Explanation:
The correct answer is (B) – Duty of loyalty and duty of care; they must act solely in the best interest of the employer/principal and conduct business affairs prudently. Directors and officers have duties, including the duty of loyalty (acting in the best interest of the employer) and duty of care (prudent conduct of business affairs). Violating these duties may result in civil and criminal liabilities. Options (A), (C), and (D) provide inaccurate information about the duties of directors and officers.

Explanation:
The correct answer is (C) – They aim to resolve corporate cases without indictment, trial, and conviction, fostering policy reform. Deferred prosecution agreements focus on getting the business to reform its policies, reducing the risk of illegal practices. This benefits both the company and the justice system by providing an avenue for resolving corporate cases, punishing malfeasance, and effectuating changes in a company’s culture. Options (A), (B), and (D) provide inaccurate information about the purpose and benefits of deferred prosecution agreements.

Explanation:
The correct answer is (D) – Mediation results in a binding contract, whereas arbitration decisions may or may not be binding. In mediation, the mediator assists parties in reaching a resolution, and any agreement reached is enforced as a binding contract. In arbitration, the decision can be either binding or nonbinding based on the agreement of the parties. Options (A), (B), and (C) provide inaccurate information about the nature of mediation and arbitration.

Explanation:
The correct answer is (B) – It is preferred when parties seek a more flexible remedy and usually helps preserve existing business relations. Alternative dispute resolution offers more flexibility in remedies and often preserves existing business relations between parties. Litigation is not always the preferred method, especially when these advantages are crucial. Options (A), (C), and (D) provide inaccurate information about the preferences and advantages of alternative dispute resolution.

Explanation:
The correct answer is (C) – Binding arbitration means the decision is final, while nonbinding arbitration allows parties to reconsider the arbitrator’s determination. Parties include arbitration clauses to submit disputes to arbitration rather than litigation. In binding arbitration, the decision is final and cannot be submitted to a judge or jury later. Nonbinding arbitration allows parties to reconsider the arbitrator’s decision and pursue litigation if unsatisfied. Options (A), (B), and (D) provide inaccurate information about arbitration clauses and their impact.

Explanation:
The correct answer is (C) – The third person assists parties in reaching a resolution without deciding the case, as in mediation. In mediation, the impartial third person (mediator) facilitates communication and assists parties in reaching a mutually agreeable resolution. The mediator does not make a final decision on the case. Options (A), (B), and (D) provide inaccurate information about the role of an impartial third person in alternative dispute resolution.

Explanation:
The correct answer is (B) – Nonbinding arbitration is preferred when parties want a flexible remedy and the option to reconsider the arbitrator’s decision. Nonbinding arbitration provides flexibility by allowing parties to reconsider the arbitrator’s decision and potentially pursue litigation if necessary. Options (A), (C), and (D) provide inaccurate information about the preferences and flexibility of nonbinding arbitration.

Explanation:
The correct answer is (B) – It ensures the evidence has not been altered or changed over time, demonstrating its authenticity. Establishing a chain of custody is crucial to show that the evidence presented in court has not undergone material changes or alterations from the time it was collected. This process demonstrates the authenticity of the evidence. While gaps in the chain of custody may affect the weight of evidence, they do not necessarily render it inadmissible. Option (D) accurately reflects that the chain of custody affects the weight, not the admissibility, of evidence.

Explanation:
The correct answer is (C) – Mistakes in the chain of custody may affect the weight but not the admissibility of evidence. Courts have recognized that mistakes in the chain of custody can affect the weight of the evidence presented but do not necessarily render it inadmissible. The jury and judge consider any improprieties in the chain of custody when deliberating the case’s weight for guilt or innocence. Options (A), (B), and (D) provide inaccurate information about the impact of mistakes in the chain of custody.

Explanation:
The correct answer is (C) – Close monitoring is crucial for all evidence, including physical documents, audio and video recordings, and information-processing equipment. In fraud cases, various types of evidence, including physical documents, recordings, and information-processing equipment, demand close monitoring in the chain of custody to establish authenticity. Option (D) inaccurately limits the relevance of chain of custody to specific delivery methods.

