All of Financial

"Excessive write-offs are a form of concealment for which of the following schemes? A. Phantom loans B. Conflicts of interest C. Embezzlement D. All of the above

" "All of the above

"Which of the following is a red flag for new bank account fraud? A. A customer lists a mail drop as the account's mailing address B. A customer leaves out requested information on the account application C. A customer requests a large cash withdrawal immediately after opening the account D. All of the above

" "All of the above

"Which of the following is most indicative that the winning bid on an original construction project was not feasible? A. Missing documentation B. High turnover in developer's personnel C. Draw requests D. Increasing trend in the number of change orders

" "Increasing trend in the number of change orders CORRECT

"Which of the following scenarios is an example of a kickback scheme? A. A politician threatens to shut down a business if it does not pay a bribe B. A government official demands money in exchange for making a business decision C. An employee receives a payment for directing excess business to a vendor D. A vendor inflates the amount of an invoice submitted to the company for payment

" "Kickbacks are improper, undisclosed payments made to obtain favorable treatment. Thus, an employee who receives a payment for directing excess business to a vendor is an example of a kickback scheme. In such cases, there might not be any overbilling involved; the vendor simply pays the kickbacks to ensure a steady stream of business from the purchasing company. Extortion is defined as the obtaining of property from another, with the other party's consent induced by wrongful use of actual or threatened force or fear. Economic extortion is present when an employee or official, through the wrongful use of actual or threatened force or fear, demands money or some other consideration to make a particular business decision. Thus, an example of an economic extortion is if a government official demands money in exchange for making a business decision. Similarly, if a politician threatens to shut down a business if it does not pay a bribe, this is also an example of an economic extortion scheme.

"Which of the following is NOT an appropriate technique for detecting a nonconforming goods or services scheme? A. Segregate and identify the source of the suspect goods or materials. B. Review the contractor's statements, claims, invoices, and supporting documents. C. Review correspondence and contract files for indications of noncompliance. D. Review the number of qualified bidders who submitted proposals.

" "Review the number of qualified bidders who submitted proposals. CORRECT

"A ____________ scheme involves the theft of cash BEFORE it appears on a company's books, and a __________ scheme involves the theft of cash AFTER it appears on the books. A. Cash larceny; skimming B. Skimming; cash larceny C. Cash larceny; revenue D. Fraudulent disbursement; skimming

" "Skimming; cash larceny CORRECT

"Which of the following is the correct calculation of the quick ratio? A. (Cash + marketable securities) / accounts payable B. (Cash + receivables) / current liabilities C. Current assets / current liabilities D. (Cash + marketable securities + receivables) / current liabilities

" (Cash + marketable securities + receivables) / current liabilities

"Julia runs a printing company and has an antique printing press that she uses in her business. She purchased the press ten years ago for $5,000. Similar presses are selling on the market today for about $8,000. Julia mentioned that she's thinking about retiring and her friend offered to give Julia $9,000 for the press. According to U.S. GAAP, how much should the printing press be listed for on Julia's books? A. $8,000 B. $5,000 C. $3,000 D. $9,000

" 5000

"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? A. An illegal pyramid B. A fly and buy scheme C. A Ponzi scheme D. A dog and pony scam

" A Ponzi scheme

"Which of the following real estate loan schemes would be best described as an air loan? A. A builder, in collusion with an appraiser and other real estate insiders, fraudulently applies for a loan to construct a building on a nonexistent property and keeps the proceeds. B. A property developer applying for a loan submits instances of previous development experience that are fictitious or that he had no part in. C. A fraudster files fraudulent property transfer documents with the property owner's forged signature, and then takes out a loan using the property as collateral. D. A loan applicant falsifies his income sources to qualify for a mortgage.

" A builder, in collusion with an appraiser and other real estate insiders, fraudulently applies for a loan to construct a building on a nonexistent property and keeps the proceeds.

"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 of the following schemes has taken place? A. A register disbursement scheme B. A skimming scheme C. A cash larceny scheme D. None of the above

" A cash larceny scheme

"Katie is a sales clerk at a jewelry store. She watched another sales clerk, Helen, type her access code into her register and memorized it. When Helen called in sick, Katie logged in to the cash register using Helen's code and processed customer transactions as usual. After completing one sale, she left the drawer open and slipped a large sum of money into her pocket from the register drawer. What type of scheme did she commit? A. An understated sales scheme B. A skimming scheme C. A register disbursement scheme D. A cash larceny scheme

" A cash larceny scheme

"High percentages of returns, missing compliance certificates, and evidence of falsified test inspection results are red flags of which of the following procurement fraud scenarios? A. A contractor delivering goods or services that do not conform to the contract specifications B. A procuring employee manipulating the bidding process to benefit a favored contractor C. Two or more competing contractors agreeing to refrain from bidding D. A contractor charging the procuring entity for labor costs that are not allowable

" A contractor delivering goods or services that do not conform to the contract specifications

"Which of the following is a common red flag of a defective pricing procurement fraud scheme? A. A contractor uses valid cost schedules. B. A contractor's cost estimates are inconsistent with its prices. C. A contractor submits a request for change orders. D. A contractor delivers products that appear to be counterfeit.

" A contractor's cost estimates are inconsistent with its prices.

"Which of the following best illustrates the concept of human intelligence? A. A corporate spy breaks into a competing company's office and steals sensitive information while employees are attending an off-site event. B. A corporate spy installs software on the computer of an employee from a competing company to monitor that employee's communications. C. A corporate spy creates a deceptive website that tricks employees from a competing company into divulging confidential information. D. A corporate spy poses as a customer of a competing company to elicit information from the competitor's salespeople.

" A corporate spy poses as a customer of a competing company to elicit information from the competitor's salespeople.

"Which of the following is NOT a red flag of a fraudulent credit card transaction? A. A customer cannot provide a photo identification when requested. B. A customer charges many expensive items to a newly valid card. C. A customer buys a small number of expensive items at one time. D. A customer insists on taking a large item home even when delivery is included.

" A customer buys a small number of expensive items at one time.

"Which of the following health care frauds would be best described as a fictitious services scheme? A. A doctor intentionally submits a bill to an insurer using improper codes for the services provided. B. A doctor uses the identifying information of patients he has never serviced to bill an insurer. C. A patient fraudulently reports symptoms he does not actually have to receive a prescription. D. A patient who is not insured pretends to be an insured party to receive medical services.

" A doctor uses the identifying information of patients he has never serviced to bill an insurer.

"Which of the following situations is often present in real estate fraud schemes? A. A false appraisal report B. The services of an arms-length legal representative C. No expert assistance at closing D. All of the above

" A false appraisal report

"Jessica worked at the cash register of a department store. Her friend Molly came to the store one day to help Jessica steal a watch she wanted but couldn't afford. Molly took the watch to Jessica's register and, instead of charging Molly for it, Jessica rang a ""no sale"" on the register. Molly pretended to give Jessica cash to make it look like she was paying for the watch. Molly then took the watch out of the store and later gave it to Jessica. What type of scheme did Molly and Jessica commit? A. A skimming scheme B. A register disbursement scheme C. A false sale scheme D. A purchasing and receiving scheme

" A false sale scheme

"Sean is responsible for delivering timesheets to the payroll department on behalf of his supervisor. One day he decides to withhold his timesheet from those being sent to his supervisor for approval. He falsely increases the number of hours he has worked and then forges his supervisor's signature on his timesheet. He adds the timesheet to the stack of authorized sheets and delivers them to payroll. This is an example of: A. A fictitious reimbursement scheme B. A ghost employee scheme C. A check tampering scheme D. A falsified hours and salary scheme

" A falsified hours and salary scheme

"Jill is an accountant who needs to satisfy continuing professional education (CPE) requirements throughout the year to maintain her professional license. Her supervisor usually signs off on these requests without paying them much attention or scrutiny. Wanting to use this to her advantage, Jill figures out that it would be easy to copy the image of the logo from a popular CPE provider and generate a receipt using basic computer software. She creates a fraudulent receipt and submits it to her supervisor for reimbursement. What type of scheme is Jill committing? A. Collusion with a supervisor B. A multiple reimbursement scheme C. A mischaracterized expense scheme D. A fictitious expense scheme

