Coach CFE Practice Exam

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• Jason, a server, swipes a customer's card when he has his back turned, in a scheme to steal credit card information. This is known as credit card ________.
• Vertical analysis can best be described as a technique for analyzing the percentage change in individual financial statement line items from one accounting period to the next.
• The asset turnover ratio is calculated by dividing net sales by average total assets.
• Which term describes the act of demanding money or other considerations to influence a business decision through the use of force or fear?
• A property flipping scheme involves purchasing real estate and reselling shortly after at an unjustly inflated value.
• Which of the following best describes the difference between a flipping scheme and a flopping scheme in mortgage fraud?
• Which practice is recommended to strengthen employee authentication and access control when safeguarding proprietary information?
• Which of the following is NOT a typical fraud scheme by health care institutions and their employees?
• What is another term for unbundling in coding fraud?
• Elizabeth’s workers' compensation fraud is classified as which type of fraud?
• Which statement about mandatory vacations is true?
• Which of the following is NOT typically classified as a current asset?
• Which statement is true about the balance sheet?
• Dumpster diving can yield bills, credit card receipts, bank statements, and other items that contain a person's name, address, and telephone number.
• Which of the following is NOT a common red flag of procurement fraud schemes involving collusion among contractors?
• What should you do if you receive an unsolicited email requesting personal information?
• In a construction loan, the purpose of developer overhead is to provide:
• Which scenario is an example of economic extortion?
• What fraud scheme involves an employee with signature authority writing fraudulent checks for personal benefit?
• Examiners in Chapter 11 bankruptcy have the power to subpoena records and depose witnesses, but they do not run the business or propose plans.
• In a pay and return scheme, what is the typical sequence of events?
• What is the primary difference between a Ponzi scheme and an illegal pyramid?
• In inventory fraud schemes, what might conspirators sometimes claim?
• Research and development (R&D) personnel often inadvertently divulge confidential information through which of the following?
• The assumption that a business will continue indefinitely is reflected in the accounting concept of:
• Which statement describes a noncompete agreement?
• Which of the following is true about the quick ratio?
• ABC Company purchases a material amount of products from another entity whose operating policies can be controlled by ABC Company's management but does not disclose this situation on its financial statements. What type of improper disclosure scheme is this?
• Under GAAP, what amount should Julia's printing press be listed on the books?
• The quick ratio is commonly referred to as the acid-test ratio.
• The statement of changes in owners' equity connects which two financial statements?
• Jill creates a fraudulent receipt to obtain reimbursement for a fictitious expense. Which type of scheme is this?
• Which statement about brokered loans is true?
• During nonconforming goods investigations, what step involves isolating and tracing the suspect goods to their origin?
• Undisclosed payments made to obtain favorable treatment are best described as which term?
• Which factor most enables account takeover schemes?
• Green's scheme is best classified as which type of fraud?
• Which practice is a red flag of bid splitting schemes?
• Rowena notices unusual characteristics in bidding documents: ten contracts awarded to the same contractor with unreasonably narrow specifications. Which procurement fraud scheme is most likely?
• All of the following statements about identity theft are true EXCEPT which one?
• A large amount of overdue accounts receivable on the books is a red flag of a fictitious revenue scheme.
• Which option describes not one of the three types of loans often used in corrupt payments?
• True/False: Developer overhead should not include a profit percentage.
• Samantha's mobile lab scheme is best described as which?
• Bradley detected indicators suggesting brokered loan fraud in a recently acquired loan portfolio. Which fraud scheme does this most likely represent?
• Which of the following is NOT a common type of credit card fraud?
• Which of the following statements describes reverse social engineering?
• Which action is NOT a method used to conceal inventory shrinkage?
• Under GAAP, revenue and the corresponding expenses should be recorded in the same accounting period.
• Which term describes the unaccounted-for reduction in a company's inventory resulting from error or theft?
• All organizations with a pyramid structure are illegal.
• Reconciling the cash register total to the cash in the drawer is an effective method to detect a cash larceny scheme.
• Pharming differs from phishing in that in pharming the attacker:
• Julia is performing tests by comparing payroll records to HR files. Which fraud scheme is she most likely looking for?
• Most shell company schemes involve the purchase of fictitious what?
• Non-repudiation in e-commerce is achieved through which methods?
• Calendars and schedules displayed at an employee's workstation can inadvertently provide a company's competitors with valuable proprietary information.
• Which statement is TRUE regarding an overstated refund scheme?
• Which of the following is a method by which inventory can be improperly stated?
• ABC Corporation is involved in a class-action lawsuit for defective products. Management believes that the company will lose and pay significant damages. The company does not have to disclose a liability related to the lawsuit in its financial statements. True or False?
• The Office of Foreign Assets Control is an office within the U.S. Department of the Treasury charged with administering and enforcing U.S. sanction policies against targeted foreign organizations and individuals that sponsor terrorism and international narcotics traffickers.
• Which statement best defines a computer worm?
• Which of the following appears on the balance sheet?
• Which describes common methods to conceal liabilities and expenses?
• The quick ratio is used to determine the efficiency with which a company uses its assets.
• Which device is commonly used to skim data from the magnetic stripe on ATM cards?
• Which financial statement shows a company's financial position at a specific point in time?
• When management avoids a risk by eliminating an asset, what analysis must the fraud risk assessment team perform?
