CFE-Financial-Transactions-and-Fraud-Schemes Exam Dumps - ACFE Certified Fraud Examiner Questions and Answers

Detailed Explanation:

Rationale for Correct Answer:When a single employee is responsible for opening the mail and recording payments, the risk of theft of incoming checks is greatest. This lack of segregation of duties allows one person both custody of funds and recordkeeping authority, a classic internal control weakness.

Analysis of Incorrect Options:

B & C – Involving two or more employees provides better segregation of duties, reducing the risk.

D. None of the above – Incorrect since option A directly matches.

Key Concept:Segregation of duties to prevent skimming/theft of incoming checks.

Detailed Explanation:

Rationale for Correct Answer:Insider cyberfraud thrives in environments where monitoring is weak. If access logs are not reviewed, malicious activity can go undetected, enabling fraud.

Analysis of Incorrect Options:

B. Programs run during business day – Normal IT operations, not a fraud risk.

C. Restricted access – This is a preventive control, not a facilitator.

D. Separation of duties – Strong control, prevents insider fraud.

Key Concept: Conditions facilitating insider cyberfraud.

Detailed Explanation:

Rationale for Correct Answer:Tangible assets are those that can be physically perceived (touched, seen, etc.) and appraised (assigned a measurable value). Examples include buildings, land, equipment, and inventory. Both characteristics are correct, making C the best choice.

Analysis of Incorrect Options:

A. Capable of being perceived – True, but incomplete.

B. Capable of being appraised – True, but incomplete.

D. Neither A nor B – Incorrect since both statements are accurate.

Key Concept:Tangible Assets — physical and measurable property owned by a business.

Detailed Explanation:

Rationale for Correct Answer: Social engineering involves manipulating or deceiving people into revealing confidential information or taking actions that aid the attacker (e.g., clicking malicious links, sharing credentials). It targets human weaknesses rather than technical vulnerabilities.

Analysis of Incorrect Options:

A. IP spoofing – Forging an IP address to disguise origin.

B. Electronic piggybacking – Unauthorized use of someone else’s access connection.

C. Packet sniffing – Monitoring data traffic across a network.

Key Concept: Cyberfraud techniques – social engineering.

Detailed Explanation:

Rationale for Correct Answer: Skimming is the theft of incoming cash before it is recorded in the books. Since the payment is never recorded, no audit trail exists, making it an “off-book” scheme.

Analysis of Incorrect Options:

A – Incorrect; skimming can involve both sales and receivable payments.

C – Incorrect; skimming is off-book, not on-book.

D – Incorrect; skimming is typically harder to detect than larceny, since there is no record.

Key Concept: Skimming vs. larceny – off-book theft of cash receipts.

Detailed Explanation:

Rationale for Correct Answer:Weak or poor collection and recording procedures create opportunities for employees to skim. Without strong controls over cash receipts and documentation, employees can divert funds without detection.

Analysis of Incorrect Options:

A. Revenue sources and recording procedures – Too general; it is weak procedures that matter.

C. Internal audits and recording procedures – Audits help detect fraud, not enable it.

D. Register manipulations and recording procedures – Describes concealment, not the root cause.

Key Concept:Control weaknesses enable skimming.

Detailed Explanation:

Rationale for Correct Answer: In collusive bidding, contractors coordinate to submit artificially high or uniform bids, with the appearance of competition. If all contractors submit bids that are consistently low relative to norms, it may indicate collusion to fix prices and share markets.

Analysis of Incorrect Options:

A – More competitors reduces collusion risk, not increases it.

C – Declining prices with new competition is expected in free markets.

D – Not subcontracting is not a standard collusion red flag.

Key Concept: Procurement fraud red flags – bid rigging and collusion.

Detailed Explanation:

Rationale for Correct Answer:W. Steve Albrecht’s Fraud Scale introduced the relationship between pressure, opportunity, and integrity. He and his colleagues identified 81 red flags or behavioral indicators of occupational fraud and abuse based on these three dimensions. Therefore, the correct answer is A. 81.

Analysis of Incorrect Options:

B. 82 / C. 83 / D. 84 – Distractors; none match the number identified in the fraud scale research.

Key Concept:Fraud Scale — Red Flags of occupational fraud.

Detailed Explanation:

Rationale for Correct Answer:Net realizable value (NRV) is the estimated selling price of an asset in the ordinary course of business, minus any costs of completion, disposal, or transportation. This is often applied in valuing accounts receivable and inventory.

Analysis of Incorrect Options:

B. Going concern – Assumption of business continuity, not asset valuation.

C. Cost – Historical cost, not future realizable value.

D. Fair value – Current market-based measure, not net proceeds after costs.

Key Concept:Net realizable value — valuation method for receivables and inventory.

Detailed Explanation:

Rationale for Correct Answer:The balance sheet provides a snapshot of a company’s financial position at a specific date. It shows assets, liabilities, and equity, allowing stakeholders to assess book value and solvency.

Analysis of Incorrect Options:

A. Equity – A component of the balance sheet, not the full report.

C. Income statement – Shows performance over a period, not book worth at a date.

D. Financial record – Too general.

Key Concept:Balance Sheet as a tool for determining book worth at a point in time.