Forensic Accounting Systems
Test Preparation
Course Introduction
Forensic Accounting Systems explores the principles, tools, and technologies used in the detection, prevention, and investigation of financial fraud within organizations. The course covers the integration of accounting, auditing, and investigative skills with specialized software and data analytics to identify suspicious transactions, analyze financial records, and gather evidence suitable for use in legal proceedings. Emphasis is placed on understanding common fraud schemes, legal and ethical considerations, digital forensics, and the development of reports and presentations for stakeholders including legal authorities, regulators, and management.
Recommended Textbook
Accounting Information Systems 7th Edition by James Hall
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17 Chapters
1713 Verified Questions
1713 Flashcards
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Page 2
Chapter 1: The Information System: An Accountants Perspective
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96 Verified Questions
96 Flashcards
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Sample Questions
Q1) The most commonly stated benefits of DDP are cost savings,increased user satisfaction,and improved operational efficiency.Explain.
Answer: The costs of both processing and data storage have declined significantly in the time since early automation.In addition,data entry can be distributed and application complexity reduced.Users are typically more satisfied when they can control the resources that affect their profitability.Also users want systems people who will respond to their needs and involve them in development and implementation of their own systems.
Delegation of cost control to individual units leads to more efficient use of unit resources.
Q2) The data control group is responsible for
A) performing the day-to-day processing of transactions
B) security and integrity of the database
C) liaison between the end user and data processing
D) providing safe storage for off-line data files
Answer: C
Q3) The task of locating and transferring an existing record from the database for processing is called data ____________________.
Answer: retrieval
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Chapter 2: Introduction to Transaction Processing
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Sample Questions
Q1) If an organization processes large numbers of transactions that use common data records,what type of system would work best (all else being equal)?
Answer: Large-scale systems that process high volumes of transactions,often use real-time data collection and batch updating.Master file records that are unique to a transaction such as customer accounts and individual inventory records can be updated in real time without causing operational delays.Common accounts should be updated in batch mode.Real-time processing is better suited to systems that process lower transaction volumes and those that do not share common records.
Q2) Which of the following is a turn-around document?
A) remittance advice
B) sales order
C) purchase order
D) payroll check
Answer: A
Q3) Is a DFD an effective documentation technique for identifying who or what performs a particular task? Explain.
Answer: No.A DFD shows which tasks are being performed,but not who performs them.It depicts the logical system.
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Chapter 3: Ethics, Fraud, and Internal Control
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119 Verified Questions
119 Flashcards
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Sample Questions
Q1) Which of the following is not an example of independent verification?
A) comparing fixed assets on hand to the accounting records
B) performing a bank reconciliation
C) comparing the accounts payable subsidiary ledger to the control account
D) permitting authorized users only to access the accounting system
Answer: D
Q2) Explain the shell company fraud.
Answer: A shell company fraud first requires that the perpetrator establish a false supplier on the books of the victim company.The fraudster then manufactures false purchase orders,receiving reports,and invoices in the name of the vendor and submits them to the accounting system,which creates the allusion of a legitimate transaction.Based on these documents,the system will set up an account payable and ultimately issue a check to the false supplier (the fraudster).
Q3) Computer programs are intellectual property.
A)True
B)False
Answer: True
Q4) Sequentially numbering all sales invoices is an example of
Answer: accounting records
Page 5
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Chapter 4: The Revenue Cycle
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105 Flashcards
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Sample
Questions
Q1) Good internal controls in the revenue cycle should ensure all of the following except A) all sales are profitable
B) all sales are recorded
C) credit is authorized
D) inventory to be shipped is not stolen
Q2) Commercial accounting systems have fully integrated modules.The word "integrated" means that
A) segregation of duties is not possible
B) transfer of information among modules occurs automatically
C) batch processing is not an option
D) separate entries are made in the general ledger accounts and the subsidiary ledgers
Q3) What function does the receiving department serve in the revenue cycle?
Q4) The credit department
A) prepares credit memos when goods are returned
B) approves credits to accounts receivable when payments are received
C) authorizes the granting of credit to customers
D) none of the above
Q5) What is the objective of re-engineering?
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Chapter 5: The Expenditure Cycle Part I: Purchases and Cash Disbursements Procedures
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Sample Questions
Q1) Proper segregation of duties requires that the responsibility approving a payment be separated from posting to the cash disbursements journal.
A)True
B)False
Q2) In a real-time processing system with a high number of transactions,the best and most practical control over cash disbursements is to have
A) all checks manually signed by the treasurer
B) all checks signed by check-signing equipment
C) checks over a certain dollar amount manually signed by the treasurer
D) checks over a certain dollar amount manually signed by the cash disbursements clerk
Q3) The warehouse is responsible for updating the inventory subsidiary ledger.
A)True
B)False
Q4) If accounts payable receives an invoice directly from the supplier it needs to be reconciled with the purchase order and receiving report.