• Excessive write-offs are a form of concealment for phantom loans, embezzlement, and conflicts of interest. Therefore, if all write-offs are subject to management review before they are written off, management reduces the potential environment for fraud.
• A non-competition agreement continues after the employee leaves the company.
• Which term describes attackers using botnets to disseminate large volumes of phishing emails?
• Green's scheme is best classified as which type of fraud?
• Common methods of inflating health care billings include all of the following EXCEPT:
• Which ratio is calculated by dividing current assets by current liabilities?
• Which set of items would you expect to find on the balance sheet?
• Lapping of receivables is best described as a fraud where:
• Which insurance scam describes getting insurance after an accident and then reporting the damage to collect for the earlier loss?
• What effect would the improper recording of an expenditure as a capitalized asset have on the financial statements?
• Which combination of factors in a multilevel marketing organization is a red flag for illegality?
• An insurance company might be guilty of fraud if it fails to pass on the fee breaks it negotiates with its providers to its consumers.
• Automatic debit program schemes occur when fraudsters obtain a consumer's bank account information and then use this information to draft money from the consumer's bank account without that person's consent. This statement is:
• Which of the following statements correctly identifies the financial statement that details the changes in the total owners' equity amount listed on the balance sheet?
• Which of the following types of accounts are increased by credits?
• What is the primary purpose of an exception report in fraud detection?
• A register disbursement scheme is easier to conceal when register employees have the authority to void their own transactions.
• Loyalty accounts are attractive targets for fraud for which of the following reasons?
• Which of the following methods would be most efficient for detecting large embezzlements?
• A data classification policy helps organizations assign different protections based on data value and sensitivity.
• The accounts receivable clerk should be responsible for preparing the bank deposit.
• Brittany, a cash register teller, rang a 'no sale' transaction to open the drawer, and then removed a large sum of money. Which of the following schemes has taken place?
• The quick ratio is used to determine the efficiency with which a company uses its assets.
• Frequent check deposits in round numbers or for the same amount and checks written to individuals for large, even amounts might be indicators of which type of fraud?
• What is a recommended practice regarding government identification numbers?
• The asset turnover ratio is typically calculated by dividing net sales by which of the following?
• Which of the following is a recommended step that businesses should take to protect their customers and employees from identity theft?
• What technique is commonly used in genuine holograms to prevent counterfeiting?
• Which of the following is a common sign of fictitious revenue schemes?
• Which of the following best defines a Trojan horse?
• Which steps are taken during an account takeover scheme?
• Which practice is a method for concealing liabilities and expenses?
• Electronic data interchange (EDI) leaves no paper trail, making fraud detection more difficult for fraud examiners.
• Which group is NOT a favorite target of identity thieves?
• Which of the following is NOT a red flag of fraudulent insurance claims?
• Which statement best defines a nondisclosure agreement?
• Which collusion scheme involves two or more contractors refraining from bidding or withdrawing a previously submitted bid?
• The motivation for financial statement fraud almost always involves personal gain.
• When a task force is charged with safeguarding proprietary information (SPI), what should be the first step that it takes?
• Pass-through schemes are usually undertaken by employees who receive inventory on the victim company's behalf.
• When an employee signs a legally enforceable non-competition agreement, the provisions continue after the employee leaves.
• A draw request on a construction loan should be accompanied by all of the following EXCEPT:
• Mario is writing down customers' account numbers and passwords to fraudulently use them for online purchases. This constitutes which type of fraud?
• What type of scheme involves forming a shell company to purchase goods and resell them to the employer at an inflated price?
• Under HIPAA's criminal statutes, which action is prohibited as part of the health care fraud provisions?
• To prevent overstating inventory on the balance sheet, which actions should auditors take?
• The type of fraud that targets groups of people who have some social connection is known as:
• Which situation is a red flag for medical device fraud related to researchers or hospitals?
• What is the term for adjusting the perpetual inventory to match the physical count without proper adjustment entries?
• Which of the following practices is a potential indicator of a bid splitting scheme?
• The removal of cash from a victim organization before the cash is entered in the organization's accounting system is:
• Which of the following is a red flag of fraudulent register disbursements?
• Falsified prescriptions, excessive supplies, and scooter scams are fraud schemes commonly involving which health care entity?
• Which statement best describes how a fraudster would conceal inventory shrinkage?
• Skimming schemes can involve the theft of cash sales or the theft of accounts receivable payments.
• Positive pay is a system by which the bank verifies checks presented for payment against the list provided by the company of approved checks.
• Financial identity theft often involves which of the following actions?
• Zach inflated the price on a travel receipt and sought reimbursement. This is an example of what type of fraud scheme?
• Generally, if the dollar amount of an embezzlement scheme at a financial institution is small enough such that the targeted entity's financial statements will not be materially affected, the scheme can be most effectively detected through which of the following methods?
• Debits increase which types of accounts?
• The Health Insurance Portability and Accountability Act (HIPAA) of 1996 added which offenses to the federal criminal code?
• If an accountant fails to write down obsolete inventory to its current fair market value, what effect does this have on the current ratio?
• Sean falsifies a timesheet to inflate hours and then forges a supervisor's signature before delivering it to payroll. This is an example of:
• In a fictitious revenue scheme, what happens to accounts receivable if the customers never pay?
• Which scheme describes a clerk creating a fictitious company and billing the employer for services that were never rendered?
• Early revenue recognition is a common example of what type of financial fraud scheme?
• Which of the following is a common avenue through which proprietary company information is compromised?