" A fictitious expense scheme

"Which of the following scenarios illustrates a fraudster's use of social engineering? A. A fraudster has lunch at a restaurant where a target company's employees are known to eat with the intention of overhearing sensitive conversations B. A fraudster calls a company employee and requests sensitive information while claiming to be a coworker whose systems are down C. A fraudster without an employee badge gains access to a secure facility by following legitimate employees who are oblivious to his presence D. None of the above

" A fraudster calls a company employee and requests sensitive information while claiming to be a coworker whose systems are down

"Julia, a fraud examiner, is performing tests to look for potential asset misappropriation schemes at her company. One of her routine tests is to compare the payroll records to the human resources files. What type of fraud scheme is she most likely looking for when performing this test? A. A fraudulent commissions scheme B. A ghost employee scheme C. A check tampering scheme D. A falsified hours and wages scheme

" A ghost employee scheme

"Which of the following situations is an example of DRG creep? A. A medical provider habitually creates false diagnoses for patients and bills for services never performed. B. A hospital has a pattern of incorrectly coding and documenting minor cuts and scratches as major lacerations. C. A medical provider sells numerous patient information files to third parties who use them to make false medical claims. D. A hospital regularly sends duplicate reimbursement claims to a health care program for a particular treatment.

" A hospital has a pattern of incorrectly coding and documenting minor cuts and scratches as major lacerations.

"Which of the following is NOT a type of loan that frequently turns up in corruption cases? A. A legitimate loan in which a third party makes the loan payments B. A legitimate loan made at market rates C. An outright payment falsely described as an innocent loan D. A legitimate loan made on favorable terms

" A legitimate loan made at market rates

"Which of the following best describes phishing? A. A method for acquiring sensitive information needed to facilitate a specific scheme by searching through large quantities of available data B. A method for acquiring sensitive information by falsely claiming through electronic communication to be from an entity with which the target does business C. A method for acquiring sensitive information by bypassing a computer system's security through the use of an undocumented operating system and network functions D. A method for acquiring sensitive information in which an attacker hides near the target to gain unauthorized access to a computer system

" A method for acquiring sensitive information by falsely claiming through electronic communication to be from an entity with which the target does business

"Which of the following best describes social engineering? A. A method for gaining unauthorized access to a computer system in which an attacker deceives victims into disclosing personal information or convinces them to commit acts that facilitate the attacker's intended scheme B. A method for gaining unauthorized access to a computer system in which an attacker searches through large quantities of available data to find sensitive information that he can use to facilitate his intended scheme C. A method for gaining unauthorized access to a computer system in which an attacker bypasses a system's security through the use of an undocumented operating system and network functions D. A method for gaining unauthorized access to a computer system in which an attacker hides near the target to obtain sensitive information that he can use to facilitate his intended scheme

" A method for gaining unauthorized access to a computer system in which an attacker deceives victims into disclosing personal information or convinces them to commit acts that facilitate the attacker's intended scheme

"Jacob was on a business trip in another city. One night, he met up with some friends (unrelated to his work) at an expensive restaurant and paid for the group's entire meal on his credit card, announcing that "the company would pay for it." He submitted the receipt for the dinner along with the rest of his legitimate business receipts from the trip and described the dinner as "client entertainment." What type of scheme did Jacob commit? A. An overstated expense scheme B. A multiple reimbursement scheme C. A fictitious expense scheme D. A mischaracterized expense scheme

" A mischaracterized expense scheme

"Pam is the purchasing manager at a retail store. She decides to form her own shell company and purchase merchandise through this entity. She then sells the merchandise to her employer at an inflated price as if she were a legitimate vendor. What type of scheme is Pam committing? A. A need recognition scheme B. A pass-through scheme C. A cash larceny scheme D. A pay and return scheme

" A pass-through scheme

"White, an employee of ABC Corporation, intentionally issued two payments for the same invoice. After the checks had been mailed, White called the vendor and explained that a double payment had been made by mistake. She asked the vendor to return one of the checks to her attention. When the vendor returned the check, White took it and cashed it. This is an example of: A. A shell company scheme B. A receivables skimming scheme C. A pay and return scheme D. A pass-through scheme

" A pay and return scheme

"Which of the following types of transactions is LEAST likely to use a person-to-person (P2P) payment system? A. A person transferring money to a friend abroad B. A person making an online donation to a charity C. A person buying groceries at a supermarket D. A person paying for an item on an online auction site

" A person buying groceries at a supermarket

"Sheila, an accounts payable supervisor for ABC Company, bought supplies for a company she owns on the side. Sheila entered vouchers in ABC Company's accounts payable system for the cost of the supplies. Checks were cut to pay for these unauthorized expenses during normal daily check runs. The goods were drop-shipped to a location where Sheila could collect them. What type of occupational fraud is this? A. A personal purchases with company funds scheme B. A pay and return scheme C. An invoice kickback scheme D. An expense reimbursement scheme

" A personal purchases with company funds scheme

"Roger, a CFE, is an auditor for the government's Office of Audit and Evaluation. While conducting a routine audit of ten construction contracts from the Public Works Department, Roger notices some unusual characteristics in the contracts' bidding documents. The contracts were all awarded to the same contractor, and the specifications in all ten contracts had unreasonably narrow specifications for the types of goods being procured. Which of the following types of procurement fraud schemes is most likely at issue here? A. A procurement employee has drafted bid specifications in a way that gives an unfair advantage to a certain contractor. B. A procurement employee convinced his employer that it needs excessive or unnecessary products or services. C. A procurement employee has intentionally included unallowable costs in the projects' contracts and budgets. D. A procurement employee broke up a large project into several small projects that fall below the mandatory bidding level.

" A procurement employee has drafted bid specifications in a way that gives an unfair advantage to a certain contractor.

"Which of the following is the most accurate definition of a Trojan horse? A. A type of software that collects and reports information about a computer user without the user's knowledge or consent B. A program or command procedure that gives the appearance that it is useful but in fact contains hidden malicious code that causes damage C. A software program that contains various instructions that are carried out every time a computer is turned on D. A virus that changes its structure to avoid detection

" A program or command procedure that gives the appearance that it is useful but in fact contains hidden malicious code that causes damage

"Jackson is a receiving clerk at a warehouse. His job is to count the number of units in incoming shipments, record the figures in receiving reports, and forward copies of the reports to the accounts payable department. One day, Jackson received a box of 20 laptop computers at the warehouse. His wife's computer just broke, so he stole one of the computers from the box. To conceal his scheme, Jackson sent a receiving report to accounts payable that 20 computers arrived, but he only recorded 19 on the copy of the receiving report used for the inventory records. What type of scheme did Jackson commit? A. A purchasing and receiving scheme B. A noncash larceny scheme C. An asset transfer scheme D. None of the above

" A purchasing and receiving scheme

"What is the primary difference between a Ponzi scheme and a pyramid scheme? A. All pyramid schemes are legal, whereas all Ponzi schemes are illegal. B. A Ponzi scheme is promoted by encouraging victim members to recruit new members. C. In a pyramid scheme, old investors are paid with money from new investors. D. A pyramid scheme promotes itself as a pyramid, whereas a Ponzi scheme promotes itself as an investment opportunity.

" A pyramid scheme promotes itself as a pyramid, whereas a Ponzi scheme promotes itself as an investment opportunity.

