Question 1

Which of the following statements is true?
A)Fraud usually results from unintentional errors.
B)Fraud is more violent and traumatic than robbery.
C)Fraud always involves deception,confidence and trickery.
D)Losses from fraud are less than losses from robbery.

Accepted Answer

Fraud always involves some form of deception, trickery, or false representation. It is a deliberate and intentional act to obtain something of value through dishonest means. Unintentional errors may lead to mistakes or negligence, but they do not constitute fraud. Fraud and robbery are both serious crimes, but they are not necessarily comparable in terms of violence or trauma. The losses from fraud can be significant and may even exceed the losses from robbery in some cases.

Question 2

To be successful,plaintiffs in civil cases must prove their case by which of the following?
A)Preponderance of evidence.
B)Beyond a reasonable doubt.
C)To a degree of reasonable mitigation.
D)To the standard of prima facie.

Accepted Answer

Plaintiffs in civil cases must prove their case by a preponderance of evidence, meaning that it is more likely than not that their claims are true. This is a lower standard than the criminal standard of "beyond a reasonable doubt." The other two options (C and D) are not relevant to the standard of proof in civil cases.

Question 3

Which of the following is NOT an example of a fraud-fighting career?
A)Working for the criminal investigation division of the IRS.
B)Serving as an expert witness.
C)Maintaining the security of public records.
D)Defending an organization being sued in a civil case.

Accepted Answer

The answer of Which of the following is NOT an...

Question 4

Generally applicants for CFE certification should have a minimum of a bachelor's degree or equivalent from an institution of higher learning.Alternatively if applicants do not have a bachelor's degree,they may substitute ______ months of fraud-related professional experience for each year of academic study.
A)24
B)18
C)15
D)12
E)9

Accepted Answer

The answer of Generally applicants for CFE certification should have...

Question 5

The word "con," which means to deceive,comes from the word:
A)Contract.
B)Conserve.
C)Confuse.
D)Confidence.

Accepted Answer

The word "con" meaning to deceive originates from the word "confidence," as confidence tricksters or "cons" would use their charm and confidence to deceive their victims.

Question 6

Scammers often use their victim's ethnic identity to gain their trust and then steal their life savings.This is an example of:
A)vendor fraud.
B)affinity fraud.
C)embezzlement.
D)occupational fraud.

Accepted Answer

Affinity fraud involves scammers using a shared characteristic, such as ethnicity, religion, or community, to build trust with their victims and then scamming them out of their money. The scenario described in the question is a perfect example of affinity fraud.

Question 7

Telemarketing fraud usually falls into this category.
A)Investment scams
B)Management fraud
C)Vendor fraud
D)Embezzlement

Accepted Answer

Telemarketing fraud usually involves convincing victims to invest in a fraudulent scheme or product. This falls under the category of investment scams.

Question 8

Who are the primary victims of financial statement fraud?
A)Middle management
B)Organizations that buy goods or services
C)Analysts
D)Stockholders

Accepted Answer

Stockholders are the primary victims of financial statement fraud because they rely on accurate financial information to make investment decisions. When financial statements are fraudulent or misleading, stockholders may suffer financial losses.

Question 9

Which of the following is NOT one of the major types of fraud classification schemes?
A)Employee embezzlement
B)Government fraud
C)Investment scams
D)Customer fraud

Accepted Answer

Government fraud is not classified as one of the major types of fraud schemes in the context of business and accounting. The major types typically include employee embezzlement, investment scams, and customer fraud, among others, focusing on the source or method of the fraudulent activity rather than the sector in which it occurs.

Question 10

Which of the following frauds is usually the most expensive?
A)Vendor fraud
B)Customer fraud
C)Occupational fraud
D)Financial statement fraud

Accepted Answer

Financial statement fraud typically involves large amounts of money and can significantly impact a company's financial stability and reputation. This type of fraud often involves deliberately misrepresenting financial information or manipulating financial records.

Question 11

Civil claims begin when one party files a complaint against another,usually for the purpose of:
A)penalty.
B)imprisonment.
C)proving the other party wrong.
D)financial restitution.

Accepted Answer

Civil claims are usually filed for the purpose of financial restitution, meaning the plaintiff (the party filing the complaint) is seeking monetary damages from the defendant (the party being sued) to compensate for harm or loss suffered. Civil claims do not involve penalties or imprisonment, and are not necessarily about proving one party "wrong" in a moral or ethical sense, but rather determining whether the defendant is legally liable for damages.

Question 12

Which of the following observations concerning occupational fraud is NOT true?
A)It is clandestine.
B)It is committed for the purpose of direct or indirect financial benefit to the employee.
C)It always involves two or more employees.
D)It costs the employing organization assets,revenues,or reserves.

Accepted Answer

Occupational fraud does not always involve two or more employees. In fact, it can be committed by a single employee.

Question 13

Perpetrators of some fraud schemes often target conspiracy theorists,promising access to the "secret" investments used by the Rothschilds or Saudi royalty and offer triple-digit returns.Such schemes are best described as:
A)Affinity frauds.
B)Ponzi schemes.
C)Franchise frauds.
D)Prime bank schemes.

