Who Are The Primary Victims Of Financial Statement Fraud?

Chapter 1--The Nature of Fraud MULTIPLE CHOICE 1. One way that criminal law differs from civil law is that it: a. | Provides remedies for violations of private rights. | b. | Must yield a unanimous verdict. | c. | Can have a jury of fewer than 12 persons. | d. | Allows for various claims in one action. |

ANS: B | Feedback | A | Incorrect. This is a characteristic of civil law; criminal law deals with crimes against the public. | B | Correct. Criminal trials must result in an unanimous verdict. | C | Incorrect. This is a characteristic of civil law; criminal trial juries must have 12 persons. | D | Incorrect. This is a characteristic of civil law; criminal law permits only one claim at a time. |

PTS: 1
Both involve numbers. | B | Incorrect. Both are found in business. | C | Incorrect. Computers can make errors. | D | Correct. |

PTS: 1 27. Who are the primary victims of financial statement fraud? a. | Employees and middle management. | b. | Organizations that buy goods or services. | c. | Analysts and pundits. | d. | All Stockholders |

ANS: D | Feedback | A | Incorrect. While they are negatively affected by fraud, they do not rely on financial statements to the same degree as stockholders. | B | Incorrect. This is the victim of vendor fraud. | C | Incorrect. They may be fooled by financial statement fraud, but they would not suffer as much as stockholders. | D | Correct. Stockholders are the primary victims of management fraud because they are the ones who depend most on the accuracy of the financial statements. |

PTS: 1 28. Which of the following organizations is not a possibility for a future career in fraud? a. | CPA Firms | b. | Government | c. | Universities | d. | None of the above |

ANS: D | Feedback | A | Incorrect. CPA firms conduct investigations, support firms in litigations, serve as expert witnesses, etc.
| Fraud committed on behalf of the organization | c. | Fraud committed by an organization against employees. | d. | Fraud committed by government agencies. |

ANS: B | Feedback | A | Incorrect. This is the other type of fraud committed. | B | Correct. This is the most common type of fraud. | C | Incorrect. This is not a typical fraud. | D | Incorrect. Though likely, this is not a typical fraud. |

PTS: 1 39. Which of the following is not a key activity in occupational fraud? a. | The activity is clandestine. | b. | The activity is committed for the purpose of direct or indirect financial benefit to the employee. | c. | The activity always involves two or more employees. | d. | The activity costs the employing organization assets, revenues, or reserves. |

ANS: C | Feedback | A | Incorrect. This is a key activity in occupational fraud. | B | Incorrect. This is a key activity in occupational fraud. | C | Correct. | D | Incorrect. This is a key activity in occupational fraud. |

PTS: 1 40. The most common type of fraud committed on behalf of organizations is usually perpetrated by: a. | Employees with access to company assets | b. | Top management