• Which of the following is an example of the piggybacking method used to gain access to restricted areas?
• Gaps in the sequence of transactions on the register log might indicate that a fraudulent register disbursement scheme is taking place.
• What term best describes billing separately for components of a single procedure to boost reimbursement?
• To conduct an electronic payment using a person-to-person (P2P) system, the two individuals must meet in person at a financial institution to sign an order requesting the transfer of money from one person's account to the other.
• Which of the following is NOT an effective control to protect against skimming schemes?
• Mario is writing down account numbers and passwords of customers to fraudulently use them to pay for items he purchases online. This is an example of which fraud type?
• Which of the following is not a red flag in bid tailoring, according to the listed indicators?
• Encryption should be used to protect all personal information stored by a company or sent to third parties.
• Sheila's unauthorized purchases for a company she owns are an example of which type of occupational fraud?
• After paying the ransom demanded by a ransomware attacker, you are guaranteed access to all locked files.
• Why is theft using someone else’s login to steal cash from a register not classified as a skimming scheme?
• James, a government purchaser, is told that if he awards ABC $5 million in contracts, ABC will hire him later at a higher salary; no money changes hands. Is this bribery or corruption?
• If nonconforming goods are suspected, which action might a fraud examiner take after the fact?
• Which item is excluded from the quick ratio calculation?
• Which statement best describes bid specifications in procurement?
• Which of the following are examples of fraudulent kickbacks in the health care industry?
• Michael, a medical provider, performs an appendectomy but submits two codes for the same procedure. Which scheme best describes this behavior?
• The quick ratio is commonly referred to as the acid-test ratio.
• Which of the following is NOT a type of loan that frequently turns up in corruption cases?
• Which of the following is NOT a symptom that might indicate a malware infection?
• Register disbursement scheme is best described as which transaction?
• Which of the following is NOT commonly listed as a category for improper asset valuations?
• Which practice reduces the risk of account takeover?
• Brittany, a cash register teller, signed onto her register, rang a 'no sale' transaction to open the drawer, and then removed a large sum of money. Which scheme has taken place?
• In the air loan scenario, which description best fits an air loan?
• In procurement fraud, which scenario is most likely indicated by high return rates for nonconforming goods, missing compliance certificates, and evidence of falsified test results?
• If a customer reports the loss or theft of an access device, should the financial institution cancel the existing card, PIN, or other access and issue a new one?
• To aid in detecting cash larceny, who should make the bank deposit?
• Bid rotation is a form of collusion where contractors alternate the business among themselves.
• In shell company schemes, why do perpetrators prefer billing for consulting services rather than tangible goods?
• Of the following, who should conduct physical observations of a company's inventory to prevent inventory theft?
• In organized fraud schemes, the united-effort participants typically include which of the following?
• Missing documents in a loan file are generally not a red flag for loan fraud.
• In fictitious revenue schemes, what happens to revenue accounts at the end of the accounting period?
• Which of the following is a red flag indicating fraudulent register disbursements?
• Which practice helps detect cash fraud by providing independent oversight?
• Lindsey, a medical provider, makes monetary payments to existing patients and other providers for referring new patients. What is this scheme called?
• Defective pricing schemes often inflate labor costs by which method?
• Which of the following is an administrative security control?
• Which statement is TRUE?
• In a fictitious revenue scheme, which account is debited to balance the entry?
• Falsely increasing the perpetual inventory balance and failing to reconcile inventory records are ways a fraudster might conceal inventory shrinkage.
• Which statement best describes a data classification policy?
• Which statement about ransomware is TRUE?
• Vertical analysis expresses components as percentages of a base value within the financial statements.
• When fabricating a counterfeit credit card, which feature is the most difficult to reproduce?
• Grey, a controller for a small company, took money from company deposits and concealed the theft by making false accounting entries. This scheme is best classified as which type?
• Which measure should be included in a data breach response plan?
• In the bid evaluation and award phase, which activity is performed by the procuring employees?
• Bank statements should be reviewed and reconciled by more than one person each month.
• Which statement about HIPAA's criminal statutes is true?
• Which types of accounts are decreased by debits?
• Which statements are true regarding detecting a cash larceny scheme?
• Which is a common red flag for fictitious revenue schemes?
• Which of the following is NOT a common method for concealing liabilities and expenses?
• Departures from GAAP can be justified in which circumstances?
• What term describes an automated process used to guess a system user's password?
• Non-repudiation in e-commerce is obtained through digital signatures, confirmation services, and timestamps.
• Posing as a job applicant in interviews as a data-gathering tactic used by competitive intelligence professionals illustrates which concept?
• Large businesses are usually at greater risk for business identity theft than smaller ones.
• Which description best defines social engineering?
• Which COSO component focuses on evaluating internal control deficiencies and communicating them to those responsible for corrective action, including senior management and the board?
• Fraudulent kickbacks in the health care industry can include which of the following?
• What type of fraud scheme involves creating a fictitious entity to receive payments for forged invoices?
• Which of the following would NOT be included on a fraud indicators list for health care program beneficiaries?
• Which action might be used to conceal a sham loan transaction by disguising the true purpose?
• Which of the following is NOT a method used in bid tailoring schemes?
• Which statement about related-party transactions is correct?
• Cash theft schemes fall into two categories: skimming and cash larceny. Which statement correctly describes these categories?
• Which of the following is NOT one of the key phases of procurement processes that use competitive bidding mechanisms?