Explanation:
The correct answer is (D) – Guidelines include keeping copies of postmarked envelopes, verifying document completeness, and creating memos detailing receipt circumstances. Examining documents in person or following guidelines for recording crucial details, including postmarked envelopes, document completeness, and memos, is essential for demonstrating the chain of custody. Option (B) inaccurately suggests that keeping originals of delivery receipts is the only essential guideline.

Explanation:
The correct answer is (C) – Identify each item, document relevant information, and maintain a continuous record of the item’s custody as it changes hands. Maintaining a chain of custody for electronic evidence is crucial to ensure its integrity. Examining each item, documenting details, and keeping a continuous record are essential procedures. Options (A), (B), and (D) provide inaccurate information about the relevance and procedures of maintaining a chain of custody for electronic evidence.

Explanation:
The correct answer is (B) – Information is presented at trial, while evidence is investigative; admissibility concerns should not restrict examination scope. Understanding the distinction between information and evidence is crucial. Information encompasses all investigative findings, while evidence refers to information presented at trial. It is essential for fraud examiners not to let admissibility concerns limit their examination scope, as even inadmissible information may lead to the discovery of admissible evidence. Options (A), (C), and (D) provide inaccurate perspectives on the relationship between information, evidence, and admissibility.

Explanation:
The correct answer is (C) – Testimony based on firsthand knowledge is preferred, making personal involvement more effective and easily admitted. Factual testimony is preferred from firsthand knowledge, including observations, information collected during investigations, calculations, summaries, and research. Testimony derived from personal involvement is more effective and easily admitted in court. Options (A), (B), and (D) provide inaccurate information about preferred sources for factual testimony.

Explanation:
The correct answer is (B) – Fact witnesses may provide opinions when their judgments align with expert standards. Fact witnesses may provide opinions if their judgments are rationally based on perception and helpful to understanding the testimony or determining a fact in issue. The criteria include alignment with expert standards and relevance to the case. Options (A), (C), and (D) provide inaccurate information about the permissibility of fact witness opinions.

Explanation:
The correct answer is (C) – Lay witnesses are restricted from providing expert opinions based on scientific knowledge; the legal standard is subjective. Generally, lay witnesses are restricted from providing expert opinions, especially those based on scientific, technical, or specialized knowledge. The legal standard requires the opinion to be rationally based on perception and helpful to understanding the testimony or determining a fact in issue. Option (C) accurately reflects the limitations and legal standard for lay witness opinions.

Explanation:
The correct answer is (C) – Experts serve various functions, including establishing facts and interpreting the opposing expert’s opinions. Experts can serve as testifying or consulting experts and play crucial roles in litigation. Jack V. Matson outlines four main functions of expert testimony: establishing facts, interpreting facts, commenting on opposing expert’s facts and opinions, and defining professional standards. Option (C) accurately reflects the multifaceted role and functions of expert witnesses in litigation involving fraud.

Explanation:
The correct answer is (A) – Open questions allow for detailed responses, while closed questions extract specific information; both types are equally effective. Open questions solicit a detailed response, encouraging the witness to provide information in their own words. Closed questions, on the other hand, aim for specific answers, often in the form of yes or no. Both types are crucial during direct examination for lay witnesses, as they serve different purposes in extracting comprehensive information. Option (A) accurately reflects the primary distinction and the effectiveness of both open and closed questions.

Explanation:
The correct answer is (B) – The expert and retaining party are allies; maintaining objectivity is crucial to credibility. In adversarial systems, the expert and the retaining party work together, but it’s crucial for the expert to maintain objectivity. While legal counsel may attempt to present the expert’s testimony favorably, the expert must avoid supplanting their judgment with that of the retaining party to ensure credibility. Option (B) accurately captures the dynamic and highlights the importance of objectivity.

Explanation:
The correct answer is (C) – Inquisitorial systems appoint their own experts; the appointment impacts the expert’s investigative responsibilities. In inquisitorial systems, the court appoints experts, and this impacts the examination process. The expert’s investigative responsibilities, including the scope of analysis, authority to access evidence, and other functions, are controlled by the judge. Option (C) accurately describes the distinction in systems and the impact of expert appointment.

Explanation:
The correct answer is (B) – Narrative questions help structure evidence presentation; hypotheticals demand precision reflecting case facts. Narrative questions assist in presenting evidence coherently, allowing experts to recount case backgrounds and findings. Hypotheticals, to be effective, must be precisely constructed, reflecting the facts of the case directly. Exaggeration or obscurity in hypotheticals is cautioned against, as they must align closely with the case being tried. Option (B) accurately highlights the significance of narrative questions and the precision required for hypotheticals.

