What type of scheme did penney most likely uncover

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Assignment

Question 1
Which type of check tampering scheme is usually the most difficult to defend against?
Concealed check
Authorized maker
Forged endorsement
Altered payee

Question 2
Check tampering includes both fraudulently preparing a company check for one's own benefit and intercepting a company check that is intended for a third party and converting it for one's own benefit.
True
False

Question 3
Which of the following procedures can help prevent and detect the theft and conversion of outgoing company checks?
All of the above
Train employees to look for dual endorsements on canceled checks.
Chart the date of mailing for every outgoing check.
Track changes made to vendor records.

Question 4
Check tampering schemes involving checks made payable to "cash" are extremely difficult to resolve, as there is no way to tell who converted the check.
True
False

Question 5
Methods used to conceal check tampering schemes include all of the following except:
Forced reconciliation
Check kiting
Falsifying the disbursements journal
Re-altering the canceled checks

Question 6
To prevent and detect forged maker schemes, an organization should:
Separate the duties of check preparation and check signing.
All of the above
Rotate authorized check signers.
Maintain a usage log for the signature stamp.

Question 7
Concealing a check tampering scheme generally means hiding both the identity of the perpetrator and the fact that the fraud ever occurred.
True
False

Question 8
To prevent altered payee schemes, the person who prepares the check should also review the check after it has been signed.
True
False

Question 9
In which of the following schemes does the fraudster intercept and convert a company check made payable to a third party?
Forged maker scheme
Altered payee scheme
Authorized maker scheme
Concealed check scheme

Question 10
Which of the following choices is not a category of check tampering?
Forged maker schemes
Altered payee schemes
Unauthorized endorsement schemes
Concealed check schemes

Question 11
Which of the following computer audit tests can be used to detect forged maker schemes?
Extract manual checks and summarize by vendor and issuer
Extract checks that are out of sequence
All of the above
Extract all checks payable to "cash" and summarize by issuer for reasonableness

Question 12
Producing a counterfeit check using the company's logo and bank account number is one type of concealed check scheme.
True
False

Question 13
Which of the following is not a type of altered payee scheme?
Using erasable ink
Forged maker
Leaving the payee designation blank
"Tacking" on

Question 14
According to the 2012 Report to the Nations on Occupational Fraud and Abuse, check tampering has the lowest median loss of all fraudulent disbursement frauds.
True
False

Question 15
Mary Duncan is an internal auditor for the Western Realty Group. Recently, she ran a program that extracted checks that were out of the normal sequence. She found that four or five checks were written every month that fit this category. Based on the information given, which of the following schemes is likely occurring?
Personal purchases scheme
Multiple reimbursement scheme
Shell company scheme
Forged maker scheme

Question 16
Salaried ghost employees are generally easier to create and more difficult to conceal than hourly ghost employees
True
False

Question 17
Which of the following is not necessary for a ghost employee scheme to succeed?
A paycheck must be issued to the ghost.
Timekeeping and wage rate information must be collected.
The perpetrator must have access to a bank account in the ghost employee's name.
The ghost must be added to the payroll.

Question 18
In one of the case studies in the textbook, Melissa Robinson, who worked as an executive secretary for a worldwide charitable organization and was active in her children's school, was also a thief. As one of two people allowed to sign checks on the organization's bank accounts, she learned early on that she could forge the second person's signature without anyone becoming suspicious. What red flags were present that indicated that something wasn't appropriate?
There were a lot of missing files that the auditors couldn't locate during their annual audit.
Robinson would not release any financial information when requested and gave excuses for why it wasn't available.
Robinson would not take vacation leave.
All of the above

Question 19
Vicky Rogers works in the accounts payable department at HDU, Inc. When checks are returned to the company for incorrect vendor addresses, she is supposed to research them, correct them, and then forward them to the proper address. Instead, Rogers decided to convert some of the returned checks for her own use. Based on the information provided, what type of check tampering scheme is this likely to be?
Concealed check
Forged maker
Forged endorsement
Authorized maker

Question 20
In one of the case studies in the textbook, Ernie Phillips was a CPA who had fallen on hard times both financially and personally. He eventually got a job as a controller for a friend who had just been named as the receiver for a financial services company. Within a short period of time Phillips began writing checks to himself that had nothing to do with payroll. How was the fraud discovered?
A vendor received a check in error and reported it to the operations manager.
The receiver received a call from the bank asking him to verify a check.
The operations manager found a check made payable to Phillips while searching Phillips' desk for some accounting records.
The president received a bank statement containing canceled checks that had been written to Phillips.

