ACFE Certified Fraud Examiner (CFE) Financial Transactions and Fraud Schemes Practice Exam

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• Which is an important characteristic of financial reporting that ensures users can make comparisons across entities?
• In healthcare fraud, what is a key indicator of a fictitious services scheme?
• Which of the following statements is true regarding credits and debits in accounting?
• According to cash-basis accounting, when are expenses recorded?
• Which measure aids in preventing inventory fraud?
• In false accounting entry schemes, employees debit the general ledger to conceal a theft. What is a common method of theft described in this context?
• What is an ineffective method for protecting proprietary information?
• What financial statement helps to connect the income statement to the balance sheet?
• In financial fraud, what broad category do telemarketing schemes fall under?
• Which type of fraud involves collusion among multiple parties to defraud an insurance company?
• Which action is typically taken to manage security risk in organizations?
• Which of the following is NOT an appropriate technique for detecting a cost mischarging scheme involving labor?
• What is the primary function of competitive intelligence in business?
• Which of the following is NOT considered a potential indicator of insurance fraud?
• What effect does improperly expensing capital costs have on financial statements?
• What describes a rent-a-patient scheme?
• In workers' compensation fraud, which type involves an employer misrepresenting payroll information?
• What distinguishes a Ponzi scheme from a pyramid scheme?
• Which device is NOT classified as a physical access control?
• How is social engineering best defined?
• Which of the following are considered red flags of insider cyberfraud?
• What can be a consequence of coin miner malware on an infected device?
• Which qualitative characteristic of financial reporting is reflected when an organization continues to use the FIFO inventory valuation method?
• What could indicate that a customer is providing inaccurate information on a bank account application?
• Which of the following is a common red flag of Ponzi schemes?
• Which financial ratio helps measure a company's ability to meet short-term obligations?
• A data classification policy can BEST be described as which type of security control?
• What does the asset turnover ratio measure?
• Which of the following is a common method used by identity thieves?
• What does a significant increase in cost of goods sold compared to sales growth suggest?
• Which security measure is used to protect physical documents from unauthorized access?
• Which phase is NOT part of procurement processes that use competitive bidding mechanisms?
• Which statement regarding related-party transactions is true?
• What technique do fraudsters often prefer to maintain anonymity during new account fraud?
• Why are electronic receipts not preferred for employee expense reimbursements?
• What scheme involves pledging the same collateral to multiple lenders without their knowledge?
• What defines a computer worm?
• What does DRG creep refer to in medical billing?
• What type of fraud involves falsifying payroll records to generate paychecks for non-employees?
• Which method is used for revenue recognition in long-term construction contracts?
• How are debits and credits defined in accounting?
• Which type of fraud scheme does not typically have a clear audit trail?
• Which of the following is NOT a health care fraud scheme typically perpetrated by patients?
• In the context of financial statements, what is considered a liability?
• Is it true that falsely increasing the perpetual inventory balance conceals inventory shrinkage?
• What is the most accurate definition of a software keylogger?
• Which fraud scenario is characterized by two companies regularly interacting without proper disclosure?
• Is horizontal analysis used to analyze percentage changes in items on financial statements over different accounting periods?
• When should employees be informed about the confidentiality of proprietary information?
• What best describes a pricing strategy where a doctor charges less to private patients than to those under government programs?
• Which scenario exemplifies the misuse of a noncash asset?
• Address similarity reports can help detect insurance fraud by revealing payments sent to which type of parties?
• Which of the following is true regarding the detection of a cash larceny scheme?
• A financial fund operator who insists that investors continually reinvest their profits is indicative of which type of scheme?
• Are assets, liabilities, and owners' equity all items that appear on a company's balance sheet?
• Is it true that a pyramid scheme promotes recruitment of new members to increase returns for existing investors?
• What is the primary purpose of developer overhead in construction loans?
• What type of device is used to read the microchip in smart cards?
• Frequent deposits in round numbers can be an indicator of which type of fraud?
• The absence of which document would likely be a concern in a draw request for a construction loan?
• Which of the following is NOT a red flag of health care provider fraud?
• What could indicate a fictitious revenue scheme in accounting?
• What could be an indicator of loan fraud in construction projects?
• Examples of fraud schemes perpetrated by health care institutions and their employees include all the following EXCEPT:
• A company must disclose contingent liabilities if:
• What account is MOST LIKELY debited to balance fictitious revenue entries for non-existent sales?
• Which of the following would NOT be considered a common feature of debt consolidation fraud?
• Which of the following is NOT classified as a type of expense reimbursement scheme?
• Green's scheme, where he did not turn in orders and spent customer down payments, is best classified as which type of fraud?
• Which of the following is an example of consumer fraud schemes?
• Which of the following types of transactions is least likely to use a person-to-person (P2P) payment system?
• Which of the following is a method of committing wage misappropriation?