A)True
B)False
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Chapter 6: The Expenditure Cycle Part II: Payroll Processing and
Fixed Asset Procedures
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87 Verified Questions
87 Flashcards
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Sample Questions
Q1) Timekeeping is part of the personnel function.
A)True
B)False
Q2) List four types of data that appear on a depreciation schedule.
Q3) Which transaction is not processed in the Fixed Asset System?
A) purchase of building
B) improvement of equipment
C) purchase of raw materials
D) sale of company van
Q4) The Fixed Asset Systems does all of the following except
A) records acquisition of assets
B) records improvements to assets
C) estimates the fair market value of assets in service
D) records the disposal of assets
Q5) To improve internal control,paychecks should be distributed by the employee's supervisor.
A)True
B)False
Q6) How do Fixed Asset Systems differ from the expenditure cycle?
Q7) List two types of authorization required in the Fixed Asset System. Page 8
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Page 9
Chapter 7: The Conversion Cycle
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102 Flashcards
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Sample Questions
Q1) Which of the following is not an assumption of the Economic Order Quantity model?
A) demand for the product is known with certainty
B) total cost per year of placing orders is fixed
C) lead time is known and is constant
D) there are no quantity discounts
Q2) Cement and petrochemicals are produced by the batch manufacturing method.
A)True
B)False
Q3) What information is contained in the bill of materials (BOM)?
Q4) Inventory control performs all of the following tasks except it
A) provides production planning and control with the inventory status report of finished goods
B) updates the raw material inventory records
C) prepares a materials requisition for each production batch
D) records the completed production as an increase to finished goods inventory
Q5) How are cost structures fundamentally different between the traditional and CIM environments?
Q6) Explain the relationship between MRP,MRPII and ERP.
Q7) Discuss the principles underlying the lean manufacturing approach.
Page 10
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Chapter 8: General Ledger, Financial Reporting, and Management Reporting Systems
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Sample Questions
Q1) The journal voucher is the document that authorizes entries to be made to the general ledger.
A)True
B)False
Q2) Long-range planning involves
A) planning the marketing and promotion for a product
B) presenting department heads with budgetary goals for the next year
C) preparing a work force utilization budget for the next quarter
D) deciding the optimum size of the firm
Q3) What type of data is found in the general ledger master file?
A) a chronological record of all transactions
B) the balance of each account in the chart of accounts
C) budget records for each account in the chart of accounts
D) subsidiary details supporting a control account
Q4) Describe at least three characteristics of strategic planning decisions and their information requirements.
Q5) What are the major exposures in the general ledger/financial reporting system?
Q6) What three elements must be present for a problem to be "structured?"
Q7) What is XBRL?
Q8) What is information overload? How does it affect decision-making? Page 11
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Chapter 9: Database Management Systems
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106 Flashcards
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Sample Questions
Q1) The data definition language
A) identifies, for the database management system, the names and relationships of all data elements, records, and files that comprise the database
B) inserts database commands into application programs to enable standard programs to interact with and manipulate the database
C) permits users to process data in the database without the need for conventional programs
D) describes every data element in the database
Q2) The data definition language is used to insert special database commands into application programs.
A)True
B)False
Q3) The __________________________ describes every data element in the database.
Q4) Explain the three views of a database.
Q5) What are the characteristics of a properly designed relational database table?
Q6) A deadlock is a phenomenon that prevents the processing of transactions. A)True
B)False
Q7) Explain how linkages between relational tables are accomplished.
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Chapter 10: The REA Approach to Business Process
Modeling
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76 Flashcards
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Sample Questions
Q1) Which of the following tables would most likely have a composite key?
A) Take Order.
B) Cash
C) Ship Product
D) Inventory Ship Link
Q2) Why are journals and ledgers not modeled in an REA diagram?
Q3) Support events include control,planning,and management activities that directly affect a change in resources.
A)True
B)False
Q4) How does the REA approach improve efficiency?
Q5) Discuss the concept of duality as it relates modeling an economic transaction.
Q6) What is a user view?
Q7) Value chain analysis distinguishes between primary activities and support activities. A)True
B)False
Q8) What is a semantic data model?
Q9) Explain how a sales invoice table can be used to replace traditional accounting records. Page 14
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Page 15
Chapter 11: Enterprise Resource Planning Systems
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Sample Questions
Q1) Data mining typically focuses on the operational databases.
A)True
B)False
Q2) Which of the following statements is least likely to be true about a data warehouse?
A) It is constructed for quick searching and ad hoc queries.
B) It was an original part of all ERP systems.
C) It contains data that are normally extracted periodically from the operating databases.
D) It may be deployed by organizations that have not implemented an ERP.
Q3) Auditors of ERP systems
A) need not worry about segregation of duties.
B) may feel that the data warehouse is too clean and free from errors.
C) find independent verification easy.
D) need not worry about system access since the ERP determines it.
