Deck 1: Certified Fraud Examiner

Question 1

The most common method of detection in corruption cases is:

A) Internal audits
B) Internal controls
C) Tips
D) By accident

Answer 1

C

Question 2

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

Answer 2

Embezzling

Question 3

In Cressey's fraud  triangle, its three of the legs are Opportunity, Pressure and

A) Violation
B) Isolation
C) Rationalization
D) None of the above

Answer 3

C

Question 4

According to a survey, in principal perpetrator, males in a majority of cases, accounting for ___ percent of frauds versus ___ percent in which a female was the primary culprit.

A) 62 versus 36
B) 61 versus 39
C) 62 versus 37
D) None of the above

Question 5

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

A) Employee deviance
B) Employee theft
C) Employee fraud
D) All of the above

Question 6

__________ may be defined as the offering, giving, receiving or soliciting anything of value to influence an official act.

A) Corruption
B) Diverting business to vendors
C) Bribery
D) Lacking approval authority

Question 7

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

A) Absconders
B) Long-term violators
C) Offender types
D) None of the above

Question 8

Perceived certainty of detection is directly related to employee theft for respondents in all industry sectors, that is the stronger the perception that theft would be detected, the more the likelihood that the employee would engage in deviant behavior.

Question 9

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

A) Forced Balance
B) Trend analysis
C) Expense account
D) None of all

Question 10

Which of the following is NOT the reason why senior management will overstate business statement?

A) Comply with debit covenants
B) Meet personal performance criteria
C) Trigger performance related compensation
D) Show a pattern of growth to support sale of a business

Question 11

Which of the following are the classifications for the Corruption?

A) Bribery, economic extortion, illegal gratuities and conflicts of interest
B) Corruption, bribery, economic extortion, conflicts of interest
C) Overbilling, bribery, bid-ridding and illegal gratuities
D) economic extortion, bribery, illegal gratuities and corruption

Question 12

SIMULATION __________ means that traditional bribery statutes proscribe only payments made to influence the decisions of government agents or employees.

Question 13

Bid-rigging scheme occurs when:

A) an employee fraudulently assists a vendor in winning a contract through the competitive bidding process.
B) an employee does not assist a vendor in winning a contract through the competitive bidding process.
C) an employee once assists a vendor in winning a contract through a single competitive bidding process.
D) All of the above

Question 14

In Fraud scale pressure, opportunity and integrity variables all results in a list of ___ possible red flags or indicators of occupational fraud and abuse.

A) 81
B) 82
C) 83
D) 84

Question 15

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:

A) Conflict of interest
B) Corruption
C) Bribery
D) Overbilling

Question 16

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.

Question 17

Which of the four basic measures, if properly installed and implemented may help prevent inventory fraud?

A) Proper documentation, segregation of duties, independent checks and physical safeguards
B) Proper documentation, segregation of duties, independent checks and inventory control
C) Proper documentation, physical padding, independent checks and physical safeguards
D) prenumbered affiliations, segregation of duties, independent checks and physical safeguards

Question 18

Which of the following can constitute a bribe, even if the illicit payment is never actually made?

A) Offering a payment
B) Corruption in payment
C) kickback payment
D) Overbilling in payment

Question 19

People commit financial statement fraud to:

A) Conceal false business performances
B) Preserve personal status/control
C) Maintain personal income
D) Stand outside the accounting system

Question 20

Undisclosed payments made by vendors to employees of purchasing companies are referred to as:

A) Bid-rigging
B) Kickbacks
C) Presolicitaion
D) None of the above

Question 21

A ___________ occurs when an employee, manager or executive has an undisclosed economic or personal interest in a transaction that adversely affects the organization.

A) Conflict of interest
B) Illegal sale
C) Unauthorized purchase
D) Financial disclosure

Question 22

When a victim company purchases unnecessary goods or services from a supplier at the direction of the corrupt employee, this results in:

A) Presolicitation scheme
B) Need recognition scheme
C) False sole-source scheme
D) Submission scheme

Question 23

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

A) Gambling habit
B) Extravagant lifestyle
C) Drug and/or alcohol addiction
D) All of the above

Question 24

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

A) Solicit bid from fictitious suppliers
B) Solicit transaction from fictitious vendors
C) Solicit bid-splitting from fictitious vendors
D) None of the above

Question 25

The fraudsters' interest lies with an employer other than a company.

Question 26

In which of the following process, all bidders are legally supposed to be placed on the same plane of equality, bidding on the same terms and conditions?