• What kind of fraud might involve recording fictitious sales within an accounting period?
• What type of fraud was committed by Belinda when she submitted an expense report for a company dinner?
• Which of the following is NOT a method used to conceal inventory shrinkage?
• What are the primary categories included in the statement of cash flows?
• An employee overstating the value of a customer refund is committing which type of scheme?
• What happens after a ransom is paid to a fraudster in a ransomware attack?
• Early revenue recognition is classified as what type of financial fraud scheme?
• Who is best qualified to investigate nonconforming goods delivery issues?
• What distinguishes competitive intelligence from corporate espionage?
• Who should be responsible for preparing the bank deposit according to best practices?
• What type of fraud scheme typically involves colluding brokers?
• Which of the following is a NOT a warning sign of health care provider fraud?
• What is a false statement about automatic debit program schemes?
• What is NOT an example of a business email compromise (BEC) scheme?
• Which scenario best describes a fictitious services scheme in healthcare fraud?
• Under historical cost basis, how should Julia record her antique printing press?
• Calculating which of the following determines a company's earnings for an accounting period by deducting its operating expenses from gross profit?
• In a fictitious refund scheme, what does NOT occur?
• What type of fraudulent scheme is Sheila involved in with her company ABC?
• Which statement about revenue recognition is true?
• What type of theft occurs when cash is taken before it is recorded in a company's books?
• What type of billing scheme did Joe commit by creating a fictitious company?
• What does skimming involve?
• Which of the following statements about noncompliance with confidentiality is true?
• What is a prerequisite for conducting effective vendor assessments?
• Which of the following is a common red flag of elder fraud schemes?
• Which of the following is NOT considered a red flag of a fraudulent payment card transaction?
• Who should conduct physical observations of a company's inventory to most effectively prevent inventory theft?
• Which of the following indicates the likelihood of losing money in a pyramid scheme?
• In premium fraud schemes, what action might an employer take to reduce costs?
• What type of transaction did Brittany perform before stealing money from the register?
• According to going concern disclosure requirements, when must substantial doubt about a company's financial obligations be disclosed?
• What is a significant risk for organizations not to have a planned response to data breaches?
• What best describes the scheme where a doctor orders unnecessary lab tests for profit?
• In a fraudulent second lien scheme, the conspirators typically do which of the following?
• What type of fraud involves impersonating a company's president through email?
• Which of the following does NOT help prevent cash larceny schemes?
• True or False: Missing documents from a loan file is generally NOT considered a red flag for loan fraud.
• Which of the following best describes phishing?
• ABC Company failed to disclose a relationship with another entity in its financial statements. What type of improper disclosure scheme does this indicate?
• Which of the following methods analyzes the percentage change in financial statement items over time?
• In a pass-through scheme, where does the employee buy merchandise from?
• When should David report revenue from catering an event that has been paid for in advance?
• Which of the following best describes a fictitious expense reimbursement scheme?
• Which of the following actions is NOT considered a red flag for fraudulent claims?
• What best describes a Ponzi scheme?
• In a billing scheme, what is typically altered to commit fraud?
• How can businesses prevent skimming practices?
• Is it true that personal calendars at work can provide competitors with valuable information?
• Payment card counterfeiting operations may include the use of which of the following?
• Which of the following types of accounts are decreased by debits?
• Logical access controls, encryption, and application security are all technical security controls used to safeguard computer systems and communication networks. True or False?
• What does sliding in insurance refer to?
• Which of the following statements is true about the statement of cash flows?
• What term is used for phishing conducted via text messages?
• What is the primary challenge in prosecuting check fraud cases?
• The removal of cash from a victim organization before the cash is entered in the accounting system is known as:
• What type of scheme involves an employee providing a friend with merchandise through a fake sale?
• Which statement best describes a contingent liability?
• What is one key characteristic of synthetic identity theft?
• Which measure can management take to prevent malicious software infections?
• Which fraud involves obtaining payment from a person's bank account without their consent?
• Which of the following statements is true regarding a Ponzi scheme?
• Which of the following conditions indicates potential fraud during procurement?
• Which type of fraud scheme often involves urgency in requests for wire transfers?
• What is the term for the amount withheld from each draw request in construction contracts until completion?
• Which statement about identity theft is FALSE?
• What activity is included in the bid evaluation and award phase of procurement?
• Which component is NOT necessary for a ghost employee scheme to succeed?
• Card skimming or shimming schemes can occur in which situation?
• If a fraudster misappropriates cash, which method would NOT maintain the accounting equation?
• What is an outcome of maintaining an accurate vendor master file?
• What type of expenses should be properly matched with revenues according to accounting principles?
• Why should companies implement a continuous monitoring program for procurement activities?
• What is the term used for acquiring information through illegal methods for commercial purposes?