• Which of the following statements regarding e-commerce is TRUE?
• Which real estate loan scheme would be best described as an air loan?
• Which of the following is the most accurate definition of a firewall?
• The accounting principle that requires including information necessary for users to make valid decisions is known as full disclosure.
• Which is a technical or administrative control for securing computer systems and communication networks?
• Which scheme did Zane engage in when using the same collateral to secure multiple loans from different lenders before liens were recorded?
• Tanya inflates the amount of customer refunds at a department store. This scheme is known as:
• _____ is the deliberate misrepresentation of the financial condition of an enterprise accomplished through the intentional misstatement or omission of amounts or disclosures in the financial statements to deceive financial statement users.
• In a loan participation, which bank generally performs the underwriting, and what is expected of the participating bank?
• In evaluating potential nonconforming goods, which items should be inspected to determine conformity?
• Which statement about corrupt payments is INCORRECT?
• In a fictitious refund scheme, which statement is true?
• Sales and cost of goods sold generally move together unless there have been changes in purchase prices, quantities purchased, or quality of products. Which statement is true?
• Which of the following is NOT a category of workers' compensation schemes?
• In a fictitious void scheme, what is the primary fraud objective?
• Which of the following is a common method used in bid manipulation schemes?
• Which of the following is the best description of what is shown on a company's income statement?
• All of the following are types of medical provider fraud EXCEPT:
• Which formula correctly defines the quick ratio?
• Which method might be used to conceal a sham loan transaction in which the loan officer receives part of the proceeds (kickback)?
• Which of the following is the best description of what is shown on a company's income statement?
• Janice should look at which of the following reports to assess an anonymous tip about potential claims fraud?
• Failure to record corresponding revenues and expenses in the same accounting period will result in an understatement of net income in the period when the revenue is recorded and an overstatement of net income in the period in which the corresponding expenses are recorded.
• Which situation is often present in real estate fraud schemes?
• Which statement describes factoring groups' practice in relation to telemarketing operations?
• When developing a program for safeguarding proprietary information (SPI), an organization should form a company task force to develop the program, and the task force should include representatives from relevant departments across the company, such as research and development (R&D), corporate security, and records management.
• Which pairing correctly describes theft before vs after funds appear on the books?
• Which of the following is NOT an appropriate technique for detecting nonconforming goods or services schemes?
• Illegal gratuities differ from bribery mainly because they do not necessarily involve which element?
• Electronic piggybacking occurs when an attacker takes advantage of a legitimate computer user's active session.
• In a pass-through scheme, what does the employee do after purchasing through a shell company?
• A quick ratio of 1.5 indicates the company has how much liquid assets per dollar of current liabilities?
• Which statement about debits and credits is true?
• Which password practice is recommended for protecting personal information online?
• Which element is NOT part of the Howey four-factor test?
• Which of the following is NOT one of the four most common types of expense reimbursement schemes?
• A detailed expense report should contain which of the following components?
• Shell companies are typically created for what purpose in fraud schemes?
• In the described scenario, Molly and Jessica committed which type of scheme?
• Which method can be used to destroy or manipulate data?
• When a fraudster calls someone at the target company and cajoles or tricks the person into providing valuable information, this technique is referred to as which?
• Which statement about smart cards is true?
• Which type of malware can generate illicit income via cryptocurrency and slow down devices?
• The primary purpose of a quiet room is to prevent corporate spies from listening in on meetings.
• Which of the following is a possible form of corrupt payment?
• A common red flag of brokered loan fraud includes which of the following?
• Examples of fraud schemes perpetrated by health care institutions and their employees include all of the following EXCEPT:
• The auto insurance scheme where the insured reports a vehicle stolen to collect on a policy is known as?
• Bank reconciliations should be performed by an authorized signatory on the account.
• Which of the following is a common area for construction loan fraud schemes?
• Which analysis type evaluates the percentage change in line items from one period to the next?
• Which party is responsible for overseeing business operations by assessing the strategy and underlying purpose of management's decisions and actions?
• Which financial statement shows a company's financial position at a specific point in time?
• Which action would not be considered a red flag of bid tailoring?
• Which of the following is the most common type of identity theft?
• Which is a common red flag of defective pricing procurement fraud schemes?
• Bradley uncovered which type of fraud?
• In bid tailoring, which method involves drafting unduly broad qualification standards to qualify an otherwise unqualified contractor?
• What happens when an employee records a fictitious refund?
• Grey, a controller for a small company, took a large sum of money from the company deposits and concealed the theft. The money had already been recorded in the accounting system. This scheme is best classified as which?
• Payers can make corrupt payments by giving recipients hidden interests in profit-making enterprises.
• Rock phishing is a type of phishing scheme that uses text messages or other short message systems to dupe an individual or business into providing sensitive data.
• Which pattern is a red flag for collusion in bidding?
• Is the asset turnover ratio used to assess a company's ability to meet sudden cash requirements?
• Which of the following illustrates a common form of collusion among competitors to defeat the competitive bidding process?
• Assets, Liabilities, and Owners' Equity are all items that appear on a company's balance sheet.
• The solicitation phase of procurements involving open and free competition includes which activity?
• Which of the following is NOT an acceptable justification for departing from GAAP?
• Which of the following is a recommended step that individuals should take to protect themselves from identity theft?
• Which of the following is a common reason why people commit financial statement fraud?
• Which statement correctly describes horizontal analysis?
