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Chapter 11
Chapter 12
Chapter 13
Chapter 14
Miscellaneous (Enron)
100
This company officer is most likely to be the perpetrator of financial statement fraud.
Who is the CEO?
100
By far, the most common accounts manipulated when perpetrating financial statement fraud are _________ and ____________.
What are revenues and receivables?
100
____________ is usually difficult for management to intentionally overstate because balances can be easily confirmed with banks and other financial institutions.
What is cash?
100
_______________ can be broken down into the following four scheme types: bribery schemes, conflicts of interest schemes, economic extortion schemes, and illegal gratuity schemes.
What is corruption?
100
The Big Five public accounting firm that was Enron's audit firm.
Who is Arthur Andersen?
200
Financial statement fraud is usually detected when information in the financials is compared with the real-world characteristics of the firm and the context in which management is operating and being motivated. The four elements of the fraud __________________ are management and directors, relationships with others, organization and industry, financial results and operating characteristics.
What is exposure rectangle?
200
_____________ analysis is a method that examines changes in account balances from period to period.
What is horizontal?
200
_______ problems relate to the inclusion of all accounts payable (or other assets or liabilities) that should be reported in the current period and exclusion of all that should be reported in past and future periods. For example, including accounts payable incurred on December 30 as a liability in January but not December would represent a ________ problem and possible financial statement fraud.
What is cutoff?
200
A ____________________ occurs when an employee, manager, or executive has an undisclosed economic or personal interest in a transaction that adversely affects the company
What is conflict of interest?
200
Sherron Watkins' role the scandal at Enron.
What is whistle-blower?
300
Several factors led to a perfect storm of financial statement fraud at the end of the 20th century. One of these factors related to the opportunistic behavior of some CPA firms. In some cases, accounting firms used audits as loss leaders establish relationships with companies so they could sell more lucrative consulting services. In many cases, audit fees were smaller than consulting fees for the same clients. This caused a lack of auditor ___________________.
What is independence?
300
___________________ is a practice that suppliers use to encourage customers to buy extra inventory so as to increase current-period sales.
What is channel stuffing?
300
Accounting rules require contingent liabilities whose likelihood of payment is “___________________” to be disclosed in the footnotes and contingent liabilities whose likelihood of payment is “____________” to be recorded as liabilities in the financial statements.
What are reasonably possible and probable?
300
Payroll fraud schemes fall into four major categories: ghost employees, falsified hours and salary, commission schemes, and false workers’ compensation claims. Of all payroll fraud schemes, ________________ schemes tend to generate the largest losses.
What are ghost employees?
300
Enron's corporate motto
What is "Ask Why"?
400
In the context of strategic reasoning, if an auditor considers additional layers of complexity, including how management may anticipate the auditor's behavior and plans the audit accordingly, this is an example of _____________ reasoning.
What is higher-order?
400
________________ is one of the most widely used ratios to analyze revenues and receivables and is calculated by dividing sales by accounts receivable. Sudden, unexpected changes in this ratio are a strong signal that fraud may be occurring.
What is asset turnover ratio?
400
_______________ means recording something (such as start-up costs) as an asset rather than as an expense. Improper ______________ would result in the overstatement of assets and the understatement of expenses.
What is capitalization?
400
While both involve the theft of cash, __________ schemes involve stealing cash that has already been recorded in the company’s accounting system. With the cash already accounted for, it is easier to determine when the cash is missing. __________ schemes involve stealing cash before it has been recorded in the records of the company.
What are larceny and skimming?
400
Ken Lay blamed this person for the financial improprieties that bankrupted the company.
Who is Andrew Fastow (CFO)?
500
In addition to the typical analyses of financial statements (e.g. ratio, vertical, horizontal), research suggests that auditors and fraud examiners can benefit by also using _______________ performance measure to assess the likelihood of fraud. Examples include: # of employees, square footage of stores, # of locations, etc.
What is nonfinancial?
500
___________ inventory are goods that the company holds and sells for another company. Because the company holding the goods (consignee) does not own them, it may inflate ending inventory by including this inventory in its year-end physical count.
What is consigned?
500
_________ fraud can be categorized into the following three groups: 1. Overall misrepresentations about the nature of the company or its products, usually made through news reports, interviews, annual reports, and elsewhere. 2. Misrepresentations in the Management Discussions and Analysis (MD&A), or in other nonfinancial statement sections of annual reports, 10-Ks, 10-Qs, and other reports. 3. Misrepresentations and omissions in the footnotes to the financial statements.
What is disclosure?
500
_______________ is a type of fraudulent disbursement scheme in which an employee either prepares a fraudulent check for his or her own benefit or intercepts a check intended for a third party and converts the check to his own benefit.
What is check tampering?
500
Enron Corp.'s energy traders manipulated this state's power system to increase profits during the height of its 2000-2001 energy crisis.
What is California?