• What is a potential red flag of loan fraud related to real estate developers?
• Which scenario illustrates an example of a kickback scheme?
• What is a common method for individuals to conceal inventory shrinkage?
• What is an important first step for an organization developing a program for safeguarding proprietary information (SPI)?
• What is a necessary measure to ensure the legitimate value of recorded inventory?
• Which type of elder fraud scheme often involves property that does not exist?
• What is a key factor that can lead to comparison difficulties in international accounting practices?
• What is the nature of a Ponzi scheme?
• Which of the following is NOT typically a carrier of malware?
• What is the term for a procurement fraud scheme where bid specifications favor a specific contractor?
• In an overstated refund scheme, an employee does what?
• What kind of schemes often involve making false statements or omitting information on applications?
• What characterizes a property flipping scheme?
• What is an example of an overstated expense scheme?
• What does synthetic identity theft primarily involve?
• During which phase do procurement entities fulfill their contractual obligations?
• What effect does upcoding have on a patient's insurance billing?
• Which of the following is an indicator of a potential check tampering scheme?
• A fraudster can understate expenses to make a company seem more profitable. Is this statement true or false?
• What is an example of an administrative security control?
• In accrual-basis accounting, when are revenues recognized?
• Which financial reporting characteristic allows for changes in accounting principles under certain conditions?
• Which of the following is a recommended practice for preventing fraud in electronic payments?
• Which objective MOST ACCURATELY describes administrative security controls?
• Which of the following is NOT an indicator that a computer or network might have been accessed or compromised by an unauthorized user or entity?
• What is the best description of logical access?
• Which type of fraud is Elizabeth committing by pretending to be injured at work?
• What does the term "bid rotation" refer to in procurement fraud schemes?
• What type of fraud did Anna commit by recording a lower sale amount and skimming the difference?
• Which of the following is NOT a common type of payment card fraud?
• What type of fraud involves charging or billing a health care program for services that were not rendered?
• Which of the following practices should be avoided regarding IT personnel's access to data?
• In a fraudulent activity context, which of the following defines a successful skimming scheme?
• Person-to-person (P2P) payment systems require in-person transactions to transfer money.
• What is a poor information security practice that can contribute to information loss?
• Which of the following best describes spyware?
• Which term describes controls implemented at the application level to secure sensitive information in an organization?
• Which of the following is an example of an electronic funds transfer (EFT) fraud scheme?
• What type of scheme has taken place when a teller removes money from the register without a valid transaction?
• A pyramid scheme is designed to pay off its earliest investors. True or False?
• What is a common way a procuring employee might engage in a bid manipulation scheme?
• What happens when revenues and expenses are not recorded in the same accounting period?
• Which activity does NOT typically occur during the containment and eradication of cybersecurity incidents?
• Which of the following is the MOST ACCURATE definition of a Trojan horse?
• Which type of department is least likely to be targeted for intelligence-gathering purposes by fraudsters?
• Which document is crucial in preventing financial frauds related to employee schemes?
• Which of the following measures is NOT recommended to mitigate billing schemes?
• In a corrupt payment scheme, how might a payer benefit illicitly?
• What is a strong indicator of new account fraud at a bank?
• Which factor enhances the appeal of prepaid debit and gift cards for committing fraud?
• In a scavenger scheme, how does the consumer get defrauded again?
• Which of the following items can assist in identity theft through dumpster diving?
• Which type of scheme involves borrowers misrepresenting their creditworthiness to qualify for a loan?
• How is the debt-to-equity ratio calculated?
• What is a potential consequence of an embezzlement scheme on financial ratios?
• Are all organizations with a pyramid structure operating illegal pyramid schemes?
• What is a common area for construction loan fraud schemes?
• In financial statement fraud schemes involving expense recognition, what must always be maintained according to the matching principle?
• Are special care facilities at lower risk for fraud due to their comprehensive services?
• In identity theft, what does social engineering refer to?
• Which of the following would likely indicate a bid tailoring scheme?
• What can result from a hacker obtaining passwords from an aggregator?
• What type of fraud is a result of double-pledging collateral?
• Which of the following is a common red flag for new bank account fraud?
• What is a critical concern for lending institutions when assessing a company's financial ratios?
• Which method is effective in detecting fraudulent practices in health care facilities?
• What best describes upcoding in medical billing?
• Which scenario best describes a fictitious provider scheme?
• What is an integral part of expense report review procedures?
• What do fraudsters often convert stolen payment card funds into?
• Which accounting equation reflects Assets = Liabilities + Owners' Equity?
• Which of the following statements is TRUE regarding a fictitious refund scheme?
• Which of the following statements about bribery is true?
• Which is NOT an effective control against skimming schemes?
• Which of the following is a method to help detect a skimming scheme?
• What is the fundamental challenge in recording fictitious revenues?
• Which type of fraud prevention involves risk assessments and security audits?
