Name: __________________________________________________
Score: __________________________________________________
1. Ferlin worked for a company that provides probation services and
electronic monitoring. After 13 years, she started submitting
overtime pay for herself and a relative. Later, she did the same thing
for a second relative that joined the company. Identify the fraud
scheme.
2. Reyman went on a business trip for a technology company. During
his one week trip, he kept every receipt that he plans to reimburse.
These include his personal disbursements. Identify the fraud scheme.
3. Aireen received a check from Customer A as payment for his due
payable. That day, she decided that she would advance her salary,
and thus cashes the check. Then the following day, Customer B paid
his account. This payment was then applied to Account A. Identify
the fraud scheme.
4. Ferlin was tasked to deliver to their company’s controller the check
payments that are stored in their mail. She discovered that there were
10 new checks. She put one of the checks amounting to Php 60,000
on her pocket and burns the associated remittance slip. Identify the
fraud scheme.
5. Reyman is a credit union employee who conspired with an outsider
friend and granted him unauthorized access to client bank accounts.
Identify the fraud scheme.
6. The issue regarding privacy encompasses people’s desire to be in full
control of what and how much information about themselves is
available to others, and to whom it is available. Tell whether this
statement is true or false.
7. These are the policies and procedures used to ensure that appropriate
actions are taken to deal with the organization’s identified risks.
8. FAR Company strictly implements that all sale invoices be
numbered. They also keep record of their transactions by using
journals and ledgers. Identify the control activity used.
ID Number: _____________________________________________
Rating: _________________________________________________
9. The control activity that reconciles subsidiary accounts with control
accounts.
10. The control activity that avoids the situation wherein an individual
with access to all relevant records destroys the audit trail to
manipulate sales transactions.
11. Aireen reviews the budgetary report for the construction of a
highway road. She frequently receives a one sack of rice, a
pangkabuhayan package and a house and lot from the department
that made the report. Because she has utang na loob, she signed and
certified the budgetary report. What type of corruption happened?
12. Statement 1: Public companies must report all off-balance-sheet
transactions.
Statement 2: Annual reports filed with the SEC must include a
statement by management asserting that it is responsible for creating
and maintaining adequate internal controls and asserting to the
effectiveness of those controls.
Statement 3: Officers must certify that the company’s accounts
“fairly present” the firm’s financial condition and results of
operations. Knowingly filing a false certification is a criminal
offence.
Tell whether these statements are true or false.
13. Directors who have a personal relationship by serving on the boards
of other directors companies; have a business trading relationship as
key customers or suppliers of the company; have a financial
relationship as primary stockholders or have received personal loans
from the company and have an operational relationship as employees
of the company exhibit what type of underlying problem?
14. The SOX Act addresses auditor independence by creating more
separation between a firm’s attestation and non-auditing activities.
 Give one non accounting service that external auditors are no longer
permitted to render to audit clients. WORD BANK

15. Proportionality states that the benefit from a decision must equal the
risks associated. Tell whether this statement is true or false.
Payroll Fraud Lack of Director Independence
16. Ethical issues in business can be divided into four areas namely
equity, rights, honesty and exercise of corporate power. Under Skimming- Mailroom Fraud Billing Schemes
Equity, we have product pricing. For Rights, we have diversity. For
Honesty, we have misleading advertising. And lastly, for Exercise of Segregation of Duties Computer Fraud
Corporate Power, we have Upsizing and Plant Operations. Tell
whether this statement is true or false. Cash Larceny- Lapping Accounting Records

Exposure Detective Controls Illegal Gratuity

17. The control activity that distinguishes and separates the
authorization, custody of assets and recording functions.
Expense Reimbursement Fraud Proportionality
18. Ferlin is the purchasing agent for a building contractor, and a part Conflict of Interest Shell Company
owner in a plumbing supply company. She has the sole discretion in
selecting the vendors for the plumbing supplies needed for buildings IT Controls Monitoring Privacy
under contract. Ferlin directs a disproportionate number of purchase
orders to her company, and charges above market price for the Supervision Business Ethics
products. What type of corruption happened?
Non-cash Misappropriations Bribery
19. The logical layout of a source document into zones that contain
specific data such as customer name, address, items sold and quantity Independent Verifications Control Activities
forces the clerk to enter the necessary data. Source documents
bearing this type of data field asserts a preventive control. Tell Access Control Fraudulent Statements
whether this statement is true or false.
Verification Procedures Economic Extortion
20. Reyman, a clerk, entered the following data on a customer sales
order: Sarbanes-Oxley Act Pass-Through Fraud
Quantity: 10,000
Price: 100
Total: 100,000

What detective control must be done before processing the

transaction and posting to the accounts in order to correct the error?

Bonus Question (2 pts):

Who was the founder of ENRON who died weeks before his jail
sentence was to be announced?
ANSWER KEY: ANSWER KEY:
1. Payroll Fraud 21. Payroll Fraud
2. Expense Reimbursement Fraud 22. Expense Reimbursement Fraud
3. Cash Larceny – Lapping 23. Cash Larceny – Lapping
4. Skimming – Mail Room Fraud 24. Skimming – Mail Room Fraud
5. Non-Cash Misappropriations 25. Non-Cash Misappropriations
6. True 26. True
7. Control Activities 27. Control Activities
8. Accounting Records 28. Accounting Records
9. Independent Verifications 29. Independent Verifications
10. Access Control 30. Access Control
11. Bribery 31. Bribery
12. All are true 32. All are true
13. Lack of Director Independence 33. Lack of Director Independence
14. Possible Answers are: 34. Possible Answers are:
 Bookkeeping or other services related to the accounting  Bookkeeping or other services related to the accounting
records or financial statements; records or financial statements;
 Financial information systems design and implementation;  Financial information systems design and implementation;
 Appraisal or valuation services, fairness opinions, or  Appraisal or valuation services, fairness opinions, or
contribution-in-kind reports; contribution-in-kind reports;
 Actuarial services;  Actuarial services;
 Internal audit outsourcing services;  Internal audit outsourcing services;
 Management functions or human resources;  Management functions or human resources;
 Broker or dealer, investment adviser, or investment banking  Broker or dealer, investment adviser, or investment banking
services; services;
 Legal services and expert services unrelated to the audit; and  Legal services and expert services unrelated to the audit; and
 Any other service that the PCAOB determines is  Any other service that the PCAOB determines is
impermissible. impermissible.
15. False. It must outweigh the risks. 35. False. It must outweigh the risks.
16. False. For exercise of Corporate Power: Downsizing and Plant 36. False. For exercise of Corporate Power: Downsizing and Plant
Closures Closures
17. Segregation of Duties 37. Segregation of Duties
18. Conflict of Interest 38. Conflict of Interest
19. True 39. True
20. Recalculate the total value using the price and quantity 40. Recalculate the total value using the price and quantity

For the Bonus Question: For the Bonus Question:

Kenneth Lay Kenneth Lay