CFE Financial Transactions and Fraud Schemes Exam Questions (186 Q&As)

1. One reason employees might be hesitant to use PO boxes in shell company schemes is that some businesses are specially vary of sending checks to vendors that have street addresses only.

2. Another way to eliminate competition in the solicitation phase of the selection process is to:

3. _________ assumes the business will go on indefinitely in the future.

4. According to SAB 104, for the revenue to be typically considered realized or realizable and earned, which of the following criteria is NOT met:

5. The person or persons who have access to __________ are often the targets of unethical

vendors seeking an advantage in the process.

6. A typical issue involving material and fraud would be:

7. A technique by which checks are numbered using a new technique that is revealed by a colored highlighter pen or by a bright light held behind the check is called:

8. ___________ is to allow the owner, investors, creditors and others with an interest to know

the appropriate book worth of the business at a particular date.

9. Which of the following search is used for unusually high incidence of returns and allowances scheme?

10. The amount of cash on hand in a register may be compared to the amount showing in the register tape in order to detect _______.

11. CORRECT TEXT

_________ is defined as a person who works for the victim organization and who is primary

culprit

12. One final means of concealing a register scheme, as with many kinds of fraud, is to destroy all records of the transaction.

13. According to Marshall, ______ are probable future economic benefits obtained or

controlled by a particular entity as a result of past transactions or events.

14. When situational pressures and perceived opportunities are low and personal integrity is high, occupational fraud is much more likely to occur than when the opposite is true.

15. Larceny is the scheme in which an employee simply takes inventory from the company premises without attempting to conceal it in the books and records.

16. Physical tampering prevention is a check tampering technique that is used to secure bank assisted controls.

17. Maintain the presence of a manager or supervisor near the area of the cash register as a deterrent to theft is a prevention for:

18. People commit financial statement fraud to:

19. Delivery has not occurred or services have not been rendered when:

20. _____________ involves purposeful misreporting of financial information about the

organization that is intended to mislead those who read it.

21. A process by which several bidders conspire to split contracts up and ensure that each gets a certain amount of work is called:

22. Depreciation is especially applicable when companies try to overvalue their assets and net worth; the lower their depreciation expense, the higher the company’s profits.

23. Verify supporting documentation on outstanding checks written for a material amount is a test used to conduct for:

24. ____________ is a process by which a bookkeeper records all transactions and can adjust

the books.

25. The act of an official or fiduciary person who unlawfully and wrongfully uses his station or character to procure some benefit, contrary to duty and rights of others is called:

26. A shell company scheme in which actual goods or services are sold to the victim company is known as:

27. How many accounts are affected in fraudulent accounting entries and therefore same

number of categories on the financial statement?

28. Which of the following is NOT the method for stealing inventory and other assets?

29. Assets that are long-lived and that differ from property, plant and equipment hat has been purchased outright or acquired under a capital lease are:

30. Bank statement are diligently reviewed to ensure that amounts and signature have not been altered, is an activity for:

31. The behavior profile of employees who are involved in bribery schemes may include:

32. ________ increase assets and expenses and/or decrease liabilities and/or equity

33. A voucher is:

34. If the assets are intentionally purchased by the company but simply misappropriated by the fraudster, this is referring to as:

35. Which are check tempering frauds in which an employee prepares a fraudulent check and submits it usually along with legitimate checks to an authorized maker who signs it without a proper review?

36. Employees with the authority to grant discounts in order to skim revenues may use which authority?

37. Skimming is:

38. The principal way to detect omitted credits from books of account is through:

39. CORRECT TEXT

___________ allows the fraud examiner to inspect key attributes on a smaller portion (or

sample) of those documents.

40. Which of the following offender types in which people who take the money and run away?

41. CORRECT TEXT

The _______________ cost method of pricing would carry an asset’s value on the financial

statements as what it would currently cost, considering inflation.

42. The scheme which reduces victim companies to issue fraudulent payments for goods or services that they have not received is called:

43. The most common method for billing scheme is:

44. CORRECT TEXT

One of the simplest ways to justify unacceptable conduct and avoid guilt feelings is to invent a good reason for ________.

45. Which of the following method is NOT used to detect conflicts of interest?

46. Which check tampering red flag may indicate employees have embezzled cash and charged the embezzlement to expense accounts?

47. In physical tampering prevention technique, hidden images can be seen only when the check is held at an angle through:

48. Physical assets including _________ and ________ are the most commonly

misappropriated noncash asset in our study.

49. One final means of concealing a register scheme, as with many kinds of fraud, is to destroy all records of the transaction.

50. __________ can be defined as conduct detrimental to the organization and to the

employee.

51. The most common method for billing scheme is:

52. Which check tampering red flag may indicate employees have embezzled cash and charged the embezzlement to expense accounts?

53. _________ revenues involve the recording sales of goods or services hat did not occur.

54. In which phase of competitive bidding process, fraudsters attempt to influence the selection of a contractor by restricting the pool of competitors from whom bids are sought?

55. When an incorrect total is carried from the journal to the ledger or from ledger to the financial statements, this method is called:

56. The excess credits (or debits) on the income statement are used to decrease (or increase) the equity account.

57. __________ may be defined as the offering, giving, receiving or soliciting anything of value

to influence an official act.

58. The forms that allow noncash assets to be moved from one location in a company to another can be used to facilitate the misappropriation of those assets are called:

59. Which of the following are used in a short term skimming scheme?

60. A special scheme in which employees know their employer is seeking to purchase a certain asset and take advantage of the situation by purchasing the asset themselves is: