financial records, and support legal proceedings. Emphasis is also placed on legal frameworks, ethical considerations, and the practical role of forensic accountants in litigation support and corporate governance.
Recommended Textbook
Accounting Information Systems A Practitioner Emphasis 7th Edition by Cynthia D. Heagy
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Chapter 1: Significance of Accounting Information Systems
and the Accountants Role
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Sample Questions
Q1) The Sarbanes-Oxley Act prohibits public accounting firms from providing consulting services to its auditing clients.
A)True
B)False
Answer: True
Q2) Which of the following organizations can audit a company to determine whether the company has the correct number of licenses for the number of users?
A) Accenture Consultants
B) Business Program Accreditation Association
C) Business Software Alliance
D) All of these Answer: C
Q3) The Certified Internal Auditor certification program is sponsored by the Information Systems Audit and Control Association.
A)True
B)False
Answer: False
Q4) What are the major components of a computerized accounting system?
Answer: Hardware, software, and people
Page 3
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Chapter 2: Accounting Systems Documentation
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Sample Questions
Q1) Which of the following applies to documentation standards?
A) Standards must conform to applicable industry, national or international conventions.
B) Each item of documentation should bear the name of person checking and authorizing documentation for use.
C) Each item should bear the date and name of person preparing it.
D) All of the above apply.
Answer: D
Q2) What does the Sarbanes-Oxley Act of 2002 require relative to documentation?
A) A company must document its internal control in detail.
B) A company must document its internal control at a general level.
C) A company must document each step in its cash receipts and disbursements processes in detail.
D) A company must document each step in its cash receipts and disbursements processes at a general level.
Answer: A
Q3) In a systems flowchart, a rectangle represents a process, or operation.
A)True
B)False
Answer: True
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Chapter 3: Essential Elements and Basic Activities of Accounting Systems
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Sample Questions
Q1) Which of the following can save time in recording and posting a credit sale?
A) General journal
B) Purchases journal
C) Payroll journal
D) Sales journal
Answer: D
Q2) Give an example of a numbering system for a chart of accounts.
Answer: 1000 - 1999 - Assets
2000 - 2999 - Liabilities
3000 - 3999 - Ownership Equity
4000 - 4999 - Revenues
5000 - 5999 - Expenses
Q3) What type of file is used to store data about transactions that have been started but not completed?
A) Transaction
B) Master
C) Open
D) Reference
Answer: C
Page 5
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Chapter 4: Data Flows, Activities, and Structure of Accounting Systems
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Sample Questions
Q1) What are the support activities of an accounting information system?
A) People, input, process
B) People, technology, input
C) People, technology, control
D) People, process, control
Q2) What are information formats called?
A) Paper reports
B) Activity requirements
C) General ledger summaries
D) Forms
Q3) What are the major activities of an accounting information system?
Q4) Which subsystem is responsible for accounting for the raw materials, finished goods, and merchandise inventories?
A) Production control
B) Sales order processing
C) Inventory management
D) Purchase order processing
Q5) Identify three subsystems of the business processes you described in the previous question.
Q6) Name, explain, and give examples of four different ways that data are processed. Page 6
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Chapter 5: Reporting Process, Coding Methods, and Audit Trails
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Sample Questions
Q1) Which of the following computer languages is used specifically for Web applications?
A) Structured query language (SQL)
B) Extensible markup language (XML)
C) Web services description language (WSL)
D) Enterprise application language (EAL)
Q2) What type of reporting includes data that measure activities over which a particular manager has some authority?
A) Comparative reporting
B) Exception reporting
C) Functional reporting
D) Responsibility reporting
Q3) Describe in what situations the frequency of reporting should be weekly or even daily.
Q4) The most common reporting of physical units is for which of the following?
A) Unassigned hours in a CPA firm
B) Hours billed
C) Inventory
D) Employee turnover rate
Q5) Explain the meaning of exception reporting.
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Chapter 6: Internal Control and Risk Assessment
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Sample Questions
Q1) The Sarbanes-Oxley Act of 2002 requires that a publicly traded company's independent auditor report directly to the audit committee.
A)True
B)False
Q2) Which of the internal control components provides the foundation for all the other components of internal control?
A) Risk assessment
B) Information and communication
C) Monitoring
D) Internal environment
Q3) The Sarbanes-Oxley Act (SOX) requires that the external audit firm for a company be rotated every five years.
A)True
B)False
Q4) One factor of the internal environment is management's philosophy and operating style.
A)True
B)False
Q5) What are four indications of management's philosophy and operating style?
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Chapter 7: Control Activities
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Q1) which of the following is (are) categories of control activities?
A) Information processing.
B) Physical controls.
C) Performance reviews.
D) Segregation of duties.
E) A, B, and D only.
F) All of the above.
Q2) Hiring trustworthy employees is the best way to minimize the opportunity for fraudulent activity,
A)True
B)False
Q3) What is a popular way of shielding an organization's private network from intruders outside of the organization?
A) File attributes.
B) Uninterruptible power supply.
C) Auxiliary power supply.
D) Firewall.
Q4) Explain what key(s) would be used by a business transmitting sensitive data and why the key(s) would be used.
Q5) Describe the process of cryptography using private and public keys.
Page 10
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Chapter 8: The Financial Process
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Sample Questions
Q1) An account that stores the cubic feet of gas sold is an example of a statistical account.
A)True
B)False
Q2) The most significant conceptual difference between manual and computerized accounting systems is that in the computerized financial process, the vast majority of transactions are first recorded in other processes and then transferred to the financial process.
