Pass the ACFE Certified Fraud Examiner CFE-Fraud-Schemes-and-Financial-Crimes Questions and answers with Dumpstech

Detailed Explanation:

Rationale for Correct Answer: Corporate spies do use social engineering, but their primary methods include surveillance, infiltration (e.g., posing as employees), and technical monitoring. The statement in option C is false because searching desks/workstations is a tactic, but it is not the primary method.

Analysis of Incorrect Options:

A – True; fake badges are a common infiltration tactic.

B – True; low-level jobs provide physical access.

D – True; technical surveillance is a recognized method.

Key Concept: Methods of corporate espionage.

Detailed Explanation:

Rationale for Correct Answer: Cressey’s research on fraud offenders found that most had non-sharable financial problems, which fell into categories such as: (1) violation of ascribed obligations, (2) business reversals, (3) physical isolation, (4) status gaining, and (5) employer-employee relations. “Larceny by fraud” is not a category of non-sharable problem but rather a type of theft scheme. Hence, D is correct.

Analysis of Incorrect Options:

A. Violation of ascribed obligations – Correctly one type of non-sharable problem.

B. Business reversals – Correctly one type of non-sharable problem.

C. Physical isolation – Correctly one type of non-sharable problem.

D. Larceny by fraud – Not a “problem” type; it is a fraud scheme.

Key Concept: Cressey’s non-sharable problems — psychological and situational pressures that contribute to occupational fraud.

Detailed Explanation:

Rationale for Correct Answer: Fraudsters often attempt to influence or bribe employees who have access to sealed bids . Access to sealed bids provides unfair knowledge of competitors’ pricing and terms, enabling collusion or bid manipulation.

Analysis of Incorrect Options:

A. Bid-splitting – A fraud scheme, not what vendors seek access to.

C. General purchasing – Too broad; not specifically tied to vendor fraud.

D. Tailor specifications – A corruption scheme, but not the specific target of vendor bribery.

Key Concept: Sealed bid access as a key target in procurement fraud.

Detailed Explanation:

Rationale for Correct Answer: Per generally accepted accounting principles, changes in accounting principles must be disclosed in the financial statements to ensure comparability and transparency. The ACFE notes that disclosures are critical to prevent misleading users of financial statements.

Analysis of Incorrect Options:

A. Subsequent events – Material subsequent events must be disclosed; this statement is false.

B. Contingent losses – Only probable and reasonably estimable losses must be disclosed. If unlikely, no disclosure is required.

C. All information – Only material information requires disclosure.

Key Concept: Disclosure requirements in financial reporting .

Detailed Explanation:

Rationale for Correct Answer: Upcoding occurs when a provider bills for a higher level of service than what was actually provided. Billing a 15-minute visit as a 60-minute visit is a classic upcoding scheme.

Analysis of Incorrect Options:

A. Name brand prescription – Not upcoding; this is prescribing choice, not billing fraud.

B. Multiple codes instead of one – This is unbundling , not upcoding.

D. Changing service date – This is falsifying service dates , not upcoding.

Key Concept: Health care billing fraud — upcoding vs. unbundling.

The correct answer is C because periodic audits of expense reports help deter and detect reimbursement fraud. Expense reimbursement schemes can involve mischaracterized expenses, overstated expenses, fictitious expenses, altered receipts, multiple reimbursements, or claims for another employee’s expenses. Telling employees that expense reports are subject to audit reinforces accountability and increases the perceived risk of detection. Option A weakens controls because all reimbursement claims should require adequate support, not only selected categories. Option B can increase risk because cash advances create another source of funds requiring control and reconciliation. Option D removes supervisory review, which is a key preventive control. The ACFE material identifies detailed expense reports, supporting documentation, review, and audit procedures as important controls.

================

Detailed Explanation:

Rationale for Correct Answer: Economic extortion occurs when someone demands payment or benefit under threat of harm (explicit or implicit). A government official demanding money in exchange for awarding a contract is classic extortion.

Analysis of Incorrect Options:

A – This is a billing scheme (fraudulent disbursement), not extortion.

C – This is a kickback scheme (corruption).

D – This is an illegal gratuity scheme (reward after action).

Key Concept: Types of corruption—extortion vs. bribery vs. gratuities.

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.

The correct answer is B. A paper property scheme involves an insurance claim for property that exists only “on paper,” meaning the claimed property never actually existed or was never owned by the claimant. The question describes a claim for destroyed items, such as a boat or expensive equipment, that did not exist. This differs from a staged theft, where an actual event is falsely created or arranged to appear like a theft. It also differs from an inflated theft or inflated inventory scheme, where property might exist but the claimant exaggerates the quantity, quality, or value of the loss. The ACFE insurance fraud material identifies property schemes, including phony or inflated thefts and paper boats, as property and casualty insurance fraud methods.

The correct answer is A, money laundering. The ACFE material defines money laundering as the process by which criminals disguise illicit assets as legitimate assets that they have a right to possess and spend. It involves concealing the existence, nature, source, control, beneficial ownership, location, or disposition of property derived from criminal activity. Cross-border financing may be a feature of laundering, but it is not the overall process described. Asset trafficking is not the best ACFE classification for disguising criminal proceeds. Concealment of assets may occur in fraud or bankruptcy matters, but it is broader and does not specifically capture the laundering of illegal proceeds into apparently legitimate funds.

================