• Which control procedure does NOT help prevent payroll fraud?
• What is a common reason why individuals commit financial statement fraud?
• Which of the following is NOT classified as a payroll fraud scheme?
• Which statement is TRUE regarding gross profit?
• What principle dictates that expenses should be recorded in the same period as associated revenues?
• In most shell company schemes, what is primarily purchased?
• Which aspect of faithful representation in financial reporting ensures neutrality?
• Which committee round is the risk management oversight often found in?
• What is the primary purpose of ensuring a separation of duties within an information systems department?
• What is an example of a method used to determine if there are weaknesses in a company's financial controls?
• Which fraudulent activity occurs if an employee misrepresents personal expenses as business-related?
• In financial fraud examinations, what is considered a significant flag of potential inventory theft?
• When fabricating a counterfeit payment card, what is the MOST DIFFICULT facet to reproduce?
• What kind of fraud occurs when an employee sells goods but doesn’t record the sale?
• What distinguishes a flopping scheme from a flipping scheme in mortgage fraud?
• What is Employment identity theft characterized by?
• Sean falsified his work hours and forged a signature before submitting a time sheet. What type of fraud scheme is he committing?
• Which activities are essential for effective cybersecurity breach recovery?
• What is a common indicator of inventory theft in financial statements?
• In the context of special care facilities, what statement is true regarding fraud victims?
• When a person uses force or fear to demand money for a business decision, they are committing which type of fraud?
• Which of the following is a bad practice for identity theft prevention?
• Which equation reflects the correct accounting model?
• Real estate scams are often recognized by which characteristic?
• In which scenario does linked financing loan fraud occur?
• Which aspect is a red flag of a fictitious revenue scheme?
• In unscrupulous debt consolidation schemes, what is a typical behavior of the debt consolidation company?
• Which system detects malicious activity across a network but does not block the activity?
• What is a common red flag of register disbursement schemes?
• What type of fraud scheme involves using an insured's identity to obtain insurance benefits?
• What term describes the act of reporting an accident after obtaining insurance to collect for damages incurred before the policy?
• Insurance agent/broker fraud can include which of the following?
• Why should employees be informed about confidentiality requirements?
• Which type of fraud occurs when a person falsely identifies themselves as another person during an investigation of a crime?
• What are physical access controls primarily designed to do?
• Does the asset turnover ratio assess a company's efficiency in using asset resources?
• Which action exemplifies a multiple claims health care fraud scheme?
• Which of the following statements is true regarding skimming schemes?
• Which of the following is NOT a recommended method for identity theft prevention in businesses?
• How should a task force determine which proprietary information to protect?
• Is pharming a method used to trick users into entering sensitive information on a fake website?
• What is a common objective of using smart cards in transactions?
• Which of the following makes prepaid debit and gift card fraud appealing to fraudsters?
• How should incident response planning be approached in relation to cybersecurity incidents?
• Improperly recording an expenditure as a capitalized asset rather than as an expense would primarily lead to which effect on the financial statements?
• Which action can be taken to enhance data security?
• What do gross revenues refer to in financial accounting?
• Which type of scheme does Matthew fall victim to if he receives a fraudulent voicemail requesting personal information?
• What type of scheme was Jeff involved in when he cashed a counterfeit check for a friend?
• Which of the following statements concerning unnecessary medical tests is accurate?
• Which of the following is NOT considered a red flag of a Ponzi scheme?
• Unauthorized personal use of a company vehicle is considered which type of fraud?
• What type of fraud involves misrepresenting creditworthiness to obtain a loan?
• Which of the following is NOT a characteristic of a Ponzi scheme?
• What is the main purpose of implementing administrative security controls?
• Which type of fraud involves using the same collateral for multiple loans without disclosure to the lenders?
• Fraud in financial statements typically manifests as:
• Which of the following could be a characteristic of a phishing scheme?
• Which fraud scheme involves persuading a company it needs to order excessive products?
• Which type of fraud involves an employee submitting false employee costs for reimbursement?
• Which of the following statements is true regarding electronic payment fraud?
• What is a key indicator of a bid splitting scheme?
• Which security control involves the deliberate scrambling of a message to keep it unreadable without a key?
• Which information security goals are important for an e-commerce system to meet?
• Which step can organizations take to reduce electronic funds transfer fraud?
• When a person is deceived into revealing information over the phone, it is known as?
• Which of the following is NOT an appropriate technique for detecting a nonconforming goods or services scheme?
• Which of the following is an acceptable justification for a departure from generally accepted accounting principles (GAAP)?
• Financial statement fraud is the intentional misrepresentation of the financial condition of an enterprise. True or False?
• Which of the following fraud types is characterized by deceptive tricks to deceive victims?
• During the solicitation phase of procurements, which activity is involved?