• Which of the following is an acceptable justification for a departure from generally accepted accounting principles (GAAP)?
• After paying the ransom demanded by the attacker, the decryption key is always provided.
• Which of the following is a bid-splitting red flag where multiple procurements from the same supplier fall just under the bidding threshold?
• Loyalty accounts are attractive targets for fraud for which of the following reasons?
• Notes payable are best described as:
• The equipment needed to run a check fraud ring is very expensive and difficult to obtain. True or False?
• Eliminating an asset or discontinuing an activity because the cost of protective controls is too high is an example of which risk response?
• Which statement about the pre-solicitation phase is true?
• What are the four main classes of attacks on smart cards?
• Which scenario is an example of economic extortion in politics or business?
• The asset turnover ratio is used to determine the efficiency with which asset resources are used by the entity.
• Which situation would be MOST indicative of a customer committing new account fraud at a bank?
• Which statement best describes timing differences?
• A forged maker scheme is a check tampering scheme in which an employee signs the third party's name on the check's endorsement line.
• Which of the following combinations identifies information security goals an e-commerce system should meet for users and asset holders?
• Why is the health care industry concerned about EDI fraud?
• What is the correct accounting equation?
• Which describes fraud perpetrated by medical practitioners, medical suppliers, or medical institutions on patients or health care programs to increase their own income by illicit means?
• Non-repudiation refers to a method used to guarantee that parties involved in an e-commerce transaction cannot deny their participation.
• Which statement about the balance sheet is true?
• Which of the following best illustrates technical surveillance for corporate espionage?
• Which tactic has fraudsters used to disguise inventory by altering the apparent value of goods?
• In which scenario might a credit card skimming scheme be conducted?
• Which statement correctly describes pharming as an attack?
• Which of the following is a red flag indicating embezzlement in source documents?
• Which items are typically classified as current assets?
• Which statement best describes an understated sales scheme?
• Entries to the left side of an account are referred to as credits, while entries to the right side of an account are debits.
• Implementing privilege escalation and using buffer overflow exploits are examples of administrative controls used to secure computer systems.
• Which action involves reducing inventory to reflect obsolescence and current market value?
• Due to the paper trail involved and the emphasis placed on the problem by law enforcement, the vast majority of check fraud offenders are pursued and prosecuted.
• Which of the following is NOT a problem situation regarding a construction loan that might be concealed using change orders?
• Fidelity insurance covers which type of loss?
• Regarding the quick ratio, which statement is correct?
• A medical provider billed for a name-brand drug while providing the patient with a generic version. This inflated billing scheme is known as which of the following?
• Failing to record bad debt expense for the period will result in fraudulently overstated accounts receivable.
• Which of the following is NOT a payroll scheme type?
• In procurement with competitive bidding, four basic stages can be identified. Which phase includes post-award and administration activities?
• Real estate scams are easily recognized because there is almost always an element of time pressure or a now-or-never pitch.
• In order to understate net income, therefore lowering income tax liability, an accountant could fraudulently expense costs rather than properly capitalizing them to an asset account.
• What describes a ghost employee?
• Which statement best describes the timing difference between larceny and skimming?
• Which statement about P2P payment systems is accurate?
• At the end of a fiscal year, are income statement accounts reduced to zero balance?
• If a customer reports the loss or theft of an access device, which action should be taken?
• Frequent check deposits in round numbers or for the same amount and checks written to individuals for large, even amounts might be indicators of check fraud.
• Which statement describes claimant fraud?
• Which of the following enables fraudsters to convert loyalty points into sellable items such as gift cards?
• Which control helps prevent EFT fraud by verifying addresses and identity?
• Which of the following is NOT a principal type of billing scheme?
• Which statement best describes a Ponzi scheme?
• Which statement best describes the audit‑trail difference between skimming and cash larceny?
• Which term best describes a loan that exists primarily to facilitate fraud by appearing legitimate?
• Which of the following is a classic red flag of a Ponzi scheme?
• What term describes potential obligations that will materialize only if certain events occur, such as a corporate guarantee or ongoing litigation?
• An understated sales scheme involves which of the following?
• Which of the following is NOT considered a red flag of a Ponzi scheme?
• Which of the following is a typical malware symptom?
• Generally, if the dollar amount of an embezzlement scheme is small such that the financial statements are not materially affected, the scheme can be most effectively detected through which method?
• Which tactic describes moving inventory overnight between locations to conceal shortages?
• Under GAAP, which basis is typically used to record assets?
• Which of the following is most indicative that the winning bid on an original construction project was not feasible?
• An altered payee scheme typically involves altering the payee line to insert a different name on a check. Which element is most characteristic?
• Which of the following describes a red flag indicating a lack of transparency in a Ponzi scheme?
• Which practice supports strong password security?
• Visitors to a company's facilities should be allowed unrestricted access as long as they have signed in as a visitor in the company's logbook and have been issued a visitor's badge.
• Under the going concern principle in GAAP, if substantial doubt exists about a company's ability to fulfill obligations, it must be disclosed.
• Which example best illustrates a mischaracterized reimbursement expense scheme?
• Which of the following does NOT help prevent a computer from being infected by malicious software?
• Which GAAP principle requires corresponding expenses and revenue to be recorded in the same accounting period?
• Placeholder to ensure 15 questions are met in the dataset.
• Nondisclosure agreements are generally an expensive and inefficient means of protecting an organization's proprietary information.