"Which of the following is the most accurate definition of a computer worm? A. A self-replicating computer program that penetrates operating systems to spread malicious code to other systems B. A program or command procedure that gives the appearance that it is useful but in fact contains hidden malicious code that causes damage C. A type of software that, while not definitely malicious, has a suspicious or potentially unwanted aspect to it D. Any software application in which advertising banners are displayed while a program is running

" A self-replicating computer program that penetrates operating systems to spread malicious code to other systems

"Joe formed a company called Glenn Corp. He opened a bank account in Glenn Corp.'s name and used his home computer to create fraudulent invoices from Glenn Corp. for ""consulting services."" However, Glenn Corp. is a fictitious entity that was created solely to commit fraud, and no services have been rendered. Joe mailed these invoices to his employer, Paisley Company. Paisley Company promptly submitted payment to Glenn Corp., not realizing that the company was fake, and Joe deposited the money. What type of billing scheme did Joe commit? A. A shell company scheme B. A pay and return scheme C. A cash larceny scheme D. A pass-through scheme

" A shell company scheme

"Which of the following best illustrates the use of technical surveillance for purposes of corporate espionage? A. A spy uses a phony employee badge to enter an office and take a sensitive document. B. A spy hacks into a target computer and monitors an employee's communications. C. A spy impersonates a help desk representative to obtain an employee's network password. D. A spy creates a deceptive website to trick employees into entering confidential information.

" A spy hacks into a target computer and monitors an employee's communications.

"Which of the following is the most accurate definition of a firewall? A. A system that blocks unauthorized or unverified access to network assets by surveying incoming and outgoing transmissions B. A device that takes information and scrambles it so that it is unreadable by anyone who does not have a specific code C. A system that authenticates users by monitoring their statistical characteristics, such as typing speed and keystroke touch D. None of the above

" A system that blocks unauthorized or unverified access to network assets by surveying incoming and outgoing transmissions

"Which of the following health care frauds would be best described as a fictitious provider scheme? A. A thief steals a health care provider's identifier and bills a government health care program under the name of a fake clinic. B. A provider operates a mobile lab that bills a health care program for unnecessary tests and then relocates. C. A doctor at a hospital inflates the cost of his services by coding them as being more complex than they should be. D. A group of people posing as medical professionals provide services without proper licenses.

" A thief steals a health care provider's identifier and bills a government health care program under the name of a fake clinic.

"Which of the following is the most accurate definition of a software keylogger? A. A type of software that, while not definitely malicious, has a suspicious or potentially unwanted aspect to it B. A self-replicating computer program that penetrates operating systems to spread malicious code to other systems C. A program or command procedure that gives the appearance that it is useful but in fact contains hidden malicious code that causes damage INCORRECT D. A type of program that monitors and logs the keys pressed on a system's keyboard

" A type of program that monitors and logs the keys pressed on a system's keyboard

"Which of the following is the most accurate definition of spyware? A. A type of software that collects and reports information about a computer user without the user's knowledge or consent B. A program or command procedure that gives the appearance that it is useful but in fact contains hidden malicious code that causes damage C. A self-replicating computer program that penetrates operating systems to spread malicious code to other systems D. Any software application in which advertising banners are displayed while a program is running

" A type of software that collects and reports information about a computer user without the user's knowledge or consent

"Laura, the sales manager of Sam Corp., is afraid sales revenue for the period is not going to meet company goals. To make up for the shortfall, she decides to mail invoices to fake customers and credit (increase) revenue on the books for these sales. What account will she most likely debit to balance these fictitious revenue entries and conceal her scheme? A. Accounts receivable B. Accounts payable C. Cash D. Inventory

" Accounts receivable

"Bruce is a purchaser for Acme Widgets. Bruce's brother-in-law is a salesperson for Olson Electronics, one of Acme's largest suppliers. Bruce told his supervisor about the relationship, and she approved his ordering of supplies from his brother-in-law as long as the purchases were reviewed by a senior manager. Bruce did not receive any favors or money from his brother-in-law in return for the sales. A year after Bruce discussed the situation with his supervisor, Acme's management discovers that another supplier offers the same parts as Olson Electronics but at a cheaper price. Acme Widgets is considering suing Bruce for conflict of interest. Which of the following is the MOST ACCURATE statement about Acme's chances of success? A. Acme's chances are poor because Bruce did not actually receive any money from his brother-in-law for sending him business. B. Acme's chances are good because it is clear that Bruce had a conflict of interest in dealing with his brother-in-law. C. Acme's chances are poor because the company was aware of the situation and it allowed Bruce to do business with his brother-in-law's company despite the relationship. D. Acme's chances are good because it could have gotten the supplies at a lower price.

" Acme's chances are poor because the company was aware of the situation and it allowed Bruce to do business with his brother-in-law's company despite the relationship.

"A confidence scheme designed to part victims from their money by falsely promising the future delivery of a product or service in exchange for an upfront payment is called a(n): A. Bait and switch B. Home-based business scheme C. Scavenger scheme D. Advance-fee swindle

" Advance-fee swindle

"The type of fraud that targets groups of people who have some social connection, such as neighborhoods of racial minorities or immigrant groups, is known as: A. Consolation B. Affinity fraud C. Reloading D. None of the above

" Affinity fraud

" "Which of the following is a typical method used to make corrupt payments in bribery and corruption schemes? A. Payment of credit card bills B. Checks and other financial instruments C. Gifts, travel, and entertainment D. All of the above

" All of the above

"A detailed expense report should require which of the following components? A. Original receipts (when possible) B. Explanation of the business purpose of each expense C. Time period when the expense occurred D. All of the above

" All of the above

"Credit card counterfeiting operations might include the use of which of the following? A. Desktop computers, embossers, tipping foil, and laminators B. High-speed printing facilities C. Embossed blank plastic cards D. All of the above

" All of the above

"Examples of expense reimbursement schemes include which of the following? A. Listing dinner with a friend as a business development expense B. Requesting reimbursement for an expense that was never incurred C. Listing personal travel as business travel D. All of the above

" All of the above

"Fraudulent disbursement schemes include which of the following? A. Check tampering schemes B. Payroll schemes C. Register disbursement schemes D. All of the above

" All of the above

"Fraudulent kickbacks in the health care industry can include which of the following? A. Payment for additional medical coverage B. Waiver of deductibles and copayments C. Payment for referral of patients D. All of the above

" All of the above

"Glenn has just inherited a large amount of money from a deceased relative. Several weeks later, a colleague of Glenn's suggests an investment in a security that is certain to generate returns of 20% every six months. Glenn is intrigued, but also worried that it might be a Ponzi scheme. Which of the following actions should Glenn take before investing? A. Ensure that he can comprehend the details and strategy of the investment B. Find out if the financial manager is licensed and if the security is registered C. Determine if the investment's returns have been abnormally consistent D. All of the above

" All of the above

"Heather is a fraud examiner who is investigating a fraud case at a bank. Which of the following of Heather's findings might be a red flag of embezzlement? A. Payees on source documents do not match entries on the general ledger B. Only photocopies are available as source documents instead of originals C. Some source documents are missing or altered D. All of the above

" All of the above

"If a bank loan is a nonperforming loan, it might be a red flag for fraud. Which of the following is a fraud scheme that is often connected to a nonperforming loan? A. Bribery B. Construction over-budget items C. Land flips D. All of the above

" All of the above

"In a grandparent scheme targeting the elderly, which of the following is a way to confirm if a caller is the grandparent's actual grandchild? A. Hang up the phone and contact the grandchild directly B. Ask the caller questions only the grandchild would know C. Ask relatives if they know of any issues with the grandchild D. All of the above

" All of the above

"In which of the following scenarios might a credit card skimming scheme be conducted? A. A retail employee processes a payment outside of the customer's view B. A customer is pumping gasoline and notices a strange device attached to the self-payment apparatus C. A server walks away from a customer's table to process a credit card payment D. All of the above

" All of the above

"Insurance agent/broker fraud includes which of the following? A. Fictitious death claims B. Premium theft C. Fictitious payees D. All of the above

" All of the above

"It is considered acceptable practice to deviate from generally accepted accounting principles (GAAP) in which of the following circumstances? A. It is common practice in the industry to give particular transactions a specific accounting treatment B. There is concern that assets or income would be overstated C. Adherence to GAAP would produce misleading results D. All of the above