• Which document would an employee alter to conceal inventory theft?
• Which document alteration could signify potential fraud in health care reimbursements?
• During which step of the cybersecurity incident response methodology is damage limitation most focused on?
• What is one major risk associated with an inaccurate vendor master file?
• What is an example of an improper asset valuation scheme?
• What security measure aims to protect manual file systems from unauthorized access?
• What action do thieves typically take to gain access to an account for takeover fraud?
• Which statement about cash schemes is TRUE?
• Why should noncompetition agreements not be required for all employees?
• What is the most accurate definition of a firewall?
• The use of safeguards incorporated into hardware, software, and networks is known as what type of security?
• Which type of phishing scheme utilizes text messages to obtain sensitive information?
• What occurs when an employee processes a fictitious refund at their register?
• When a medical provider bills for a more complex service than was actually rendered, what is this practice called?
• Which of the following is NOT a red flag for a need recognition scheme?
• Which method is useful in detecting a ghost employee scheme?
• To understate net income and lower income tax liability, an accountant could fraudulently expense costs rather than properly capitalizing them to an asset account. Is this statement true or false?
• What approach is NOT appropriate for detecting nonconforming goods or services schemes?
• One method that competitive intelligence professionals use to gather data about a competitor is by posing as a job applicant. This practice is BEST described as?
• Which is NOT an example of a corruption scheme?
• What component is NOT essential for a detailed expense report?
• Which statement about vendor management practices is INCORRECT?
• What is typically a sign of a Ponzi scheme?
• In financial statement manipulation, is understating liabilities common?
• Which of the following actions is commonly associated with fraudulent construction practices?
• The asset turnover ratio is calculated by dividing which two financial metrics?
• Which of the following denotes the confidentiality and integrity goals of an information security system?
• Which method helps prevent inventory theft?
• Which of the following describes a timing difference financial statement fraud scheme?
• What is the primary purpose of separating duties in inventory management?
• Which factor contributes to the risk of account takeover schemes?
• Which activity is NOT part of the presolicitation phase in procurement?
• Which scheme is designed to defraud by promising future delivery of a product in exchange for an upfront payment?
• Which financial statement typically displays the cost of goods sold?
• Which of the following is an example of an indicator of intrusion that an employee might encounter when working on their company's network?
• In the context of economic extortion, how might a government official misuse their position?
• Which method is most effective in conducting financial audits?
• What term describes a scheme where a server swipes a customer's credit card information while processing a payment?
• Are second-hand computers safe from identity thieves if the former owner has deleted all personal information?
• What is the main goal of a pharming scheme?
• What is the recommended practice to detect expense reimbursement schemes?
• High percentages of returns, missing compliance certificates, and evidence of falsified test inspection results are indicators of which procurement fraud scenario?
• On which financial statement would you locate notes payable, current assets, retained earnings, and accumulated depreciation?
• What is competitive intelligence used for in legitimate business functions?
• What is non-repudiation in the context of information security goals for e-commerce systems?
• Which of the following is NOT considered a red flag for bid tailoring schemes?
• What type of ratio is the quick ratio?
• What term describes the practice of charging separately for component codes of a single procedure?
• Which term refers to the inclusion of additional coverages in an insurance policy without the insured's knowledge?
• Which statement about new account fraud is the least accurate?
• What type of virus is described as one that loads itself onto the target system's memory, infects other files, and then unloads itself?
• Which of the following is NOT a legitimate problem situation that may necessitate change orders in construction loans?
• In e-commerce security, what does the term 'access authority' entail?
• Which situation is often present in real estate fraud schemes?
• What is the proper basis for initially recording a piece of equipment on company books?
• Which of the following statements about accounting frameworks is true?
• Which of the following is a method used to engage in social engineering?
• Which embezzlement scheme involves employees making unauthorized withdrawals from customer accounts?
• Which type of fraud is committed when an employee misappropriates customer account information for personal purchases?
• What is the technique of applying payments from one customer to another potentially used to conceal receivables skimming called?
• Which statement is TRUE regarding events after the reporting period that might affect financial statements?
• Which of the following is an example of an off-book fraud?
• What is the role of logical access controls?
• Is it true that businesses should limit the personal information they collect from customers to help prevent identity theft?
• Before Glenn invests in a potentially suspicious security, which action should he prioritize?
• Which fraudulent method involves misleading third-party payers regarding device research costs?
• What term best describes the act of gathering intelligence by infiltrating an organization?
• Which type of fraud involves dishonest reporting by an insurance agent?
• Is the statement true that the equipment needed to operate a check fraud ring is very expensive and difficult to obtain?
• What is an example of a fictitious expense in an expense reimbursement scheme?
• What should be the first step for a task force developing a program for safeguarding proprietary information?
• In the context of financial statements, what does vertical analysis focus on?