• Which statement justifies a departure from generally accepted accounting principles (GAAP)?
• Scooter scams involve billing for electric-powered wheelchairs that are either unnecessary or of poorer quality than the billed model.
• Billing for experiments with new medical devices that have not yet been approved by a health care authority is considered a form of medical fraud.
• Which of the following are red flags of insider computer fraud?
• During the bid evaluation and award phase, procuring employees typically conduct discussions and negotiations and may give bidders an opportunity to revise their proposals.
• Which of the following is the most accurate definition of a software keylogger?
• Which of the following is a technical or administrative control for securing computer systems and communication networks?
• Under the COSO Internal Control framework, monitoring should include both ongoing evaluations and periodic, separate evaluations. Is this true or false?
• Which statement describes simple unbundling?
• All of the following are types of expense reimbursement schemes EXCEPT:
• A favored device of phony charities is to send school-age children door to door to claim they are raising money for anti-drug programs or for a group that takes underprivileged kids on trips. This claim is True or False?
• Which of the following is a red flag in source documents that might indicate embezzlement through manipulation of those documents?
• Unauthorized personal use of a company vehicle constitutes asset misappropriation.
• In Acme Widgets' conflict of interest scenario, which statement is MOST accurate regarding the chances of success in a lawsuit?
• Which measure is commonly used to protect mail and sensitive documents?
• Maria, a successful restaurateur, has been informed of an unusually attractive investment opportunity by a recent acquaintance and decides to invest in it. Several months and a couple of underwhelming payments later, Maria grows frustrated with the diminishing disbursements and attempts to withdraw her money. After several weeks of delay, she realizes that the promoter seems to have vanished, along with her investment. Maria is the victim of which of the following fraudulent ploys?
• Fictitious inventory schemes typically involve fake documents such as:
• A pyramid scheme is designed to pay off its earliest investors.
• What is the primary purpose of the diagnostic-related groupings (DRG) reimbursement method?
• Which of the following is NOT a common ATM fraud scheme?
• How does positive pay facilitate check fraud prevention?
• Which of the following is true about the quick ratio?
• Which of the following best describes phishing?
• All of the following are measures helpful in preventing cash larceny EXCEPT?
• Which of the following is NOT a common carrier of malware?
• Management has an obligation to disclose all events and transactions in the financial statements that are likely to have a material effect on the entity's financial position.
• Which statement best describes what a firewall may use to decide traffic to permit?
• Which statement correctly describes positive pay for ACH?
• What is a recommended disposal practice for sensitive documents and data-bearing devices?
• Which measure is intended to guard manual file systems against misappropriation?
• Posing as a job applicant to interview with key employees at a target company is best described as which practice?
• Electronic payment tampering is generally easier to detect than traditional check tampering.
• Jacob submitted a receipt for dinner as 'client entertainment' and described the dinner as business; what type of expense-reimbursement scheme did he commit?
• What is the primary purpose of an ACH filter?
• Which statement best describes the difference between cash larceny and a register disbursement scheme?
• If employees are aware that surprise cash counts are conducted, they will generally be less inclined to commit a cash larceny scheme.
• The accounting concept of consistency prohibits any change in accounting principle previously employed.
• Publicly available information that anyone can lawfully obtain by request, purchase, or observation is known as which of the following?
• Under the concept of consistency, changes in accounting principles must be justifiable.
• In investigating whether financial statements have been manipulated to appear more profitable, a fraud examiner should look for liabilities that have been:
• Which activity is part of the presolicitation phase?
• During an account takeover, criminals commonly alter the account's contact information to keep the owner unaware.
• Which of the following is NOT a recommended practice for protecting personal information?
• Why is the current ratio a focus for lenders in assessing a company's financial health?
• Wealth in a virtual economy can be generated only by spending significant time and effort participating in massively multiplayer online gaming platforms.
• Which statement is true about the SDN list maintained by OFAC?
• The following statement is true: A financial fund operator who insists that investors continually reinvest their profits, rather than take payouts, is a red flag of a Ponzi scheme.
• In double-entry accounting, every transaction has both a debit and a credit side, and these sides will always be equal.
• Shimming devices are used to target chip-based cards in ATM fraud.
• Which department is NOT among common targets for intelligence gathering?
• The concealment technique where one customer’s payment is credited to another customer's account is called which method?
• Which of the following does NOT happen in a fictitious refund scheme?
• Which of the following is NOT a principal type of billing scheme?
• The asset turnover ratio is used to determine the efficiency with which asset resources are used by the entity.
• What type of scheme did Jackson commit when a warehouse receiving clerk stole inventory and manipulated receiving reports to conceal the theft?
• When looking at a set of financial statements, on which statement would you find Notes payable, Current assets, Retained earnings, and Accumulated depreciation?
• Which type of procurement fraud scheme involves procurement employees who convince their employer that it needs excessive or unnecessary products or services?
• Which scenario is an example of a conflict of interest?
• In construction project underwriting, fraud examiners should look for abnormal patterns in change orders.
• What does the statement of changes in owners' equity detail?
• When should an employee be informed about the confidentiality of proprietary information, and what information is confidential?
• Special care facilities generally have the capability to meet all patients' needs in-house, leading to a lower likelihood of fraud.
• The accounting assumption that a business will continue indefinitely is called what?
• Which statement about fictitious revenue schemes is TRUE?
• Telemarketing schemes target individuals, not businesses.
• Which description best characterizes skimming in fraud terms?