Question 21
The most common method of misappropriating funds from the payroll is:
Using a ghost employee
Overstating commissions
Theft of payroll deductions
Overpayment of wages

Question 22
Melanie Diggers is an internal auditor for Atlantic Equipment Rental and Sales. While performing a routine review of one of the company's bank accounts, she noticed an unusual "adjusting entry" to the account on the general ledger. She also found that several checks that had cleared the bank in the last few months were absent from the stack of canceled checks. She requested copies of these checks from the bank and discovered that they were all made payable to the company's controller who has check signing authority on the account. The controller is also responsible for performing the bank reconciliation and recording month-end journal entries. Which of the following schemes do these signs most likely indicate?
Forged maker scheme
False voids scheme
Authorized maker scheme
Concealed check scheme

Question 23
In one of the case studies in the textbook, Melissa Robinson, who worked as an executive secretary for a worldwide charitable organization and was active in her children's school, was also a thief. As one of two people allowed to sign checks on the organization's bank accounts, she learned early on that she could forge the second person's signature without anyone becoming suspicious. How was Robinson punished?
She resigned, and a civil suit was filed to recover the loss.
She was found guilty and ordered to make restitution to the organization and its insurance company.
She was allowed to resign and agreed to pay the money back.
Charges were dismissed with prejudice when the evidence was thrown out on a technicality.

Question 24
Which of the following procedures will not help prevent ghost employee schemes?
The personnel department verifies all changes to the payroll.
The person responsible for hiring new employees also supervises the payroll function.
The personnel records are maintained separately from the payroll and timekeeping functions.
The personnel department conducts background and reference checks on all prospective employees before hiring them.

Question 25
Kristen Diamond worked in the mailroom at B&R Industries. When attaching postage to the outgoing mail, she would search for payments being sent to a specific vendor, K. D. Sand. She intercepted these checks and carefully changed them to appear payable to K. Diamond. She then endorsed the checks with her own name and deposited them into her personal bank account. What type of scheme did Kristen commit?
Concealed check
Payables skimming
"Tacking on"
Forged endorsement

Question 26
Which of the following is not a type of payroll scheme?
Falsified hours and salary scheme
Commission scheme
False deduction scheme
Ghost employee scheme

Question 27
In one of the case studies in the textbook, Ernie Phillips was a CPA who had fallen on hard times both financially and personally. He eventually got a job as a controller for a friend who had just been named as the receiver for a financial services company. Within a short period of time Phillips began writing checks to himself that had nothing to do with payroll. What happened to Phillips?
He pleaded guilty to fraud and grand theft and spent 24 months in prison.
He paid the money back by mortgaging his home.
He was charged criminally, and while out on bail, he fled with his family.
He quit his job and moved to another state.
Subsection

Question 28
Orange Publishing hired Moe McDonnell, CFE, to investigate some large variances in the company's labor costs. While looking through the payroll records for the shipping department, McDonnell noticed several employees who claimed extensive overtime during pay periods in which the company's incoming and outgoing shipments were minimal. McDonnell pulled the timesheets for these pay periods and noticed that those belonging to the suspect employees had signatures that didn't match the signatures on the other timesheets. What type of fraud might these findings indicate?
Ghost employee scheme
Overstated expenses scheme
Falsified hours and salary scheme
Commission scheme

Question 29
Comparing salaried employees' gross pay from one pay period to the next is one way of testing for payroll fraud.
True
False

Question 30
In one of the case studies in the textbook, Katie Jordon was the "All-American Girl Next Door" working her first job out of college. As an on-site manager for an apartment complex in Dallas, she did such a good job that when her employer purchased a huge apartment complex in Houston, she was asked to run it. All was well until a member of the maintenance crew resigned. She continued to keep him on the payroll and pocketed his wages. She later added a non-existent assistant once she saw how easy it was to add an employee without being questioned. However, her scheme eventually came to light, and her days of bonus pay were over. How was her scheme discovered?
An employee tipped off the main office when she saw the timesheets listing an employee that she had never heard of.
When Jordon's boss made a routine visit to the office, he noticed that there was no sign of an assistant in the office.
The auditors found it when they conducted a routine audit of all new acquisitions after being in business for one year.
She was splitting the proceeds with her boyfriend, and he contacted the home office when she broke up with him.