A) Bid-rigging
B) Kickbacks
C) Competitive bidding
D) Bid solicitation

Question 27

Which of the following is NOT the example of bribery prevention policies?

A) Reporting gifts
B) Discounts
C) Business meetings
D) Resource diversions

Question 28

Which of the following is NOT the phase of the bidding process?

A) Presolicitation
B) Postsolicitation
C) Solicitation
D) Submission

Question 29

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

A) Bid opening
B) Fictitious Bidding
C) Bid pooling
D) Bid log

Question 30

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:

A) Conflict of interest in sale
B) Turnaround sale or flip
C) Unauthorized sale
D) Written sale of unique assets

Question 31

Placing any restriction in the solicitation documents that tend to restrict competition is called prebid solicitation.

Question 32

Collusion or bid-rigging between bidders is called

A) Bribery receipt
B) Bid solicitation
C) To withdraw low bids
D) Contract acceptance

Question 33

Every bribe is a two-sided transaction, in which where a vendor bribes a purchaser, there is someone on the vendor's side of the transaction who is not making an illicit payment.

Question 34

Which of the following is the criterion for bid solicitation?

A) Containing false statements
B) Allowing the purchaser to discuss possible employment with the contractor
C) To withdraw low bids
D) To falsify the bid log

Question 35

A scheme is classified as a Conflict of interest:

A) when an employee must have some kind of ownership or employment interest in the vendor submitting the invoice.
B) when a salesman must have some kind of ownership or employment interest in the vendor submitting the sales.
C) when a purchaser must have some kind of ownership or employment interest in the vendor submitting the purchase.
D) when a dealer must have some kind of dealership interest in the vendor submitting the stock.

Question 36

Which of the following is NOT the reason to bribe employees of the purchaser?

A) To ensure receipt of a late bid
B) To extend the bid opening date
C) To ensure bid-splitting
D) To falsify the bid log

Question 37

The more power a person has over the bidding process, the more likely the person can influence the selection of a supplier.

Question 38

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?

A) Need recognition
B) Solicitation
C) False specification
D) Submission

Question 39

The person or persons who have access to __________ are often the targets of unethical vendors seeking an advantage in the process.

A) Bid-splitting
B) Sealed bids
C) General purchasing
D) Tailor specifications

Question 40

In ____________ scheme, a supplier pays an employee of the purchasing company to write specifications that will require amendments at a later date.

A) Deliberate writing of vague specifications
B) Need recognition
C) False specification
D) Bid-splitting

Question 41

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

A) Fraudulent statement scheme
B) Asset misappropriation scheme
C) Larceny scheme
D) Register disbursement scheme

Question 42

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

A) Maintenance scheme
B) Allocation scheme
C) Distribution scheme
D) Pass-through scheme

Question 43

A person is said to be in ________ act, when the business which he transacts, or the money or property which he handles, is not for his own benefit, but for another person:

A) Fiduciary Capacity
B) Embezzlement
C) Conversion
D) None of the above

Question 44

The essential elements of a ________ are an actual or constructive taking away of the goods or property of another with the without the consent and against the will of the owner and with a felonious intent.

A) Larceny
B) Abuse
C) Fiduciary
D) None of the above

Question 45

Most of the shell company schemes involve the purchase of goods rather than services.

Question 46

A voucher is:

A) a file that includes the purchase order that was send to the vendor, the vendor invoice listing the cost and quantity of items purchased, and the internal receiving reports that verify the purchased items have been delivered.
B) a figure that includes the sale order that was send to the dealer, the vendor invoice listing the cost and quantity of items sold, and the internal receiving reports that verify the purchased items have been delivered.
C) a report that includes the purchase order that was send to the vendor, the vendor invoice listing the quality and quantity of items purchased, and the external receiving reports that verify the items have been sold.
D) a mammogram that includes the purchase order that was send to the purchaser, the purchaser invoice listing the benefits and quantity of items purchased, and the internal receiving reports that verify the purchased items have been sold.

Question 47

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.

Question 48

In ___________ scheme, an employee creates false vouchers or submits false invoices to the employer.