• Cooper's approach is an example of:
• In a grandparent scam targeting the elderly, which approach can help confirm if a caller is the grandchild?
• Which of the following is NOT a recommended prevention method for identity theft in businesses?
• How does embezzlement generally affect the current ratio?
• At the end of each fiscal year, the accounts reflected on the income statement are reduced to a zero balance.
• Which of the following is a red flag for new bank account fraud?
• A clerk memorizes a coworker's access code, logs into the cash register, and steals cash from the drawer after a single sale. What type of fraud scheme is this?
• Which statement about workers' compensation fraud schemes is TRUE?
• Which of the following is a red flag for insider computer fraud?
• Which of the following is a red flag of testing or inspection results that should raise concern about nonconforming goods?
• Which measure would be helpful in detecting a skimming scheme?
• Karl forges ownership documents to a non-resident property owner, borrows against the property. This scheme is best described as?
• What is the primary purpose of an ACH filter?
• Which statement about procurement stages is true?
• Which item is NOT a method of authenticating users in information systems?
• For employee expense reimbursement requests, electronic receipts are preferred to paper receipts because they are more difficult to alter or forge.
• Traditionally, there are two methods of percentage analysis of financial statements. Which two methods are they?
• Upcoding is billing the insurer for a higher level of service than actually rendered.
• Which of the following describes an unscrupulous debt consolidation scheme?
• Fraud in financial statements generally takes the form of overstated assets or revenue and understated liabilities and expenses.
• Which GAAP principle applies to consistency of accounting policies from period to period?
• The restitution against loss to a third party when the insured fails to fulfill a specific undertaking for the third party's benefit is referred to as:
• In a daisy chain arrangement, what is the purpose of creating new documentation?
• A smart card is a plastic card, the size of a credit card, embedded with a microchip. A key advantage is that it cannot be easily counterfeited. Smart cards include a wide variety of hardware and software features capable of detecting and reacting to tampering attempts and countering possible attacks.
• Regarding check fraud enforcement, the statement 'the vast majority of check fraud offenders are pursued and prosecuted' is:
• Which of the following are examples of expense reimbursement schemes?
• Which scenario is an example of a kickback scheme?
• Which scenario illustrates social engineering by a fraudster?
• Which combination of departments should be represented on a task force coordinating a program to safeguard proprietary information?
• Which of the following is not a common red flag of bid tailoring?
• Which symptom is commonly observed when a Web browser’s homepage changes automatically due to malware?
• Which fraud scheme involves falsifying payroll records to issue paychecks to someone who does not work for the company?
• Which list contains the information security goals that should be achieved by an e-commerce system for users and asset holders?
• Payroll schemes can be categorized as check tampering rather than payroll fraud. Which item would be categorized as check tampering?
• What happens when an employee records a fictitious refund at the cash register?
• Which of the following items is a current asset?
• In nondisclosure agreements, employees are often willing to abide by them but may not understand that the information they communicate might be confidential. Which statement is most accurate?
• Which of the following is an example of a fictitious expense reimbursement scheme?
• Which item is not a common technical or administrative control used to secure computer systems and networks?
• In the context of Chapter 11 bankruptcy, when allegations of fraud are raised, the court is likely to appoint an examiner to investigate the allegations.
• Under the Howey four-factor test, all four elements must be present for a financial instrument to be considered an investment contract.
• Under the accrual basis, when should revenue and associated expenses from a December order for an event in February be recognized?
• ABC Company engages in a transaction with an entity whose management can control or significantly influence ABC Company's policies, without disclosure. This is an example of what kind of improper disclosure?
• The purpose of draw requests in construction lending is to provide:
• In a construction loan, the purpose of developer overhead is to provide what?
• Which of the following scenarios is an example of a kickback scheme?
• Which statement reflects proper separation of duties for handling production data?
• Which pattern is a common indicator of check fraud?
• A cashier in an antiques store rang up a sale for $200 instead of $250 and kept the $50 difference. What type of fraud is this an example of?
• Can comparing register totals to cash drawer amounts reliably detect cashier skimming?
• Roxanne, an employee in the bank's accounting department, debits the bank's general ledger and credits her own account. Which fraud scheme does this illustrate?
• A fraudster uses the president's email to request a wire transfer. Which scheme is this?
• Which statement best describes the current ratio?
• Which statement about encryption is accurate?
• A draw request on a construction loan should be accompanied by all of the following EXCEPT:
• Daisy chain schemes are intended to mask bad loans by making them appear recent and good.
• Separation of duties is the most important practice for preventing and detecting electronic payment fraud.
• In agent fraud schemes, what is a common tactic?
• Annika created checks to a local vendor and had her boss sign them, then altered the checks with correction fluid to cover the vendor's name and increase the amount, and then cashed the checks. What kind of scheme did she commit?
• To detect nonconforming schemes, fraud examiners should examine which items for red flags?
• Darla, an accounts receivable clerk, pockets a customer's payment and applies subsequent payments to the previous customer's accounts to conceal the theft. What scheme is this?
• Which activity is not included in the presolicitation phase of procurements involving open and free competition?
• What is the formula for the asset turnover ratio?
• During an analytical review of the financial statements, which red flag might indicate inventory theft?
• In a sham loan scheme, the loan officer may be paid part of the proceeds; which concealment method is described as charging the loan off as a bad loan?
• In a misappropriation scenario, which action will NOT result in a balanced accounting equation?