" All of the above

"James runs an electronics store. One of the main challenges in his business is keeping up with technological advances. Because of this, his auditors want to ensure inventory is not fraudulently overstated on the store's balance sheet. Which of the following actions should the auditors take to ensure inventory is not overstated? A. Ensure that inventory is recorded at the lower of cost or net realizable value B. Ensure that James has written off obsolete inventory C. View the inventory and conduct a physical count D. All of the above

" All of the above

"Jan, a Certified Fraud Examiner for a major insurance company, has received an anonymous tip that an employee in the claims department is processing claims for his own benefit during non-working hours. To gather information about the validity of this tip, Jan should look at which of the following reports? A. Address similarity report B. Manual override report C. Exception report D. All of the above

" All of the above

"Liam is the manager of a small bank that has recently experienced an increase in the amount of fraud related to electronic funds transfers (EFT). Which of the following methods can Liam implement to reduce his bank's exposure to EFT fraud? A. Send a "welcome" letter to new customers to determine if the address submitted on the account application is valid B. Separate the duties of bank employees so that responsibilities for the issuance of access devices are separate from the issuance of PINs C. Ensure that PINs are mailed separately from other associated account information D. All of the above

" All of the above

"Loyalty accounts are attractive targets for fraudsters for which of the following reasons? A. Thieves often think of loyalty points in terms of cash B. Loyalty accounts often lack fraud prevention mechanisms C. Consumers tend to monitor loyalty accounts infrequently D. All of the above

" All of the above

"Research and development personnel often inadvertently divulge confidential information through which of the following? A. Hiring outside academic professionals B. Articles written for industry journals C. Discussions with colleagues at conferences D. All of the above

" All of the above

"When should an employee be made aware of the need to maintain the confidentiality of an organization's proprietary information, as well as which information is considered confidential? A. When signing a nondisclosure agreement B. Upon being hired C. During an exit interview D. All of the above

" All of the above

"Which of the following are signs that a multilevel marketing organization's activities might be illegal? A. The organization spends more time promoting its distributor levels than its product lines B. The organization offers participants large payments for each new recruit C. The organization recruits distributors into a pyramid-style compensation plan D. All of the above

" All of the above

"Which of the following could be used to balance the accounting equation if cash were stolen? A. Reducing a liability B. Increasing another asset C. Reducing revenue D. All of the above

" All of the above

"Which of the following is TRUE concerning the different types of workers' compensation fraud schemes? A. In an agent fraud scheme, agents sometimes issue certificates of coverage to the insured customer while pilfering the premium B. In an organized fraud scheme, a lawyer, a capper, a doctor, and the claimant often collude to defraud the insurance company C. In premium fraud, an employer might understate the amount of the payroll for higher-risk classifications to get a lower-cost premium D. All of the above

" All of the above

"Which of the following is TRUE regarding the methods typically used for making corrupt payments in bribery and corruption schemes? A. Payers often make corrupt payments by paying off the recipient's credit card debt B. Payers often make corrupt payments by offering recipients loans on extremely favorable terms C. Payers often make corrupt payments by selling property to recipients at prices lower than the property's market value D. All of the above

" All of the above

"Which of the following is a basic method used to prove corrupt payments in bribery and corruption schemes? A. Secretly infiltrating ongoing transactions B. Turning an inside witness C. Identifying and tracing payments through audit steps D. All of the above

" All of the above

"Which of the following is a common area for construction loan fraud schemes? A. Developer overhead B. Estimates of costs to complete C. Retainage D. All of the above

" All of the above

"Which of the following is a common avenue through which proprietary company information is compromised? A. Publications B. Company website C. Speeches by executives D. All of the above

" All of the above

"Which of the following is a common method that fraudsters use to conceal liabilities and expenses in order to make a company appear more profitable than it actually is? A. Failing to disclose warranty costs and product-return liabilities B. Omitting liabilities or expenses C. Improperly capitalizing costs rather than expensing them D. All of the above

" All of the above

"Which of the following is a common method used by fraudsters to physically infiltrate and spy on organizations? A. Pose as a contractor B. Secure a position as an employee C. Fabricate or steal an employee badge D. All of the above

" All of the above

"Which of the following is a common reason why people commit financial statement fraud? A. To demonstrate compliance with loan covenants B. To cover inability to generate cash flow C. To encourage investment through the sale of stock D. All of the above

" All of the above

"Which of the following is a common scheme perpetrated by suppliers of reusable medical equipment? A. Billing for equipment rental after it is returned B. Providing a poorer quality wheelchair or scooter than billed for C. Falsifying prescriptions for medical equipment D. All of the above

" All of the above

"Which of the following is a common way a procuring employee might engage in a bid manipulation scheme? A. Extending bid opening dates without justification B. Altering bids C. Opening bids prematurely D. All of the above

" All of the above

"Which of the following is a method of committing a falsified hours and salary scheme? A. Forging a supervisor's signature B. Altering a timesheet after it has been approved C. Colluding with a supervisor D. All of the above

" All of the above

"Which of the following is a method that can be used to destroy or manipulate data? A. Using malware to infect computers B. Transmitting data to an outside destination without authorization C. Wire tapping into a computer's communication links D. All of the above

" All of the above

"Which of the following is a method that would help prevent the theft of company inventory? A. Restricting inventory access to authorized personnel B. Using prenumbered shipping documents, perpetual inventory records, and inventory receiving reports C. Separating the duties of handling incoming shipments and filling out the inventory requisition form D. All of the above

" All of the above

"Which of the following is a poor information security procedure that contributes to loss of proprietary information? A. Failure to guard documents maintained in manual file systems B. Failure to implement data retention and destruction policies C. Failure to practice data minimization D. All of the above

" All of the above

"Which of the following is a recommended step that businesses should take to protect their customers and employees from identity theft? A. Require employees to use complex passwords or passphrases B. Only retain personal information for as long as it is necessary C. Conduct regular employee training on information-handling best practices D. All of the above

" All of the above

"Which of the following is a recommended step that individuals should take to protect themselves from identity theft? A. Use passwords that are at least eight characters long B. Create unique answers for security questions C. Limit personal information shared on social media D. All of the above

" All of the above

"Which of the following is a red flag of a procurement fraud scheme in which vendors are colluding to circumvent the competitive bidding process? A. Qualified contractors do not submit bids B. The winning bidder subcontracts work to losing bidders C. Some bids do not meet the requirements of the solicitation documents D. All of the above

" All of the above

"Which of the following is a red flag of fraudulent register disbursements? A. Personal checks from cashiers are found in the register B. There are multiple refunds or voids just under the review limit C. Voided transactions are not properly documented or approved by a supervisor D. All of the above

" All of the above

"Which of the following is a technical or administrative control for securing computer systems and communication networks? A. Installing operating system security B. Installing network security defenses C. Encrypting sensitive data files D. All of the above

" All of the above

"Which of the following is a way that dishonest contractors collude to circumvent the competitive bidding process? A. Agree to stay out of each other's designated markets B. Refrain from submitting bids on certain contracts C. Alternate business among themselves on a rotating basis D. All of the above

" All of the above

"Which of the following is an example of a way in which an electronic funds transfer (EFT) fraud scheme can be committed? A. A hacker obtains consumer account and password information to direct funds from consumers' accounts B. A person who has stolen information about another person's bank account instructs a biller to obtain payment from that account C. An employee of a person-to-person (P2P) provider misappropriates a customer's account and password information D. All of the above

" All of the above

"Which of the following is an example of the piggybacking method used to gain access to restricted areas? A. Pretending to be a member of a large crowd of people authorized to enter a restricted area B. Taking advantage of a legitimate computer user's active session when the user attends to other business while still logged on C. Following behind an individual who has been cleared for access into a restricted area D. All of the above

" All of the above

"Which of the following is considered a red flag of check tampering? A. Non-payroll checks payable to employees B. Large gaps in the check register C. Payee addresses that match employee addresses D. All of the above