• Which procurement fraud scheme involves employees convincing the employer that it needs unnecessary products or services?
• Which types of accounts are increased by credits?
• Performing a physical inventory count can help detect what type of fraud scheme?
• What accounting principle emphasizes matching revenue and expenses in the same period?
• Which of the following would not be a typical red flag for loan fraud when a construction developer submits a draw request?
• Which of the following statements about corruption is correct?
• A falsified hours scheme can involve which of the following?
• Which type of fraudulent activity occurs when the same contractor is consistently awarded contracts with unreasonable specifications?
• Which scenario best describes a fraudulent sale scheme in real estate?
• Electronic payment tampering is generally easier to detect than traditional check tampering. Is this statement true or false?
• Which of the following describes the action of observing a user entering a password nearby?
• In procurement fraud, which practice involves contractors inflating the prices of goods and services through collusion?
• Which of the following is NOT a common red flag of procurement fraud schemes?
• To investigate a tip regarding employee misconduct in the claims department, which report should Janice review?
• All the following are types of medical provider fraud EXCEPT:
• What is the correct characterization of vertical analysis in financial statements?
• In which fraud scheme do borrowers pledge the same collateral to different lenders without disclosing it?
• What is an essential factor in the evaluation of bid proposals?
• What is an indication that an investment might be fraudulent?
• Which of the following is NOT a common sign of a bidding anomaly?
• Which term describes the practice of misclassifying long-term assets as short-term to strengthen apparent financial ratios?
• How can mandatory vacations help in detecting cash fraud?
• What is the goal of a ghost employee scheme?
• What type of scheme did Jackson commit by manipulating his receiving reports?
• Which scenario best exemplifies technical surveillance in corporate espionage?
• What critical function can the principle of "separation of duties" serve in preventing fraud?
• What type of expense scheme did Jacob commit by mischaracterizing a personal dinner as client entertainment?
• Which of the following is NOT a typical characteristic of a falsified hours and salary scheme?
• Which type of control includes management constraints and operational procedures?
• What is a common strategy used by fraudsters to mislead consumers into divulging personal information?
• What type of information is critical for a company to disclose on its income statement?
• What is a likely outcome if employees are aware that surprise cash counts are conducted?
• Do publicly traded companies have the freedom to choose any financial reporting practices?
• Which action would least likely undermine the prevention of cash larceny schemes?
• What common justification do fraudsters use for deceitful fundraising?
• Is it permissible to use a non-GAAP method of accounting if compliance is more costly?
• What is the primary means of preventing cash fraud in an organization?
• What should be a significant focus during a company-wide security audit?
• How might a change order abuse typically be recognized during a contract period?
• What distinguishes true name fraud from account takeover?
• What type of scheme is Jill committing by creating and submitting a fraudulent receipt for reimbursement?
• What principle requires expenses and revenue to be recorded in the same accounting period?
• What is the most accurate statement regarding Acme Widgets’ chances of suing Bruce for conflict of interest?
• In the context of procurement fraud, what does a rotational pattern to winning bidders suggest?
• Which fraudulent act often involves fake customers?
• Which of the following best describes an employee's action in a fictitious refund scheme?
• What role do loan covenants play in construction financing?
• What is the role of a forensic accountant in fraud investigations?
• How can corrupt payments be typically made in corruption schemes?
• What action results in a balance when a liability is fraudulently removed to make an organization appear to have less debt?
• If a fraudster wants to conceal the removal of a liability from the books, which action will NOT balance the accounting equation?
• What should application system users have access to, regarding their job duties?
• When must a company disclose potential losses from ongoing litigation?
• What method can a bank manager implement to minimize the risk of EFT fraud?
• What method is used to compare liquidated assets to current liabilities?
• How does a fraudulent invoice kickback scheme operate?
• What system allows a bank to verify checks presented for payment against a list of approved checks?
• At what stage should an incident response plan be created according to best practices for cybersecurity?
• Kickbacks are defined as:
• What is an example of an effective administrative security control?
• Which of the following best describes skimming in the context of fraud?
• What type of scheme is NOT typically used to exploit older individuals?
• What type of procurement fraud is likely indicated when a procurement employee drafts bid specifications favoring a specific contractor?
• What does the term "cash larceny" refer to in the context of fraud schemes?
• What type of fraud involves creating a shell company to sell returned merchandise back to the employer?
• What is a common sign of a fictitious revenue scheme?
• Which financial statement fraud method is aimed at misleading users regarding the financial health of a company?
• Which of the following practices would constitute as a component of consumer fraud schemes?
• Which of the following statements about new account fraud is least accurate?
• What is the primary activity involved in traditional identity theft?
• What type of fraud scheme is represented when an employee pays an invoice twice and then asks the vendor to return one of the payments?
• What type of financial statement fraud involves recording transactions in incorrect periods?
• How do payers often make corrupt payments in corruption schemes?