Accepted Answer

The fraud scheme described in the question is most likely a prime bank scheme, where the fraudster claims to have access to exclusive investments with high returns from prestigious financial institutions. These schemes often rely on convincing potential victims that the investments are only available to the wealthiest and most well-connected individuals, hence the mention of the Rothschilds and Saudi royals.

Question 14

A company is a victim of a $414 million fraud.At that time its profit margin is 10%.How much additional revenue should the company generate in order to recover the effect on net income?
A)$41.4 million
B)$414 million
C)$4.14 billion
D)$41.4 billion

Accepted Answer

The fraud amount is $414 million, which is 10% of the total revenue. Therefore, the total revenue of the company before the fraud is $4.14 billion. In order to recover the effect on net income, the company needs to generate an additional revenue of $414 million. So, the total revenue after the fraud needs to be $4.554 billion ($4.14 billion + $414 million). Therefore, the additional revenue the company should generate is $414 million.

Question 15

The Anti-Kickback Act of 1986 intends to prevent:
A)bribery,by punishing perpetrators with up to 15 years in prison.
B)any scheme to defraud federally insured financial institutions.
C)the giving or receiving of any thing of value by a subcontractor to a prime contractor.
D)individuals from using insider information to purchase or sell a company's securities.

Accepted Answer

The Anti-Kickback Act of 1986 is designed to prevent subcontractors from giving or receiving anything of value to influence the award of a subcontract by a prime contractor, particularly in government contracts.

Question 16

Fraud in companies such as WorldCom,Enron,Waste Management,Sunbeam,Rite-Aid,Phar-Mor,Parmalat,and ZZZZBest are examples of:
A)Customer fraud.
B)Investment scams.
C)Vendor fraud.
D)Management fraud.

Accepted Answer

These examples all involve management fraud, where top executives within the company engaged in fraudulent activities such as falsifying financial statements or inflating revenue to deceive investors and the public.

Question 17

In fraud prosecution cases,______ matter consists of the underlying data and all corroborating information available.
A)evidential
B)remedial
C)supplement
D)elementary

Accepted Answer

The term "evidential matter" refers to all the data and information that corroborates or supports the fraud prosecution case. This includes documents, records, witness statements, and any other evidence that can be presented in court. Therefore, the best choice is A) evidential.

Question 18

The ACFE includes three major categories of occupational fraud EXCEPT:
A)asset misappropriations.
B)corruption.
C)fraudulent statements.
D)pension fraud.

Accepted Answer

The ACFE includes three major categories of occupational fraud which are asset misappropriations, corruption, and fraudulent statements. Pension fraud is not included as one of the major categories.

Question 19

Employee embezzlement can be direct or indirect.Indirect fraud occurs when:
A)an employee uses company assets to run his/her private business.
B)employees establish dummy companies and have their employers pay for goods that are not actually delivered.
C)an employee receives a kickback from a vendor.
D)an employee steals company cash,inventory,tools,or other assets.

Accepted Answer

The answer of Employee embezzlement can be direct or indirect.Indirect...

Question 20

What is the most cost-effective way to minimize the cost of fraud?
A)Prevention
B)Detection
C)Investigation
D)Prosecution

Accepted Answer

Prevention is always the best and most cost-effective way to minimize the cost of fraud. It is better to prevent fraud from happening than to detect it after it has occurred, investigate it, and prosecute those responsible. Prevention can be achieved through various measures such as employee training, implementing internal controls and procedures, conducting thorough background checks, and regularly monitoring and auditing financial records.

Quiz 1: The Nature of Fraud

Which of the following statements is true?

To be successful,plaintiffs in civil cases must prove their case by which of the following?

Which of the following is NOT an example of a fraud-fighting career?

The word "con," which means to deceive,comes from the word:

Scammers often use their victim's ethnic identity to gain their trust and then steal their life savings.This is an example of:

Telemarketing fraud usually falls into this category.

Who are the primary victims of financial statement fraud?

Which of the following is NOT one of the major types of fraud classification schemes?

Which of the following frauds is usually the most expensive?

Civil claims begin when one party files a complaint against another,usually for the purpose of:

Which of the following observations concerning occupational fraud is NOT true?

Perpetrators of some fraud schemes often target conspiracy theorists,promising access to the "secret" investments used by the Rothschilds or Saudi royalty and offer triple-digit returns.Such schemes are best described as:

A company is a victim of a $414 million fraud.At that time its profit margin is 10%.How much additional revenue should the company generate in order to recover the effect on net income?

The Anti-Kickback Act of 1986 intends to prevent:

Fraud in companies such as WorldCom,Enron,Waste Management,Sunbeam,Rite-Aid,Phar-Mor,Parmalat,and ZZZZBest are examples of:

In fraud prosecution cases,______ matter consists of the underlying data and all corroborating information available.

The ACFE includes three major categories of occupational fraud EXCEPT:

Employee embezzlement can be direct or indirect.Indirect fraud occurs when:

What is the most cost-effective way to minimize the cost of fraud?