ADA Fraud Detection Analytics 3

Question 1

What is the 'fraud triangle' and how is it applied in audit data analytics?

Accepted Answer

A framework identifying pressure, opportunity, and rationalization as conditions enabling fraud

Answer

A three-tier data classification system for categorizing sensitive financial information

Answer

A three-step statistical method for testing related financial accounts simultaneously

Answer

A three-phase process for formally investigating suspected fraud cases

Question 2

In journal entry testing for fraud detection, which pattern is considered a significant red flag?

Accepted Answer

Journal entries posted by senior management after the period-end close

Answer

Journal entries posted during normal business hours by accounting staff

Answer

Journal entries that properly balance debits and credits

Answer

Journal entries accompanied by detailed supporting descriptions

Question 3

What does 'round dollar' analysis in fraud detection examine?

Accepted Answer

An abnormal concentration of transactions with suspiciously even dollar amounts

Answer

Transactions where amounts are converted between different currencies

Answer

The rounding of financial statement figures for presentation purposes

Answer

Payments where currency rounding errors may indicate system manipulation

Question 4

Which analytical technique establishes a normal behavioral baseline used to compare against current activity for fraud detection purposes?

Accepted Answer

Baseline analysis

Answer

Stratified random sampling

Answer

Predictive modeling

Answer

Cluster analysis

Question 5

How is cluster analysis most effectively used in fraud detection analytics?

Accepted Answer

To group similar transactions and identify those that do not fit any natural cluster

Answer

To sort transactions alphabetically for easier manual review

Answer

To rank vendors by total annual payment volume

Answer

To calculate the statistical significance of individual fraud indicators

Question 6

Which red flag in expense reimbursement data most likely indicates coordinated or fabricated fraudulent claims?

Accepted Answer

Multiple employees submitting identical dollar amounts for the same date and expense type

Answer

Multiple employees submitting expense reports once per month

Answer

Expense reports submitted with scanned digital receipts attached

Answer

Expense reports approved by managers within 48 hours of submission

Question 7

Which automated control test is most effective for detecting unauthorized changes to the vendor master file?

Accepted Answer

Comparing the current vendor master file to a prior period snapshot and investigating all changes

Answer

Recalculating the total accounts payable balance for the period

Answer

Directly confirming outstanding balances with the ten largest vendors

Answer

Testing a random sample of vendor invoices for proper authorization signatures