• How is the quick ratio correctly calculated?
• What is the recommended access protocol for visitors in a company’s facility?
• What is defined as publicly available information obtained lawfully?
• Can public disclosures such as company newsletters leak valuable secrets to competitors?
• What is the definition of ransomware?
• What is the likelihood of being prosecuted for check fraud?
• An insurance company could commit fraud by failing to apply discounts it negotiated with which entities?
• Which of the following statements is TRUE regarding the statement of cash flows?
• What strategy do phony charities often use to solicit donations?
• What is a common indicator that an insurance claim might be fraudulent?
• What is an example of economic extortion?
• Are all organizations with a pyramid structure considered illegal?
• What should auditors look for as a potential red flag in employee payroll records?
• What aspect contributes to the simplicity of cash-basis accounting?
• What type of payment scheme might involve a payer giving a recipient hidden interests in profit-making enterprises?
• Which practice is identified as an inflated billing scheme where a lower-cost item is billed as a higher-cost one?
• What defines an "air loan" in real estate schemes?
• Which two categories do cash theft schemes fall into?
• Why do companies use electronically and acoustically shielded rooms?
• What is an important characteristic to investigate in construction fraud schemes related to change orders?
• What is a key advantage of smart cards over traditional payment cards?
• When conducting internal audits, which element is crucial for identifying fraudulent activities within a company?
• What is a characteristic of wire fraud?
• Is it true that one can detect skimming sales by comparing register totals to cash drawer amounts?
• Grey, a controller for a small company, concealed theft by making false accounting entries. This scheme can best be classified as:
• What is usually presented as the first line item on an income statement?
• When a change in accounting principle is made, what must be disclosed in the financial statements?
• Which of the following is an example of a best practice for ensuring separation of duties?
• What term describes the unaccounted-for reduction in a company's inventory?
• What type of scheme involves the manipulation of expense reimbursements?
• What method do fraudsters commonly use to make companies appear more profitable by concealing financial details?
• What is a common consequence if related-party transactions are not disclosed?
• What is a common method used in an account takeover fraud scheme?
• What should companies do to prevent cash skimming?
• What is a common tactic used by fraudsters in automatic debit program scams?
• What type of financial fraud occurs when a company fails to disclose warranty costs?
• What is a common outcome of claim fraud in workers' compensation schemes?
• Economic extortion can involve threats as a means to do what?
• What tactic is NOT typically used by fraudsters to physically infiltrate organizations?
• Indicators of compromise (IOCs) are used to describe what?
• Which step should businesses take to protect against identity theft?
• Which of the following is a type of workers' compensation fraud scheme?
• What type of fraud involves the misstatement of financial statements to deceive users?
• What is a potential method for researchers to inadvertently share confidential information?
• What is the most appropriate term for a reward given to a government official after a decision has been made?
• What is ratio analysis used for?
• What is the BEST example of shoulder surfing?
• Which scenario represents a conflict of interest?
• What is an example of a security measure against unauthorized physical access?
• Which of the following classifications is NOT a type of billing scheme?
• What distinguishes smart cards from ordinary credit cards?
• When a fraudulent scheme involves redirecting payroll funds into a new account via email, what type of fraud is this?
• What is a key illustration of human intelligence in a corporate context?
• Is technical surveillance used during corporate espionage for gathering only documentary evidence?
• What is a common technique for detecting change order abuse?
• What type of fraud scheme involves an employee setting up a shell company to purchase goods that they then sell back to their employer at an inflated price?
• In which situation is it acceptable to deviate from generally accepted accounting principles (GAAP)?
• Which item is commonly found on a company's balance sheet?
• What is meant by the term 'bid suppression' in a procurement fraud context?
• Which of the following is a benefit for the fraudster when writing off inventory as obsolete?
• Which type of malware is often used to generate illicit income through cryptocurrency, slowing down infected computers?
• Which item is NOT typically used in making corrupt payments?
• Which method do dishonest contractors use to collude and evade the competitive bidding process?
• Are mobile payments that require biometric authentication less vulnerable to cyberattacks?
• What best describes how a baiting scheme works in the context of identity theft?
• What is a common avenue through which proprietary company information can be compromised?
• What type of fraud might an address similarity report help identify?
• If cash is stolen, which of the following could help balance the accounting equation?
• What is a common characteristic of scams committed by skilled fraudsters?
• What limitation do law enforcement agencies often face in prosecuting telemarketing fraud cases?
• Which of the following is NOT one of the recommended steps for responding to a cybersecurity incident?
• Does ABC Corporation have to disclose a liability related to its class-action lawsuit in financial statements?
• What would be an illegal action for an insurance company regarding health care programs?
• Which of the following is considered a red flag for procurement fraud schemes?
• What concept is Delta explaining when she discusses the completeness and neutrality of financial statements under IFRS?
