CFE - Financial Transactions and Fraud Schemes ACFE Exam Questions and Answers

Question 1

Which of the following is MOST ACCURATE concerning common methods that identity thieves use to steal information?

A. Vishing involves using an imitation website to trick targets into revealing personal or business information.
B. Stealing a credit card number by watching someone enter it on a computer is an example of shoulder surfing.
C. Searching for sensitive personal information on used mobile phones purchased from a reseller is an example of dumpster diving.
D. Baiting is defined as the practice of manipulating people into revealing personal or business information.

Answer : A

Question 2

Which of the following would NOT be helpful in the prevention of expense reimbursement schemes?

A. Requiring all receipts to be submitted electronically
B. Comparing current expenses to budgeted expense amounts
C. Requiring employees to explain the specific business purpose of each expense
D. Comparing current expenses to historical expenditure amounts

Answer : B

Question 3

All of the following items appear on the balance sheet EXCEPT:

A. Liabilities
B. Cost of goods sold
C. Assets
D. Retained earnings

Answer : D

Question 4

Which of the following is an example of a corruption scheme?

A. A public company omits recurring costs from its financial statements to make the company appear more profitable than it actually is.
B. A government procurement manager awards a lucrative contract to a vendor in exchange for an offer of future employment.
C. A warehouse manager receives thirty tablets in a shipment but excludes five from the records and sells them to third parties.
D. Two data analysts steal confidential algorithms from their workplace and use the stolen data to start a competing business.

Answer : B

Question 5

Green, an employee of ABC Corporation, formed a company called Acme Consulting. He opened a bank account in Acme’s name and used his home computer to create invoices from Acme for “consulting services.” In reality, Acme does not provide any services at all. It is a company in name only. Green submitted the invoices from Acme Consulting to his employer, ABC Corporation. When ABC made payment on the false invoices, Green collected and deposited them. What type of scheme has Green committed?

A. A shell company scheme
B. A pay and return scheme
C. A cash larceny scheme
D. A pass-through scheme

Answer : A

Question 6

Which of the following is a recommended activity that organizations should engage in to protect their proprietary information from threats?

A. Practicing data maximization to limit the information available during a data breach
B. Enlisting a company task force to identify areas most at risk for theft by a competitor
C. Storing devices containing sensitive data in specially constructed quiet rooms
D. Prohibiting all nonemployees from entering the organization’s premises

Answer : B

Question 7

To detect health care provider fraud, a fraud examiner should be alert for which of the following red flags?

A. Consistently low percentage of coding outliers present
B. Unusually low profits compared to similar businesses in the same region
C. Lack of supporting documentation for claims under review
D. Details in supporting documentation that match the health care claim

Answer : C

Question 8

Natalie, a Certified Fraud Examiner (CFE), is tasked with overseeing cybersecurity protocols for her employer, including identifying potential indicators of intrusion, or unauthorized access, to the organization’s computer network. Which of the following could potentially indicate that the organization’s network has been accessed or compromised?

A. Updates to the operating systems of computers on the network are automatically installed to patch vulnerabilities.
B. Users are being denied access to network files they do not typically use in the normal course of business.
C. When logging into the computer network, employees are reminded to change their log-in passwords before they expire.
D. The network is transmitting much more data than usual to recipients outside the country in which the organization is located.

Answer : D

Question 9

Vertical analysis can BEST be described as:

A. A technique for measuring the relationship between any two different financial statement amounts
B. A technique for comparing the performance of a parent company to one of its subsidiaries
C. A technique for analyzing the relationships among financial statement items where components are expressed as percentages of a specified base value.
D. A technique for analyzing the percentage change in individual financial statement line items from one accounting period to the next accounting period.

Answer : C

Question 10

Which of the following statements is FALSE with regard to counterfeit credit and debit cards?

A. Counterfeit credit and debit card schemes often involve collusion with merchants or a merchant’s employees.
B. The production of counterfeit credit and debit cards is too complicated for the use of high-speed printing facilities.
C. Credit and debit card holograms are difficult to reproduce.
D. Counterfeiters create phone credit and debit cards through the use of what is commonly referred to as “blank plastic”.

Answer : B

Question 11

What type of fraud scheme would an analysis of payroll withholdings be MOST LIKELY to reveal?

A. A falsified hours and salary scheme
B. A ghost employee scheme
C. A fraudulent commissions scheme
D. An expense reimbursement scheme

Answer : B

Question 12

All of the following methods would be helpful in detecting a skimming scheme EXCEPT:

A. Comparing register totals to the cash count
B. Confirming customers’ outstanding account balances
C. Counting the physical inventory
D. Examining journal entries for accounts receivable write-offs

Answer : C

Question 13

All of the following measures would help prevent the theft of company inventory EXCEPT:

A. Having the purchasing supervisor perform the physical inventory count
B. Restricting inventory access to authorized personnel only
C. Having different people responsible for receiving inventory and shipping it
D. Using prenumbered inventory receiving reports

Answer : D

Question 14

Which of the following statements regarding financial statement disclosures is FALSE?

A. There is nothing inherently wrong with related-party transactions, as long as they are fully disclosed.
B. Management must disclose potential losses from ongoing litigation if the related liability is highly likely.
C. All information relating to the company must be disclosed in the financial statements, regardless of materiality.
D. Events occurring after the close of the reporting period that could have a significant effect on the company’s financial position must be disclosed.

Answer : C

Question 15

June, a 76-year-old woman, receives a phone call from a man impersonating one of her relatives. He claims to have a lot of debt and asks her to secretly send him money so that the rest of the family will not find out. June has MOST LIKELY been victimized by which of the following schemes?

A. Pretexting fraud
B. Grandparent scheme
C. Missing-heir scheme
D. Affinity fraud

Answer : A

Certified Fraud Examiner - Financial Transactions and Fraud Schemes v1.0

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Question 15

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