Question

1. Which of the following is NOT a component of a vulnerability chart?

	a.	​concealment possibilities
	b.	​identification of the suspected perpetrator
	c.	​listing assets that are missing
	d.	​internal controls that had to be compromised

2.

Which of the following is a benefit of creating a vulnerability chart?

	a.	​It shows management where controls are weak.
	b.	​It lists/coordinates the steps the investigator must take to uncover the perpetrator.
	c.	​It forces the investigators to explicitly consider all aspects of a fraud act.
	d.	​It conveys a warning to all employees that fraud will not be tolerated.

3.

Which of the following is a limitation to the Net Worth Method?

	a.	​The Net Worth Method only gives an estimate of Net Worth increases or decreases.
	b.	​It only includes assets and liabilities that can be discovered.
	c.	​The resulting amounts presented in court are usually lower than the actual theft amount.
	d.	​When presented with the Net Worth amount(s), suspects sometimes confess.

4.

Data Set 9-1

	Year 1	Year 2	Year 3
Home	220000	220000	220000
Car	25000	25000	50000
Investments	40000	50000	65000
Bank account	3000	7000	10000
Total Assets	288000	302000	345000
Home loan	200000	150000	100000
Auto loan	20000	0	0
Student loan	60000	20000	0
Total Liabilities	280000	170000	100000
Salary		95000	105000
Investments		4000	5000
Inheritance		6000	0
Total Income		105000	110000
Home loan		13200	13200
Auto loan		9600	9600
Other living		20000	22000
Wedding		4000	0
Total Expenses		46800	44800

Refer Data Set 9-1. Calculate the net worth of the individual at the end of year 1.

	a.	$0
	b.	$288,000
	c.	$3,000
	d.	$8,000

5.

	Year 1	Year 2	Year 3
Home	220000	220000	220000
Car	25000	25000	50000
Investments	40000	50000	65000
Bank account	3000	7000	10000
Total Assets	288000	302000	345000
Home loan	200000	150000	100000
Auto loan	20000	0	0
Student loan	60000	20000	0
Total Liabilities	280000	170000	100000
Salary		95000	105000
Investments		4000	5000
Inheritance		6000	0
Total Income		105000	110000
Home loan		13200	13200
Auto loan		9600	9600
Other living		20000	22000
Wedding		4000	0
Total Expenses		46800	44800

Refer Data Set 9-1. The income from unknown sources for years 2 and 3 respectively are:

	a.	$255,200; $300,200
	b.	$171,200; $307,200
	c.	$73,800; $179,800
	d.	$65,800; $47,800

Answer 1

1. option C

​listing assets that are missing (all other given components are related to vulnerability chart)

2. option C.

It forces the investigators to explicitly consider all aspects of a fraud act. (vulnerability chart is created for internal control and thus it becomes necessary for investigators to consider all factors possible for fraud)

3. option B

​It only includes assets and liabilities that can be discovered. (new worth = assets –liabilites)

4. option D

$8000

Net worth at the end of Year 1 = 288,000 - 280,000 = $8,000

5. option D

$65,800; $47,800

Funds from unknown sources = Assets - liabilities - prior year's net worth + living expenses - funds from known sources.

Year 2: 302,000 - 170,000 - (288,000 - 280,000) + 46,800 - 105,000 = 65,800

Year 3: 345000-100000 –(302000-170000)+44800-110000 = 47800