" All of the above

"Which of the following is one of the four major categories of check tampering schemes? A. Forged maker schemes B. Altered payee schemes C. Forged endorsement schemes D. All of the above

" All of the above

"Which of the following is recommended to prevent fraud in electronic payments? A. Positive pay for ACH transactions B. Having separate bank accounts for paper checks and electronic payments C. Implementing ACH blocks and filters D. All of the above

" All of the above

"Which of the following measures should be in place to help prevent check tampering schemes? A. Companies should set up a positive pay system with their bank B. Bank reconciliations should be performed by someone who is NOT an authorized signatory on the account C. Checks should be mailed immediately after they are signed D. All of the above

" All of the above

"Which of the following methods would be useful in detecting a ghost employee scheme? A. Examining payroll checks for dual endorsements B. Analyzing payroll withholdings C. Comparing personnel records to payroll data D. All of the above

" All of the above

"Which of the following schemes are often used by fraudsters to take advantage of the elderly? A. Homeownership schemes B. Sweepstake and prize schemes C. Work-at-home schemes D. All of the above

" All of the above

"Which of the following statements is TRUE regarding e-commerce? A. Digital signatures function to authenticate e-commerce transactions B. In e-commerce transactions, non-repudiation is obtained through confirmation services and timestamps C. E-commerce entities must make sure that they can determine with whom they (or their computers) are communicating D. All of the above

" All of the above

"Which of the following statements is TRUE with regard to detecting a cash larceny scheme? A. If an employee who handles cash goes on vacation, another employee should take over his duties B. Someone other than the accounts receivable clerk should prepare the bank deposit C. Reconciling the cash register total to the amount of cash in the drawer is helpful in detecting a cash larceny scheme D. All of the above

" All of the above

"Which of the following steps are often taken during an account takeover scheme? A. Place orders using funds from the overtaken account B. Steal account login information using phishing emails C. Change customer contact information on the overtaken account D. All of the above

" All of the above

"Which of the following types of accounts are decreased by debits? A. Liabilities B. Revenue C. Owners' equity D. All of the above

" All of the above

"Which of the following types of accounts are increased by credits? A. Revenue B. Owners' equity C. Liability D. All of the above

" All of the above

"Which of the following would be helpful in detecting a skimming scheme? A. Examining journal entries for false credits to inventory B. Confirming customers' outstanding account balances C. Examining journal entries for accounts receivable write-offs D. All of the above

" All of the above

"With the Health Insurance Portability and Accountability Act of 1996, the U.S. Congress added which of the following offenses to the federal code? A. False statement relating to health care fraud B. Theft or embezzlement in connection with health care C. Committing fraud against health care benefit programs D. All of the above

" All of the above

"Which of the following is considered misuse of a noncash asset? A. Lisa is a paralegal, but she also works as a personal fitness trainer on the weekends. She stays after work at the law office one day to print off invoices for her personal training clients. B. Olivia had access to a company vehicle while on an out-of-town assignment. She used the vehicle to run some personal errands after she was finished with work for the day, but she provided false written and oral information regarding the nature of her use of the vehicle. C. Mike works for a lawn care service. One of his customers lives on his street. After Mike finishes mowing the customer's lawn, he uses his employer's lawnmower to mow his own lawn. D. All of the above are considered misuses of noncash assets.

" All of the above are considered misuses of noncash assets.

"An identity thief steals a victim's credit card and uses it to buy an expensive TV. This scheme is an example of which of the following? A. True name fraud B. An account takeover C. Criminal identity theft D. Business identity theft

" An account takeover

"Which of the following does NOT constitute an electronic funds transfer? A. A transfer of funds from a checking account to a savings account performed on a personal computer B. A customer's use of a debit card to purchase dinner at a restaurant C. An airline ticket purchased through the Internet with the use of a credit card D. The computer-initiated deposit of an employee's paycheck directly into the employee's bank account

" An airline ticket purchased through the Internet with the use of a credit card

"Annika, a bookkeeper for a small company, created checks to a local vendor and had her boss sign them. She then used correctional fluid to cover up the vendor's name and insert her own. She also changed the amounts of the checks in the same manner. Then she cashed the checks. What kind of scheme did Annika commit? A. An altered payee scheme B. A forged maker scheme C. A cash larceny scheme D. A forged endorsement scheme Submit Answer

" An altered payee scheme

"Baker, the managing partner in a small law firm, is the authorized signer on all company checks. When his personal phone bill arrived last month, Baker prepared and signed a company check to pay the bill. He did not disclose this payment to his partners. Baker committed: A. A mischaracterized expense scheme B. An authorized maker scheme C. A false billing scheme D. A forged maker scheme

" An authorized maker scheme

"Which of the following is an example of a fictitious expense reimbursement scheme? A. An employee submits a receipt for a hotel reservation in one expense report and a copy of his credit card statement reflecting the same reservation in the next period's expense report. B. An employee generates a fake receipt using basic computer software and includes it with an expense report. C. An employee alters an electronic receipt using photo editing software to reflect a higher cost than what the employee actually paid. D. An employee who travels frequently on business submits receipts from a hotel stay during a family vacation as a business expense.

" An employee generates a fake receipt using basic computer software and includes it with an expense report.

"Which of the following scenarios is an example of a conflict of interest? A. An employee for a pharmaceutical company has an economic interest in a company that does business with his employer and discloses it to his employer. B. An employee is related to a party that works for one of his company's vendors and informs his employer of the relationship. C. An employee has an undisclosed personal relationship with a company that does business with his employer. D. An employee for a phone installation company works as a fishing guide on weekends, but he does not tell the phone company about his other job.

" An employee has an undisclosed personal relationship with a company that does business with his employer.

"Which of the following is TRUE regarding an overstated refund scheme? A. It requires collusion between the customer and the employee. B. It is based on an entirely fictitious refund transaction. C. An employee overstates the amount of a legitimate refund and keeps the excess cash. D. The company's inventory balance on the books will be understated.

" An employee overstates the amount of a legitimate refund and keeps the excess cash.

"Which of the following best describes a mischaracterized reimbursement expense scheme? A. An employee alters a receipt to reflect a higher cost than what the employee actually paid and submits it for reimbursement. B. An employee produces a fictitious receipt and includes it with an expense report. C. An employee who travels frequently on business submits receipts from a hotel stay during a family vacation as a business expense. D. An employee submits a receipt for an item in one expense report and an email confirmation for the same item in the next period's expense report.

" An employee who travels frequently on business submits receipts from a hotel stay during a family vacation as a business expense.

"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: A. Fidelity insurance B. Casualty insurance C. Disability insurance D. An indemnity bond

" An indemnity bond

"Which of the following is the best definition of the automobile insurance scheme known as ditching? A. An agent collects a customer's premium, but he does not remit the payment to the insurance company. B. An insured falsely reports a vehicle as stolen to collect on an insurance policy. C. An insured has two insurance policies in place and files claims with both. D. An agent inflates his commissions by pressuring customers to unnecessarily replace existing policies for new ones.

" An insured falsely reports a vehicle as stolen to collect on an insurance policy.

"Which of the following situations would be MOST indicative of a customer committing new account fraud at a bank? A. An invalid address or phone number is listed in the customer's account information. B. A customer opens a new personal account and immediately requests two ATM cards. C. A customer opens a business account and soon after has payroll transactions on the account. D. A customer deposits a substantial amount of funds in a new personal account and does not spend or withdraw them for several months.

" An invalid address or phone number is listed in the customer's account information.

