MULTIPLE CHOICE QUESTIONS

Test Bank for

Executive Roadmap to Fraud Prevention and Internal Control: Creating a

Culture of Compliance, Second Edition

CHAPTER 1

MULTIPLE CHOICE QUESTIONS

• The Mail Fraud Statute was enacted by Congress due to a proliferation of what kind of

fraud schemes?

a) Corporate frauds

b) Health care frauds

c) Consumer mail-order frauds

d) Embezzlement by postal employees

• Dennis Kozlowski, the convicted former CEO of Tyco, was infamous for his

extravagant spending of corporate funds for personal use. Which of the following was not an example of his improper and illegal use of Tyco corporate funds?

a) Purchase of $11 million in art and antiques

b) Payment of $20 million for a trip on the Russian Space Shuttle

c) Purchase of a $6,000 floral patterned shower curtain

d) Receipt of a $19 million no-interest loan

• Rocky Aoki, the founder of the Benihana restaurant chain, was convicted for what

type of fraud?

a) Insider trading

b) Financial statement fraud

c) Embezzlement of corporate funds

d) Kickbacks

• Who is given most of the credit for uncovering the WorldCom fraud?

a) The WorldCom audit committee

b) CFO Scott Sullivan

c) The external auditor, Arthur Anderson

d) VP of Internal Audit Cynthia Cooper

• / 4

• All of the following are key elements of the “Ten-Point Plan to Improve Corporate

Responsibility and Protect America’s Shareholders” except which one?

a) CEOs or other officers who clearly abuse their power should lose their right to

serve in any corporate leadership position

b) Corporate leaders should be required to tell the public promptly whenever they

buy or sell stock for personal gain

c) Corporate executives should not be allowed to serve on their company’s board

of directors in order to ensure the board’s independence

d) The auditors of accounting standards must be responsive to the needs of

investors

• Which of the following can be a “rogue employee” involved in fraud?

a) CEO

b) Accounts payable employee

c) Administrative assistant

d) All of the above

• The Sarbanes-Oxley Act was signed into law by President George W. Bush on what

date?

a) June 30, 2002

b) July 30, 2002

c) July 31, 2002

d) January 1, 2002

• The evidence of Rocky Aoki’s fraud came to light as a result of which of the

following?

a) Wiretap on Aoki’s home phone

b) Wire transfer of funds

c) Search warrant at Aoki’s office

d) An informant working in Benihana

• The investigation of Adelphia Communications Corporation found that the executives

had looted the company of more than what amount?

• $10 billion
• $1 billion
• $18.6 billion
• $5 billion

• Which of the following is the best way to lessen the damaging effects of a “rogue

employee?”

a) Increase internal controls

b) Eliminate segregation of duties for employees

c) Require all employees to attend fraud prevention training

d) Implement background checks of employees

• / 4

• The Supreme Court overturned the conviction of accounting firm Arthur Andersen

on charges of obstruction of justice because of which of the following reasons?

a) Prosecutorial misconduct

b) Tolling of the statute of limitations

c) Perjury of a government witness

d) Improper jury instructions

• The government was aided in its investigation and prosecution of WorldCom through

which of the following?

a) Executives who pled guilty and cooperated with the government

b) The work of WorldCom’s internal audit department that uncovered the fraud

c) Bernard Ebbers’ testimony at trial denying any knowledge of the fraud

d) All of the above

• In what corporate fraud case was it revealed that the defendants maintained two sets

of books to conceal the fraud?

a) Adelphia

b) Enron

c) WorldCom

d) ImClone

• Which corporate executive used the “Chutzpah Defense” in his corporate fraud trial?

a) Scott Sullivan

b) Bernard Ebbers

c) Andrew Fastow

d) Richard Causey

• The Corporate Fraud Task Force was created under the orders of which of the

following?

a) Congress

b) Department of Justice

c) President Bush

d) Securities and Exchange Commission

• In his statement to the court prior to sentencing, convicted CEO John Rigas said that

he did nothing wrong and was only trying to improve the conditions of his employees.What is this considered to be?

a) Acceptance of responsibility for his actions

b) Maintaining his innocence before the court

c) Preparing for his appeal to a higher court

d) Failure to accept personal responsibility for his actions

• / 4

• The “Personal Piggy Bank Concept of Leadership” is best characterized by which of

the following?

a) Greed

b) Arrogance

c) Lack of integrity

d) All of the above

• The Mail Fraud Statute was enacted by Congress in what year?
• 1870
• 1872
• 1865
• 1882

• The internal investigation of Tyco that was commissioned after the discovery of the

corporate fraud concluded that the company engaged in:

• Aggressive accounting
• Abuse of goodwill
• Failure to report all acquisitions
• Bribes to government officials

a) All of these statements are true

b) Only 1, 2 & 3 are true

c) Only 3 & 4 are true

d) Only 1 & 3 are true

• With $638 million in losses in 2001, this corporation became the poster child for

fraud and greed:

a) Adelphia

b) Enron

c) WorldCom

d) ImClone

ANSWER KEY:

• c
• b
• a
• d
• c
• d
• b
• b
• b
• a
• / 4