CA Forensic Accounting & Fraud Detection Flashcards
6 cards from real CA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 CA Forensic Accounting & Fraud Detection flashcards as text
What is the primary purpose of forensic accounting?
Answer: To investigate financial fraud and disputes for legal proceedings
Forensic accounting combines accounting, auditing, and investigative skills to examine financial records for use in legal proceedings.
Which fraud scheme involves recording fictitious revenues to inflate a company's financial results?
Answer: Financial statement fraud
Financial statement fraud involves deliberately misrepresenting financial results, including recording fictitious revenues to deceive investors or creditors.
The 'fraud triangle' consists of pressure, opportunity, and which third element?
Answer: Rationalization
The fraud triangle model identifies three factors that contribute to fraud: pressure (incentive), opportunity, and rationalization (the perpetrator's justification).
What is 'skimming' in the context of occupational fraud?
Answer: Taking cash before it is recorded in the accounting system
Skimming is an off-books fraud scheme where cash is stolen before it is entered into the accounting records, making it difficult to detect.
Which document is most commonly used by forensic accountants to trace the full history of financial transactions?
Answer: General ledger
The general ledger contains a record of every financial transaction and is the primary source document forensic investigators use to trace fraud.
What is 'lapping' in the context of accounts receivable fraud?
Answer: Stealing a customer payment and covering it with a later payment from another customer
Lapping involves stealing a customer's payment and covering the shortage by applying a subsequent customer's payment to the first victim's account.