"Which of the following is NOT considered to be a red flag of a Ponzi scheme? A. A financial manager who puts an unusual amount of pressure on investors to act immediately B. An investment that has a history of inconsistent returns coinciding with fluctuations in financial markets C. An investment that promises extremely high or short-term returns with little risk involved D. A financial manager who manages, administers, and retains custody of the investment funds

" An investment that has a history of inconsistent returns coinciding with fluctuations in financial markets

"Tim, a cash register attendant at a department store, regularly inflates the amount of customer refunds. For instance, if a customer returns an item for $100, Tim records a $150 refund. Then Tim gives the customer $100 and keeps $50 for himself. This scheme is known as: A. Skimming B. A fictitious refund scheme C. A false void scheme D. An overstated refund scheme

" An overstated refund scheme

"Anna works as a cashier in an antiques store. Since the merchandise lacks barcodes, she has to enter the prices manually. One customer purchased a piece of furniture that cost $250 and paid in cash. Anna recorded the sale at $200 and kept the $50 bill. What type of fraud did Anna commit? A. An unrecorded sales (skimming) scheme B. A cash larceny scheme C. An understated sales (skimming) scheme D. Lapping of receivables

" An understated sales (skimming) scheme

"Green, a door-to-door appliance salesman, sold several appliances to households in a neighborhood. Green took the money the customers gave him as down payments for the sales and spent it. He did not turn the orders in to his employer. Green's scheme can best be classified as: A. A cash larceny scheme B. An understated sales (skimming) scheme C. An unrecorded sales (skimming) scheme D. A commission scheme

" An unrecorded sales (skimming) scheme

"Which of the following is the correct accounting model? A. Assets = Liabilities + Owners' Equity B. Assets = Liabilities - Owners' Equity C. Assets + Liabilities = Owners' Equity D. None of the above

" Assets = Liabilities + Owners' Equity

"Which of the following statements is TRUE regarding the balance sheet? A. Balance sheets are usually manipulated by understating assets or overstating liabilities. B. The balance sheet shows the financial performance of a company over a certain period of time, such as a quarter or a year. C. Assets are generally presented on the balance sheet in order of liquidity. D. The accounts that appear on the balance sheet include revenues and expenses.

" Assets are generally presented on the balance sheet in order of liquidity.

"What effect would the improper recording of an expenditure as a capitalized asset rather than as an expense have on the financial statements? A. Expenses would be overstated, giving the appearance of poor financial performance B. Assets would be falsely overstated, giving the appearance of a stronger company C. Net income would be falsely understated, lowering the company's tax liability D. None of the above

" Assets would be falsely overstated, giving the appearance of a stronger company

"When looking at a set of financial statements, on which statement would you find notes payable, current assets, retained earnings, and accumulated depreciation? A. Statement of changes in owners' equity B. Balance sheet C. Income statement D. Statement of cash flows

" Balance sheet

"All of the following are classifications of billing schemes EXCEPT: A. Personal purchases with company funds B. Bid rigging C. Invoicing via nonaccomplice vendors D. Shell company schemes

" Bid rigging

"ABC Paving and XYZ Asphalt are the only two companies in Greenwood County that lay asphalt. An audit reveals that the government is paying more for asphalt work in Greenwood County than in other counties in the region. A review of the records reveals that of the last ten asphalt contracts awarded in Greenwood County, five have gone to ABC and five have gone to XYZ. Which of the following procurement fraud schemes is most likely occurring? A. Bid rotation B. Product substitution C. Defective pricing D. Need recognition

" Bid rotation

"AD&N Railway solicits bids to lay several miles of new railroad track. Bob, who works for AD&N, writes the specifications for the project to provide that AD&N will only contract with companies that have more than 25 years of experience. Bob knows that only B&P Track Co., one of the prospective bidders, has more than 25 years of experience. What type of procurement fraud scheme has taken place? A. Bid alteration B. Bid tailoring C. Bid suppression D. Bid division

" Bid tailoring

"David runs a local catering company. He keeps his books on a calendar year and uses the accrual basis of accounting. In December of Year 1, a customer placed an order with him to cater the food for a party that would take place in February of Year 2. The contract was signed and the balance was paid in full when the order was placed in December. When should David report the revenue from this party and the associated expenses of catering it? A. Both the revenue and expenses should be recorded in February. B. The revenue should be recorded in December when David received the cash, and the expenses should be recorded in February after the party takes place. C. It doesn't matter; it is up to David to decide whether he reports the revenue and expenses in December or February. D. Both the revenue and expenses should be recorded in December.

" Both the revenue and expenses should be recorded in February.

"ABC Bank recently acquired a new portfolio of consumer loans. Because this particular loan portfolio is experiencing a higher than normal default rate, management has asked Bradley, a Certified Fraud Examiner, to evaluate the portfolio. Bradley notices that the loan package was sold without recourse to the broker, the brokerage fee was high relative to other purchases, and the broker is no longer in business. Which of the following types of schemes has Bradley most likely uncovered? A. Money transfer fraud B. Daisy chain fraud C. Brokered loan fraud D. Letter of credit fraud

" Brokered loan fraud

"A fraudster uses the email account of a company's president to impersonate the president and ask an employee to make a wire transfer. This can best be described as which of the following types of fraud schemes? A. Rock phishing B. Business email compromise C. Pharming D. Reverse social engineering

" Business email compromise

"Which of the following is NOT a reason why an identity thief might choose to target a business rather than an individual? A. Businesses' identification numbers are often publicly available online. B. Businesses usually engage in fewer transactions than individuals do. C. Businesses are less likely to notice new or unusual financial transactions. D. Businesses tend to have easier access to credit and a higher credit limit.

" Businesses usually engage in fewer transactions than individuals do.

"Grey, a controller for a small company, took a large sum of money from the company deposits and concealed the theft by making false accounting entries. The money Grey stole had already been recorded in his company's accounting system. Grey's scheme can best be classified as a(n): A. Cash larceny scheme B. Skimming scheme C. Illegal gratuities scheme D. Fraudulent financial statement scheme

" Cash larceny scheme

"Which of the following is NOT one of the three common methods for concealing liabilities and expenses on a company's financial statements? A. Liability/expense omissions B. Capitalized expenses C. Failure to disclose warranty costs and product-return liabilities D. Channel stuffing

" Channel stuffing

"Which of the following methods might be used to conceal a sham loan transaction in which the loan officer receives part of the proceeds (kickback)? A. Turning the loan over to a collections agency B. Letting the loan go into arrears C. Charging off the loan as a bad loan D. ""Digging"" the loan on the books

" Charging off the loan as a bad loan

"If an employee intercepts a company check intended for a third party and converts that check for his own benefit, he has committed: A. Skimming B. Check tampering C. Billing fraud D. Economic extortion

" Check tampering

"Elizabeth, a grocery store cashier, slips on a wet floor and falls while at work. She is unharmed, but she pretends to suffer an injury from the fall. She files a claim against the store's workers' compensation insurance policy, and she collects payments from the insurance carrier. She also misses several weeks of work, even though she is fully capable of working. Under which category of workers' compensation schemes does Elizabeth's scheme fall? A. Premium fraud B. Organized fraud C. Claimant fraud D. Agent fraud

" Claimant fraud

"Which of the following types of malware can be used to generate illicit income in the form of cryptocurrency, while slowing down an infected computer and causing victims to incur costs related to power usage or cloud storage? A. Spyware B. Coin miners C. Overwrite viruses D. Keyloggers

" Coin miners

"Which of the following is NOT a common red flag of a bid tailoring scheme? A. A contract is not rebid even though fewer than the minimum number of bids are received. B. Competitive awards vary among several suppliers. C. There are unusually broad specifications for the type of goods or services being procured. D. Only a few bidders respond to bid requests.

" Competitive awards vary among several suppliers.