Q4) The client/server model is a form of network technology in which user computers,called clients,access ERP programs and data via a host computer called a server.
A)True
B)False
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Chapter 12: Electronic Commerce Systems
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Sample Questions
Q1) Discuss the private key encryption technique and its shortcomings.
Q2) What is an extranet?
Q3) What is a Certification Authority and what are the implications for the accounting profession?
Q4) Define and contrast digital certificate and digital signature.
Q5) A ping is used to test the state of network congestion and determine whether a particular host computer is connected and available on the network.
A)True
B)False
Q6) An IP Address:
A) defines the path to a facility or file on the web.
B) is the unique address that every computer node and host attached to the Internet must have.
C) is represented by a 64-bit data packet.
D) is the address of the protocol rules and standards that governing the design of internet hardware and software.
E) none of the above is true.
Q7) Describe a denial of service (DoS)attack and identify three common forms.
Q8) What is a seal of assurance?
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Chapter 13: Managing the Systems Development Life Cycle
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Sample Questions
Q1) Why is it important that the systems professionals who design a project not perform the detailed feasibility study of the project?
Q2) Instead of implementing an application in a single big-bang release,modern systems are delivered in parts continuously and quickly
A)True
B)False
Q3) What is a systems selection report?
Q4) List four types of facts that should be gathered during an analysis of a system.
Q5) What is the learning and growth perspective?
Q6) Distinguish between escapable and inescapable costs.Give an example.
Q7) An example of a tangible benefit is
A) increased customer satisfaction
B) more current information
C) reduced inventories
D) faster response to competitor actions
Q8) Mixing technologies from many vendors improves technical feasibility.
A)True
B)False
Q9) Contrast reactive and proactive management styles.
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Chapter 14: Construct, Deliver, and Maintain Systems Projects
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Sample Questions
Q1) Which step is least likely to occur when choosing a commercial software package?
A) a detailed review of the source code
B) contact with user groups
C) preparation of a request for proposal
D) comparison of the results of a benchmark problem
Q2) Discuss the advantage of the parallel operation cutover approach.
Q3) What is the purpose of the Request for Proposal (RFP)?
Q4) Explain how a benchmark problem is used to measure the performance of two different commercial software packages.
Q5) When converting to a new system,which cutover method is the most conservative?
A) cold turkey cutover
B) phased cutover
C) parallel operation cutover
D) data coupling cutover
Q6) What are the two methods of electronic input? How do they differ?
Q7) In the object-oriented approach to systems design,a vendor is an example of an attribute.
Page 19
A)True
B)False
Q8) Describe the cold turkey (or big bang)approach to system cutover.
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Page 20
Chapter 15: IT Controls : Sarbanes-Oxley and IT Governance
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Sample Questions
Q1) To fulfill the segregation of duties control objective,computer processing functions (like authorization of credit and billing)are separated.
A)True
B)False
Q2) Both the SEC and the PCAOB require management to use the COSO framework for assessing internal control adequacy.
A)True
B)False
Q3) Computer fraud is easiest at the data collection stage.Why?
Q4) Why should new systems development activities be segregated from the program change (maintenance)function.
Q5) What control framework is recommended by the PCAOB?
Q6) Audit risk is the probability that the auditor will render an unqualified opinion on financial statements that are materially misstated.
A)True
B)False
Q7) As a form of computer fraud,what is eavesdropping?
Q8) What is an auditor looking for when testing computer center controls?
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Chapter 16: IT Controls : Security and Access
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Sample Questions
Q1) The audit trail for electronic data interchange transactions is stored on magnetic media.
A)True
B)False
Q2) Which of the following is not an access control in a database system?
A) antivirus software
B) database authorization table
C) passwords
D) voice prints
Q3) In an electronic data interchange (EDI)environment,when the auditor compares the terms of the trading partner agreement against the access privileges stated in the database authority table,the auditor is testing which audit objective?
A) all EDI transactions are authorized
B) unauthorized trading partners cannot gain access to database records
C) authorized trading partners have access only to approved data
D) a complete audit trail is maintained
Q4) A formal log-on procedure is the operating system's first line of defense.Explain how this works.
Q5) Discuss the key features of the one-time password technique:
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Chapter 17: IT Controls : Systems Development Program
Changes and Application Controls
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Sample Questions
Q1) Tracing is a method used to verify the logical operations executed by a computer application.
A)True
B)False
Q2) What are the three categories of processing control?
Q3) The correct purchase order number,is123456.All of the following are transcription errors except
A) 1234567
B) 12345
C) 124356
D) 123454
Q4) Which of the following is an example of input control test?
A) sequence check
B) zero value check
C) spooling check
D) range check
Q5) What are the audit's objectives relating to systems development?
Q6) Describe two methods used to control the source program library.
Q7) If input and processing controls are adequate,why are output controls needed?
Q8) Name four input controls and describe what they test Page 23
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