Question 31
Ellie Weaver works for the JAG Group as the customer service supervisor. When Joel Carter was hired into her department, she listed his start date as one month before he actually began work. Accordingly, the payroll department generated an extra paycheck for Carter, which Weaver intercepted and cashed at a liquor store. What type of fraud is this?
Altered payee scheme
Forged endorsement scheme
Ghost employee scheme
Falsified wages scheme

Question 32
Which of the following controls will help prevent and detect falsified hours and salary schemes?
Sick leave and vacation time are monitored for excesses by the payroll department.
All of the above
Supervisors return authorized timecards to the employees for review before they are sent to the payroll department.
The duties of payroll preparation, authorization, and distribution are segregated.

Question 33
In one of the case studies in the textbook, Katie Jordon was the "All-American Girl Next Door" working her first job out of college. As an on-site manager for an apartment complex in Dallas, she did such a good job that when her employer purchased a huge apartment complex in Houston, she was asked to run it. All was well until a member of the maintenance crew resigned. She continued to keep him on the payroll and pocketed his wages. She later added a non-existent assistant once she saw how easy it was to add an employee without being questioned. However, her scheme eventually came to light, and her days of bonus pay were over. What was her motivation for stealing?
She wanted to pay off her college loan early so she could save for a house.
She was getting married and needed money for the wedding.
She blew the engine in her car and didn't have the money to replace it.
Her boyfriend, a professional motocross racer, was injured in a race.

Question 34
According to the 2012 Report to the Nations on Occupational Fraud and Abuse, payroll frauds are the least costly type of fraudulent disbursement schemes.
True
False

Question 35
If an employee generates a much higher percentage of uncollected sales than his coworkers, what type of scheme might he be committing?
Multiple reimbursement scheme
Shell company scheme
Sales skimming
Commission scheme

Question 36
According to the 2012 Report to the Nations on Occupational Fraud and Abuse, payroll frauds are the most common type of fraudulent disbursement schemes.
True
False

Question 37
During a review of A+ Service's payroll records, Judy Penney, an internal auditor, noticed that Bradley Banks has no deductions taken from his paychecks for withholding taxes or insurance. She then searched for Banks in the personnel records, but could not locate him. Based on this information, what type of scheme did Penney most likely uncover?
Ghost employee scheme
Falsified salary scheme
None of the above
Fictitious vendor scheme

Question 38
In one of the case studies in the textbook, Jerry Harkanell worked as an administrative assistant for a large San Antonio hospital, where his clerical duties included the submission of the payroll information for his unit. He found that he could add hours to the timesheets and receive extra pay. He continued to alter his timesheets until he was finally caught. How was his scheme detected?
An exception report showed that Harkanell had claimed overtime hours for a period when there was no need to work overtime.
The payroll department sent the timesheets for one pay period back to the supervisor for review when a suspicious number of hours had been indicated.
The internal auditors received an anonymous tip.
An overtime audit was conducted revealing that Harkanell had worked an unusual number of hours compared to others in the department.

Question 39
In one of the case studies in the textbook, Jerry Harkanell worked as an administrative assistant for a large San Antonio hospital, where his clerical duties included the submission of the payroll information for his unit. He found that he could add hours to the timesheets and receive extra pay. He continued to alter his timesheets until he was finally caught. What red flag was present that should have made someone suspicious?
All of the above
He used erasable ink to record the hours on the timesheets.
He showed up for work on a day he had off so he could personally turn in the timesheets.
No one else in the department had overtime hours but Harkanell.

Question 40
Jed Butler is an internal auditor for Billings Industries. Recently he ran a program that identified customer accounts which had previously been dormant for six months or more but had sales in the last two months of the year. What type of fraud would this test most likely reveal?
Shell company scheme
Commission scheme
Personal purchases scheme
Pay-and-return scheme.

Reference no: EM131503853

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