"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? A. Conducting a financial statement analysis B. Reviewing all disbursements below the approval limit C. Educating employees who are responsible for handling currency D. Conducting a review of source documents

" Conducting a review of source documents

"Which of the following lists the information security goals that an e-commerce system should achieve for its users and asset holders? A. Exactness, invulnerability, accuracy, materiality, and data/systems response B. Confidentiality, integrity, availability, authentication, and non-repudiation C. Penetrability, accuracy, exactness, materiality, and systems reliability D. Penetrability, accuracy, availability, authentication, and systems reliability

" Confidentiality, integrity, availability, authentication, and non-repudiation

"Chapman Inc. has always used the last-in, first-out (LIFO) inventory valuation method when calculating its cost of goods sold. This is also the standard inventory valuation method for other comparable entities in Chapman's industry. Chapman's controller wants to change to the first-in, first-out (FIFO) method because it will make Chapman's net income appear much larger than LIFO valuation will. After several years of poor performance, management wants to boost the company's appearance to potential investors. However, Chapman must continue to use the LIFO inventory valuation method. This is reflected in which U.S. GAAP principle? A. Going concern B. Full disclosure C. Consistency D. Valuation

" Consistency

"Which of the following factors enables or enhances fraudsters' abilities to conduct account takeover schemes? A. The increased use of multifactor authentication B. Consumers using the same login and password information on multiple accounts C. Payment accounts offering the ability to be notified when they are accessed or changed D. Customers regularly checking their online accounts for changes

" Consumers using the same login and password information on multiple accounts

" "Common fraud schemes involving ATMs include all of the following EXCEPT: A. Credit data blocking B. Employee manipulation C. Counterfeit ATM cards D. Unauthorized access to PINs and account codes

" Credit data blocking

"______________ is a term used to classify malicious software that is intended to facilitate criminal behavior. A. Adware B. Freeware C. Crimeware D. Botnet

" Crimeware

"Which of the following appears on the balance sheet? A. Expenses B. Cost of goods sold C. Revenues D. Current assets

" Current assets

"Which financial ratio is calculated by dividing current assets by current liabilities? A. Profit margin B. Current ratio C. Receivable turnover D. Quick ratio

" Current ratio

"In a _________, a bank buys, sells, and swaps its bad loans for the bad loans of another bank, creating new documentation in the process. A. Linked financing arrangement B. False swap scheme C. Reciprocal loan arrangement D. Daisy chain

" Daisy chain

"If a fraudster wants to conceal the misappropriation of cash, which of the following actions will NOT result in a balanced accounting equation? A. Decreasing a liability B. Reducing owners' equity C. Creating an expense D. Decreasing another asset

" Decreasing another asset

"Which of the following is NOT a problem situation regarding a construction loan that might be concealed using change orders? A. Shortcuts are shoring up other problems. B. The original project is not feasible. C. Collusive bidding is occurring. D. Design changes were requested.

" Design changes were requested.

"Which of the following is NOT an appropriate technique for detecting a nonconforming goods or services scheme? A. Review the inspection and testing reports of questioned goods or materials. B. Determine if contract costs have exceeded or are expected to exceed the contract value. C. Conduct unannounced inspections of questioned goods or materials. D. Interview procurement personnel about the presence of any red flags.

" Determine if contract costs have exceeded or are expected to exceed the contract value.

"When a task force is charged with developing a program for safeguarding proprietary information (SPI), which of the following should be the first step that it takes? A. Develop an employee awareness program. B. Institute an encryption policy. C. Determine what information should be protected. D. Shred sensitive documents.

" Determine what information should be protected.

"A virus that loads itself onto the target system's memory, infects other files, and then unloads itself is called a: A. Direct-action virus B. Network virus C. Boot sector virus D. None of the above

" Direct-action virus

"The purpose of draw requests in construction lending is to provide: A. Documentation that the construction project cannot continue without additional funding B. Documentation that the design is approved by the International Union of Architects C. Documentation that costs have been incurred and reimbursement is sought D. Documentation that all architectural and engineering designs and quotes have been completed

" Documentation that costs have been incurred and reimbursement is sought

"Workers' compensation schemes are generally broken into four categories. Which of the following is NOT one of these categories? A. Double duty fraud B. Claimant fraud C. Premium fraud D. Agent fraud

" Double duty fraud

"Zane obtained a loan from Bank A, agreeing to give the bank a security interest in his commercial property. Before Bank A's lien was filed, Zane managed to get another loan from Bank B using the same commercial property as collateral (unbeknownst to Bank B). In which of the following schemes did Zane engage? A. Linked financing B. Sham loan C. Double-pledging collateral D. Daisy chain

" Double-pledging collateral

"Which of the following is NOT a common carrier of malware? A. Dual in-line memory modules B. Files downloaded from the Internet C. Freeware and shareware files D. Email attachments

" Dual in-line memory modules

"Mario, an employee of a person-to-person payment company, has been writing down the account numbers and passwords of customer accounts with the intent of fraudulently using them to pay for items he purchases online. Mario is engaging in: A. EFT fraud B. Credit card fraud C. Check fraud D. None of the above

" EFT fraud

"When an employee or official uses force or fear to demand money in exchange for making a particular business decision, that individual is engaging in: A. An illegal gratuity scheme B. Bribery C. Economic extortion D. A kickback scheme

" Economic extortion

"Daniel, a plant manager for a utility company, has his own commercial cleaning business on the side. Daniel threatened to withhold business from any vendors of the utility company that did not hire his cleaning business for their office cleaning needs. Which of the following best describes the type of corruption scheme in which Daniel engaged? A. Kickback scheme B. Collusion scheme C. Illegal gratuity scheme D. Economic extortion scheme

" Economic extortion scheme

"All of the following are options for authenticating users in information systems EXCEPT: A. Profiling software B. Encryption C. Card-based systems D. Biometrics

" Encryption

"___________ is the deliberate scrambling of a message so that it is unreadable except to those who hold the key for unscrambling the message. A. Alteration of input B. Firewall security C. Encryption D. Customer validation

" Encryption

"Which of the following would be considered a forged maker scheme? A. Jeff is an employee at Carlisle Company. He obtains a check intended for Lewis, one of Carlisle's vendors. Jeff covers up Lewis's name with correction fluid, inserts his own name, and cashes the check for himself. B. Stewart intercepts a check written from his employer, Alamo Corp., to Richard Johnson, one of Alamo's contractors. He then forges Johnson's name on the check's endorsement line and cashes it for himself. C. Erica steals a check from her employer, makes it payable to herself, and then forges the CFO's signature on the check. The CFO is an authorized check signer at the company. D. Lindsay's employer writes her a check to reimburse her for travel expenses. The check is for $350. She carefully changes the 3 to an 8 so that the check amount now appears to be $850.

" Erica steals a check from her employer, makes it payable to herself, and then forges the CFO's signature on the check. The CFO is an authorized check signer at the company.

"A draw request on a construction loan should be accompanied by all of the following EXCEPT: A. Expenses from similar contracts B. Inspection reports C. Lien releases from subcontractors D. Change orders, if applicable

" Expenses from similar contracts

" "Because it is a common occurrence, the fact that documents are missing from a loan file is generally not a red flag for loan fraud. A. True B. False

" FALSE

" "Reconciling the cash register total to the amount of cash in the drawer is an ineffective method of detecting a cash larceny scheme. A. True B. False

" FALSE

"A Ponzi scheme can best be described as an illegal business structure that might offer merchandise or services but generates almost all of its revenues from the relentless recruitment of new members. A. True B. False

" FALSE

"A company must disclose all contingent liabilities in the notes to the financial statements, regardless of the liabilities' probability or materiality. A. True B. False

" FALSE

"A forged maker scheme is a check tampering scheme in which an employee intercepts a company check intended for a third party and converts the check by signing the third party's name on the check's endorsement line. A. True B. False

" FALSE

"A skimming scheme is easier to detect than a cash larceny scheme because it leaves an audit trail. A. True B. False

" FALSE

"ABC Corporation is the defendant in a class-action lawsuit for selling defective consumer products. While the lawsuit is estimated to continue for several more years, ABC's management believes that it is reasonably possible that the company will lose the lawsuit and be ordered to pay a significant amount of damages to the plaintiffs. ABC does NOT have to disclose a liability related to the lawsuit in its financial statements. A. True B. False

" FALSE

"After paying the ransom demanded by the fraudster, a ransomware victim is always granted access to all locked files on the compromised computer. A. True B. False

" FALSE

"All organizations with a pyramid structure are illegal. A. True B. False

" FALSE

"Assets, liabilities, and owners' equity are all items that appear on a company's balance sheet. A. True B. False