A)True
B)False
Q3) Which of the following processes receives summarized information from the other processes?
A) Revenue process
B) Inventory process
C) Financial process
D) Purchasing process
Q4) The balance sheet and statement of cash flow constitute the basic reporting requirements in the financial process.
A)True
B)False
Page 11
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Chapter 9: The Revenue Process
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Sample Questions
Q1) Which of the following is an application of the recurring entry concept?
A) Automatic identification
B) Standing orders
C) New orders
D) Remittance advice
Q2) Which of the following represent cash handling risks in the revenue process?
A) Misappropriation of cash receipts.
B) Improper reconciliation of the cash account.
C) Uncollectible accounts written off without proper authorization.
D) All of the above are associated with cash handling risks in the revenue process.
Q3) Preparing an aging schedule for balance forward accounts is straightforward even though no detail may be available before the current period.
A)True
B)False
Q4) If goods are shipped by a common carrier, a shipping document provides a contract between the shipper and the carrier.
A)True
B)False
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Chapter 10: The Purchasing Process
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Q1) What is the most voluminous task in the purchasing process?
A) Accounts payable data entry
B) Purchase order data entry
C) Cash payments data entry
D) Receiving data entry
Q2) In most accounting information systems, the purchasing function is represented by two modules: purchase order and receiving, sometimes referred to as the vendor module.
A)True
B)False
Q3) What are the advantages of EDI over paper purchase orders?
Q4) Which of the following are the principal reports required for the effective management of the purchasing process?
A) Vendor performance.
B) Outstanding sales orders.
C) Discounts taken.
D) All of the above.
Q5) List four of the five actions that result from the receipt of merchandise from a vendor.
Q6) Describe output controls typically found in the purchasing process.
Page 13
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Chapter 11: The Inventory Process
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Q1) Inventory management is one of the simplest AIS processes.
A)True
B)False
Q2) What report is essential to organizations using "just in time" operations to minimize inventory?
A) Excess inventory report
B) Returns and allowances report
C) Inventory and PO aging report
D) Order recommendation report
Q3) Most data entry relating to inventory occurs in the revenue and purchasing processes rather that in the inventory module.
A)True
B)False
Q4) An ERP software encompasses all internal operations.
A)True
B)False
Q5) The reorder point is reached when the stock on hand equals the safety stock.
A)True
B)False
Q6) Discuss control activities related to the physical safeguarding of inventory.
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Chapter 12: Database Structure of Accounting Systems
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Sample Questions
Q1) Define the two database models discussed in the chapter.
Q2) A foreign key is a data element on which the database management system builds an index file.
A)True
B)False
Q3) What is a foreign key?
A) It is a nonkey data element that depends on another nonkey data element.
B) It is a data element that uniquely identifies a record.
C) It is the primary key of a table that is placed in another table so the tables can be joined.
D) A and B, but not C
Q4) Which level of the database architecture relates to the way all the data in the entire database are logically viewed?
A) Physical level
B) Conceptual level
C) Internal level
D) External level
Q5) What is a concatenated (or compound or composite) key?
Q6) What activities of an organization must an accounting system be able to support?
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Q7) Describe data redundancy in an accounting system and the problems it causes.
Chapter 13: Developing a Relational Database for an Accounting Information System
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Q1) Which of the following statements regarding normal forms is incorrect?
A) A table is in first normal form if it has multivalued or repeating data elements.
B) A table that has a single primary key is in second normal form.
C) Converting a table into second normal form applies only to a table that has a composite key.
D) A table is in third normal form if it is in second normal form and has no transitive dependencies.
Q2) What does converting a table with multiple values into first normal form accomplish?
A) Reduction of data redundancy
B) Elimination of the risk of errors in the data
C) Elimination of anomalies
D) Elimination of data redundancy and elimination of anomalies
Q3) Which of the following statements is true about symbols used in the entity-relationship diagram?
A) A line links an attribute to an attribute.
B) An ellipse represents an attribute.
C) A diamond represents an attribute.
D) A square represents an entity.
Page 16
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Chapter 14: Electronic Business
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Q1) Which of the following technologies would an organization use to prevent access to its private network?
A) Digital signature
B) Firewall
C) Web assurance service
D) Encryption
Q2) Electronic data interchange is the computer exchange of business documents between two organizations by telephone, radio, microwave, satellite transmission, or the Internet using a public standard format.
A)True
B)False
Q3) The most common EDI document is a(n)
A) Invoice
B) Purchase order
C) Shipping note
D) Price list
Q4) A self-checking symbology is one that supports check digits.
A)True
B)False
Q5) List the three types of e-business and give one example of each.
Page 17
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Chapter 15: Ais Selection and Implementation
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Sample Questions
Q1) The development of accounting systems for microcomputers led to the concentration of accounting functions within the accounting department.
A)True
B)False
Q2) What is a Gantt chart?
A) A diagram planning tool showing the order in which to perform tasks
B) A bar chart with all major tasks on the vertical axis and a calendar on the horizontal axis
C) A bar chart with all major tasks on the horizontal axis and a calendar on the vertical axis
D) A decision chart designed to determine a single versus multiple suppliers
Q3) Discuss issues involved in system acquisition.
Q4) Which of the following is not an ERP package?
A) Oracle E-Business Suite
B) Lawson Enterprise
C) Microsoft Dynamics GP
D) Peachtree by Sage
Q5) Distinguish between AIS installation and AIS implementation.
Q6) Discuss the various methods of conversion to an AIS system.
18
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