• What term describes a system that detects malicious network activity to supplement firewalls?
• In a well-designed internal control system, computer operators should not perform computer programming. True or False?
• In a market division scheme, competitors divide markets and refrain from competing in each other's designated portion.
• Which statement about crimeware is accurate?
• What type of procurement fraud involves drafting bid specifications to favor a particular contractor?
• Which procurement fraud describes delivering goods or services that do not conform to contract specifications?
• Which statement is TRUE with regard to gross margin?
• The primary purpose of physical access controls is to prevent unauthorized access to computer software.
• In identifying information to protect, which example best reflects the areas that give a company its competitive edge?
• Which ratio excludes inventory to provide a more conservative view of liquidity?
• To detect nonconforming goods schemes, fraud examiners should examine which of the following?
• Related-party transactions are sometimes referred to as self-dealing.
• Which statement about the cash flow statement is TRUE?
• Which of the following is NOT an appropriate technique for detecting a nonconforming goods or services scheme?
• Which statement correctly distinguishes vertical analysis from horizontal analysis?
• Loyalty programs are susceptible to fraud for all of the following reasons EXCEPT:
• True or False: Buffer overflows and privilege escalation are not controls to prevent computer fraud.
• What best describes the difference between skimming and cash larceny?
• Which statement about check fraud is TRUE?
• In a retail setting, an employee logs in with another worker's access code and removes cash from the register after a sale. What type of fraud scheme does this describe?
• What is the name of the document Jason signed that prohibits divulging confidential or proprietary company information?
• Which of the following is a recommended separation of duties control in information systems?
• Complementary bidding is also known by which set of terms?
• What action enhances the security of physical mail and protects personal information?
• A recommended practice to detect expense reimbursement schemes is to compare current period expenses to both historical expenditure amounts and budgeted expense amounts.
• Which of the following is a common method used by fraudsters to physically infiltrate and spy on organizations?
• Which of the following is an example of a way in which an electronic funds transfer (EFT) fraud scheme can be committed?
• Which term describes the most common giveaway scheme?
• Which statement about data classification best describes its purpose?
• Which practice is not recommended for personal identity theft prevention?
• Which statement about the statement of cash flows is NOT true?
• In credit repair scams, the fraudster promises to erase or doctor an applicant's credit history, but there is no way to erase bad credit.
• True or False: In an illegal pyramid scheme, recruiting more members increases the investor's rank and potential profits.
• On the balance sheet, liabilities are presented in order of maturity.
• In inventory controls, forced reconciliation refers to what practice?
• To conduct an electronic payment using a person-to-person (P2P) system, the two individuals must meet in person at a financial institution to sign an order requesting the transfer of money.
• In the post-award phase, contract modifications, such as change orders, are common activities.
• Which method would be useful in detecting a ghost employee scheme?
• Which of the following is an example of an off‑book fraud?
• In a fictitious revenue scheme, the debit side of the entry typically goes to which account?
• An employee issues two payments for the same invoice, requests a return of one check from the vendor, and then cashes the returned check. This is an example of which scheme?
• In a receivables skimming scheme, which finding can indicate the fraud when comparing customer balances?
• Which of the following is NOT a best practice for separation of duties within the information systems department and between IT and business unit personnel?
• __________ is the term used for including additional coverages in an insurance policy without the insured's knowledge.
• Daniela, a plant manager, threatened to withhold business from any vendors unless they hired her side cleaning business. This best describes which type of corruption scheme?
• Which fraud schemes are often connected to a nonperforming loan?
• Which category is NOT typically targeted by improper asset valuation schemes?
• Which is NOT an effective control to prevent store skimming?
• Which of the following is a red flag of check tampering?
• To reduce EFT fraud exposure, which measure should a bank implement?
• What term describes the deliberate misrepresentation of the financial condition of an enterprise?
• Which financial statement shows a company's financial position at a specific point in time?
• Which of the following is NOT an appropriate technique for detecting nonconforming goods or services fraud?
• Which types of accounting changes must be disclosed in financial statements?
• Which type of transaction is LEAST likely to use a person-to-person (P2P) payment system?
• Which practice is recommended to prevent malware infections in a network environment?
• Notes payable, current assets, retained earnings, and accumulated depreciation are found on which financial statement?
• Related-party transactions are sometimes referred to as self-dealing.
• An official received an all-expenses-paid trip after a land development deal was approved. What term best describes this conduct?
• To help prevent identity theft, businesses should strive to limit the personal information they collect from customers.
• Which of the following represents a timing difference financial statement fraud?
• Belinda used her company credit card to pay for a business dinner... This is an example of what kind of fraud?
• Payment defalcation is a form of what?
• To detect nonconforming goods or services fraud, which documents should be reviewed?
• All of the following are classifications of billing schemes EXCEPT:
• The current ratio is calculated by dividing current assets by current liabilities. Which two components are used in this calculation?
• What is the primary responsibility of a bankruptcy examiner in Chapter 11?
• Which of the following is one of the four major categories of check tampering schemes?
• Events occurring after the close of the period that could have a significant effect on the entity's financial position must be disclosed in the entity's financial statements.
• Which of the following is a way that dishonest contractors collude to circumvent the bidding process?
• Diagnostic-related groupings (DRG) creep occurs when staff members manipulate codes to increase reimbursement.
• Which financial statement fraud scheme involves recording revenues and expenses in improper periods?
• In loan participations, which bank is primarily responsible for underwriting?