Explanation:
The correct answer is (B) – Exhibits must comply with general rules of evidence; their role must be clear and justified for applicability. Special exhibits, such as charts or diagrams, used by expert witnesses must adhere to general rules of evidence. The role of exhibits must be clear, and their applicability to the case justified. They contribute to the presentation of facts by visually demonstrating complex concepts or aspects of the expert’s opinion. Option (B) accurately outlines the considerations and contribution of special exhibits during direct examination.

Explanation:
The correct answer is (A) – To satisfy legal requirements; they help in detecting fraud through proactive tip-seeking. Implementing easily accessible and anonymous fraud reporting tools, such as a tip hotline or dedicated Web page, is essential not only to satisfy legal requirements but also to proactively seek tips for detecting fraud. As mentioned in the ACFE 2016 Report to the Nations, tips are a valuable resource, and approximately 39 percent of internal investigations originate from employee, customer, or vendor tips. Option (A) correctly identifies the legal and proactive aspects of implementing fraud reporting tools.

Explanation:
The correct answer is (B) – Obtaining evidence, reporting, testifying, and assisting in prevention; credible evidence is crucial for the examination’s value. The fraud examination process involves obtaining evidence, reporting findings, testifying, and assisting in fraud prevention. Credible evidence, usually in the form of documents or witness statements, is crucial for the value of a fraud examination. Fraud examiners must legally and properly obtain such evidence. Option (B) accurately outlines the key tasks and underscores the importance of credible evidence.

Explanation:
The correct answer is (B) – Communication orally or in writing; clear, accurate, and unbiased reports are necessary for various stakeholders. The results of a fraud examination can be communicated orally or in writing. The fraud examiner is responsible for providing clear, accurate, and unbiased reports to stakeholders such as management, the board, or the audit committee. The clarity and accuracy of reports are crucial as they might be read or used by different groups involved in the proceedings. Option (B) accurately describes the communication methods and emphasizes the importance of unbiased reporting.

Explanation:
The correct answer is (C) – Testimony is required at random; fraud examiners must be truthful and communicate clearly and succinctly. Fraud examiners are often called upon to provide testimony during depositions, trials, or other legal proceedings. During testimony, fraud examiners must adhere to ethical standards, being truthful and communicating in a clear and succinct manner. Option (C) accurately reflects the ethical considerations and expectations during legal proceedings.

Explanation:
The correct answer is (B) – Forensic accounting only involves fraud investigations; fraud examination includes various professional services. Forensic accounting is defined as the use of professional accounting skills in matters involving potential or actual civil or criminal litigation. While many fraud examinations can be considered forensic accounting, forensic accounting involves more than just fraud examinations. It includes various professional services such as computer forensics, electronic discovery, bankruptcies, workplace fraud investigations, calculations of economic losses, business valuations, and professional negligence. Option (B) correctly distinguishes between the two disciplines and outlines the professional services involved in forensic accounting.

Explanation:
The correct answer is (B) – It ensures a consistent and comprehensive response; it communicates that management takes fraud seriously. Having a fraud response plan is crucial for ensuring a consistent and comprehensive response to suspicions of fraud. It communicates to stakeholders, both internal and external, that management takes fraud seriously. Option (B) accurately captures the purpose of a fraud response plan and highlights the message it conveys to stakeholders.

Explanation:
The correct answer is (D) – Credibility of the allegation, type of incident, seriousness, and potential impact; clear criteria guide decision-making. The response team should consider factors such as the credibility of the allegation, type of incident, seriousness, potential impact, and others to determine the appropriate course of action when fraud is suspected. Having clear criteria helps the response team make informed decisions. Option (D) accurately lists the relevant factors and emphasizes the importance of clear criteria.

Explanation:
The correct answer is (C) – Actions to preserve potentially relevant records; they prevent destruction of evidence in case of litigation. Litigation hold procedures are steps an organization takes to notify employees to suspend the destruction of potentially relevant records when the need to preserve information arises. These procedures are essential in preventing the destruction of evidence during a fraud examination, especially in anticipation of potential litigation. Option (C) accurately defines litigation hold procedures and their significance.