• What is the scheme known as ditching in automobile insurance?
• If a customer reports a stolen access device, a financial institution should:
• What term best describes the practice of manipulating someone to divulge sensitive information?
• Which situation would NOT be classified as insurer health care fraud?
• Which fraud technique involves altering financial statements to hide true business profitability?
• What might gaps in transaction numbers on a register log indicate?
• A draw request on a construction loan typically requires all the following EXCEPT:
• Why might high employee turnover be a red flag for potential fraud?
• Which of the following is a method to protect sensitive information in communication?
• The accounting concept that assumes a business will continue indefinitely is:
• Which group is the LEAST likely target of an affinity fraud scheme?
• Which technique is commonly used by fraudsters to ensure they can charge inflated prices for their contracts?
• Which types of changes must be disclosed in financial statements?
• Why is protecting personal identification numbers important for preventing identity theft?
• Pass-through schemes are usually undertaken by employees responsible for which function?
• What form of payment is described as being falsely characterized as a loan in a corrupt payment scheme?
• What type of corruption scheme is exemplified by someone threatening vendors to hire their business?
• What is an address similarity report primarily used for in fraud detection?
• What is a common red flag indicating a register disbursement scheme?
• Which of the following does NOT constitute an electronic funds transfer (EFT)?
• Which statement is TRUE about the balance sheet?
• What is a method used to prove corrupt payments?
• Which term describes the unlawful practice of using someone else's personal information for fraudulent purposes?
• When performing audits to detect fraud, what is Julia focusing on by comparing payroll records with HR files?
• Which scenario best exemplifies social engineering tactics?
• What best describes the action of submitting multiple codes for a single medical procedure?
• In credit repair scams, what do fraudsters promise to do?
• Is reconciling cash register totals to cash in the drawer an effective method for detecting cash larceny schemes?
• A pharming scheme differs from phishing because:
• What is the purpose of horizontal analysis in financial statement review?
• Which measure is suggested to protect against identity theft?
• A fraud scheme in which obsolete inventory is not written down to its fair market value will have what effect on the company's current ratio?
• What is NOT one of the categories related to workers' compensation schemes?
• Which of the following accurately describes a conflict of interest?
• What is one way to verify the existence of corrupt payments in schemes?
• How does vertical analysis differ from horizontal analysis?
• Darla, an accounts receivable clerk, is applying customer payments incorrectly to conceal her theft. What type of scheme is she committing?
• In what way can fraudsters conceal liabilities or expenses?
• Which action contributes to the prevention of fraud in business transactions?
• Which financial statement shows a company’s profitability over a certain period?
• What could happen if a vendor master file is inaccurate or outdated?
• When is it appropriate to deviate from GAAP?
• A Ponzi scheme is typically characterized by what type of activity?
• A contractor who delivers materials of lesser quality than specified in the contract might be involved in which type of procurement fraud scheme?
• What type of procurement fraud is indicated when two contractors alternate bids to win contracts?
• What is the primary purpose of an automated clearing house (ACH) filter?
• In a third-party health care fraud scheme, what generally happens?
• Which scenario is NOT indicative of potential contract fraud?
• What is the primary target of telemarketing schemes?
• In the context of financial transactions, which term refers to missing funds without proper documentation?
• Credit repair scams often rely on which of the following deceptive promises?
• What type of scheme is most likely uncovered when a loan package is sold without recourse and the broker is no longer in business?
• Which method is NOT used to conceal liabilities and expenses on financial statements?
• Which of the following options is categorized as an application-level control to prevent unauthorized access or modification of data?
• Why are unauthorized ACH debits typically filtered out by banks?
• When an entity improperly capitalizes expenses, what is one potential consequence?
• What documentation do draw requests in construction lending provide?
• What should auditors do to avoid overstating inventory on a balance sheet?
• Which of the following is a common reason for committing financial statement fraud?
• How can physical documents contribute to information theft?
• What obligation does management have regarding financial statements?
• Which of the following can help prevent a computer from infection by malicious software?
• Your organization’s procurement policy should ensure which of the following?
• Which method demonstrates collusion among dishonest contractors?
• What are the two traditional methods of percentage analysis of financial statements?
• Are U.S. generally accepted accounting principles (GAAP) and International Financial Reporting Standards (IFRS) considered rules-based accounting frameworks?
• What can help prevent procurement fraud in organizations?
• Which statement regarding financial statement fraud is correct?
• Which principle emphasizes collecting only necessary information to safeguard proprietary data?
• Which of the following is NOT a common type of loan mentioned in corruption cases?
• Which of the following terms refers to the act of billing for goods not delivered or services not rendered?
• What is the primary purpose of the statement of cash flows in financial reporting?
• What type of scheme does Katie's actions fall under when she stole cash from the register?
• What does the term "cost of goods sold" represent?