A) Sale requisition
B) Purchase requisition
C) Voucher handling
D) Cash generating

Question 49

Larceny by Fraud or deception means that:

A) Creates or reinforce a false impression
B) Fails to correct a false impression
C) Fails to disclose a known lien, adverse claim or other legal impediment
D) All of the above

Question 50

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

A) Bogus claims
B) Billing scheme
C) Reliance billing
D) Misappropriate claims

Question 51

The seller's price to the buyer is not fixed or determinable when:

A) When the price is not contingent on some future events
B) The transaction includes an option to exchange the product for others.
C) A service or membership fee is not subject predictable cancellation during the contract period.
D) Payment terms are not extended for a substantial period.

Question 52

Which of the following is NOT the type of billing scheme?

A) Invoicing via shell companies
B) Invoicing via non-accomplice companies
C) Invoicing via accomplice companies
D) Personal purchases with company funds

Question 53

Conflict of interest cases are more easily prevented than detected.

Question 54

A fabricated name and the post office box that an employee uses to collect disbursements from false billings is called:

A) Accomplice residence
B) Shell company
C) Perpetrator check
D) Cash generator

Question 55

The most common method for billing scheme is:

A) Register
B) Tips
C) Accident
D) None of the above

Question 56

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?

A) Endorse check scheme
B) Legitimate check scheme
C) Payable check scheme
D) Concealed check scheme

Question 57

Multiple cashiers operate from a single cash drawer without separate access codes is a red flag for:

A) Fraudulent scheme
B) Disbursement scheme
C) Register scheme
D) Force inventory scheme

Question 58

What is sometimes used to overcome well-designed internal controls of a victim company?

A) Shell company
B) Fraudulent invoices
C) Collusion
D) Rubber stamp supervisors

Question 59

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

A) Tips & Complaints
B) Review of vendor ownership files
C) Underbillings of assets
D) Interviews with purchasing personnel

Question 60

__________ is required if and when officers, executives or other persons in trusted positions become subjects of a criminal indictment.

A) Conflict of interest
B) Turnaround sale or flip
C) Disclosure
D) Resource diversion

Question 61

___________ 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.

A) Equity
B) Balance sheet
C) Income statement
D) Financial record

Question 62

Occupational fraud and abuse is a (an) __________ of doing business, in much the same way that we pay expenses for electricity, taxes and wages.

A) Equity
B) Balance sheet
C) Expense
D) Financial record

Question 63

____________ is a summary of the account balances carried in a ledger.

A) Balance sheet
B) Income statement
C) Financial statement
D) General journal

Question 64

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

A) Journal Entries
B) Debit
C) Credit
D) None of all

Question 65

__________ are the amounts which are owned to other entities:

A) Supplies
B) Expenses
C) Assets
D) Liabilities

Question 66

According to Marshall, ______ are probable future economic benefits obtained or controlled by a particular entity as a result of past transactions or events.

A) Assets
B) Liabilities
C) Credentials
D) None of above

Question 67

_________ normally are carried on an organization's books as expenses because they tend to be consumed by the organization within a year of purchase.

A) Supplies
B) Expenses
C) Assets
D) Equity

Question 68

Asset misappropriations have an effect on the liabilities and do also have an indirect effect on the equity account.

Question 69

Which of the following are not of Basic types of non-sharable problems?

A) Violation of ascribed obligations
B) Business reversals
C) Physical Isolation
D) Larceny by Fraud

Question 70

_____________ involves purposeful misreporting of financial information about the organization that is intended to mislead those who read it.

A) Fraudulent statement
B) Corruption
C) Asset misappropriations
D) None of above

Question 71

Asset misappropriation schemes were the "middle children" of the study; they were more common than fraudulent statements and more costly than corruption.

Question 72

A tangible asset is one which is:

A) capable of being perceived
B) capable of being appraised
C) Both A & B
D) Neither A nor B

Question 73

When expenses used to produce income- all of them- should be matched in a consistent manner against that income, this is referred to:

A) Equity
B) Accrual basis accounting
C) Expense
D) Financial record

Question 74

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.

Question 75

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

A) Journal Entries
B) Accounting Cycle
C) Financial statement
D) None of all

Question 76

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:

A) Tangible Assets
B) Intangible Assets
C) Forced Assets
D) None of above

Question 77

Any expenses that are incurred but not paid by the end of the year are counted in our records of profit and loss, are called:

A) Accruals
B) Depreciations
C) Expenses
D) Financial record

Question 78

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

A) Journal Entries
B) Debit
C) Credit
D) None of all

Question 79

The heart of book keeping system is the ___________.

A) Asset
B) Liability
C) Checkbook
D) Journal

Question 80

The difference between assets and liabilities is called:

A) Equity
B) Expense
C) Revenue
D) Income statement