" FALSE

"Bank reconciliations should be performed by an authorized signatory on the account. A. True B. False

" FALSE

"Both falsely increasing the perpetual inventory balance and failing to reconcile inventory records are ways a fraudster might conceal inventory shrinkage. A. True B. False

" FALSE

"Bruce, a manager for a retail store, suspects his cashiers of skimming sales. Bruce will be able to detect this kind of scheme by comparing their register totals to the amount of money in their cash drawers. A. True B. False

" FALSE

"Credit card fraud is difficult to execute because the chances of getting caught are quite high. A. True B. False

" FALSE

"Cryptocurrencies are subject to significant monitoring and government regulation. A. True B. False

" FALSE

"Debits increase asset and liability accounts. A. True B. False

" FALSE

"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. A. True B. False

" FALSE

"Electronic payment tampering is generally easier to detect than traditional check tampering because it leaves a clear audit trail. A. True B. False

" FALSE

"Employment identity theft occurs when a fraudster impersonates a business to commit financial fraud. A. True B. False

" FALSE

"Entries to the left side of an account are referred to as credits, while entries to the right side of an account are debits. A. True B. False

" FALSE

"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. A. True B. False

" FALSE

"Financial statement fraud is the intentional or erroneous misrepresentation of the financial condition of an enterprise. A. True B. False

" FALSE

"For corporate espionage purposes, technical surveillance generally consists of gathering documentary evidence or information that can be found via open sources. A. True B. False

" FALSE

"For employee expense reimbursement requests, electronic receipts are preferred to paper receipts because they are more difficult to alter or forge. A. True B. False

" FALSE

"Horizontal analysis is a technique for analyzing the relationships among the items on an income statement, balance sheet, or statement of cash flows by expressing line items as percentages of a specific base item. A. True B. False

" FALSE

"If compliance with generally accepted accounting principles (GAAP) would be significantly more expensive than a different method that isn't GAAP, use of an alternative method is permitted. A. True B. False

" FALSE

"Implementing privilege escalation and using buffer overflow exploits are examples of administrative controls used for securing computer systems and communication networks. A. True B. False

" FALSE

"In investigating whether financial statements have been manipulated to make a company appear more profitable, a Certified Fraud Examiner should look for liabilities that have been overstated. A. True B. False

" FALSE

"James is a purchaser for a large government entity. ABC Inc. tells James that if he will award ABC at least $5 million in contracts over the next two years, ABC will hire James at the end of the two years at twice his current salary. Because no actual money changes hands, this could not be considered a bribery or corruption scheme. A. True B. False

" FALSE

"Large businesses are usually at greater risk for business identity theft than smaller ones. A. True B. False

" FALSE

"Like most other types of fraud, the motivation for financial statement fraud almost always involves personal gain. A. True B. False

" FALSE

"Many health care claims are now paid via EDI (Electronic Data Interchange). Because EDI leaves no paper trail, it makes detecting fraud in the health care industry easier. A. True B. False

" FALSE

"Nondisclosure agreements are generally an expensive and inefficient means of protecting an organization's proprietary information. A. True B. False

" FALSE

"One method competitive intelligence professionals commonly use to gather data about a competitor involves posing as a job applicant and interviewing with key employees at the competing company. This practice is best described as conducting surveillance. A. True B. False

" FALSE

"Pass-through schemes are usually undertaken by employees who receive inventory on the victim company's behalf. A. True B. False

" FALSE

"Password cracking is a method that attackers use to gain unauthorized access to a computer system by bypassing password security through the use of undocumented system functions. A. True B. False

" FALSE

"Physical access controls refer to the process by which users are allowed access to computer programs, systems, and networks. A. True B. False

" FALSE

"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 by falsely claiming to be from an actual business, bank, ISP, or other entity. A. True B. False

" FALSE

"Second-hand computers, media drives, and mobile phones are safe from identity thieves if the former owner has manually deleted all personal information from such devices. A. True B. False

" FALSE

"Seniors are usually more likely to report identity theft than younger victims. A. True B. False

" FALSE

"Special care facilities generally have the capability to meet all of their patients' needs without the services of outside providers, leading to a lower likelihood of fraud involving such institutions. A. True B. False

" FALSE

"Telemarketing schemes target individuals, not businesses. A. True B. False

" FALSE

"The accounting concept of consistency prohibits any change in an accounting principle previously employed. A. True B. False

" FALSE

"The accounts receivable clerk should be responsible for both collecting cash and disbursing company funds. A. True B. False

" FALSE

"The accounts receivable clerk should be responsible for preparing the bank deposit. A. True B. False

" FALSE

"The asset turnover ratio is used to assess a company's ability to meet sudden cash requirements. A. True B. False

" FALSE

"The chances of being arrested and prosecuted for check fraud are high, and the penalties are relatively severe. A. True B. False

" FALSE

"The debt-to-equity ratio is computed by dividing current liabilities by total equity. A. True B. False

" FALSE

"The equipment needed to run a check fraud ring is very expensive and difficult to obtain. A. True B. False

" FALSE

"The person who is responsible for the shipment of inventory should also be responsible for the conversion of inventory to scrap. A. True B. False

" FALSE

"The primary purpose of physical access controls is to prevent unauthorized access to computer software. A. True B. False

" FALSE

"The primary reason for a company's management to construct an electronically and acoustically shielded quiet room is to protect the company's computer servers and other sensitive electronic equipment. A. True B. False

" FALSE

"The quick ratio is used to determine the efficiency with which a company uses its assets. A. True B. False

" FALSE

"The statement of cash flows includes the following categories: cash flows from strategic activities, cash flows from operating activities, cash flows from investing activities, and cash flows from financing activities. A. True B. False

" FALSE

"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. A. True B. False

" FALSE

"To help detect cash larceny, the person responsible for collecting incoming cash should also prepare the bank deposits. A. True B. False

" FALSE

"Traditional identity theft involves the use of entirely fabricated personal information or a combination of real and fabricated information to create a new identity. A. True B. False

" FALSE

"Vertical analysis can best be described as a technique for analyzing a percentage change from one accounting period to the next. A. True B. False

" FALSE

"Victims of consumer fraud are more likely to be organizations or businesses rather than individuals. A. True B. False

" FALSE

"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. A. True B. False

" FALSE

"Wealth in a virtual economy can only be generated by spending significant time and effort participating in massively multiplayer online (MMO) gaming platforms to slowly earn in-game currency. A. True B. False

" FALSE

"Which of the following statements is TRUE with regard to factoring companies? A. Factoring groups buy credit card receipts from telemarketing operations at a discount. B. Factoring companies in Asian and European countries tend to charge more for their services than factoring companies in other countries. C. Factoring companies approach banks on a telemarketer's behalf in order to secure credit card processing services. D. Factoring is illegal in all jurisdictions.

" Factoring groups buy credit card receipts from telemarketing operations at a discount.

"Which of the following is a method by which contractors can inflate material costs in negotiated contracts? A. Estimating costs based on valid cost allocation methods B. Obtaining materials at stated prices from third parties C. Disclosing residual inventory D. Failing to disclose discounts and credits

" Failing to disclose discounts and credits

"Which of the following situations can constitute health care fraud committed by an insurance company? A. Failing to pay a claim because the claim is missing required information B. Submitting cost data to health care regulators to justify rate increases C. Failing to follow procedures to detect fraudulent claims when acting as an intermediary for another insurance program D. All of the above

" Failing to follow procedures to detect fraudulent claims when acting as an intermediary for another insurance program

"Roxanne works in the accounting department of a bank, but is having difficulty paying her personal expenses. She decides to debit the bank's general ledger and credit her own account. Which of the following best describes Roxanne's scheme? A. Sham loan B. Unrecorded cash payment C. Daisy chain D. False accounting entry

" False accounting entry

"Which of the following is NOT a method that a fraudster might use to conceal inventory shrinkage? A. Altering the perpetual inventory records to decrease the balance B. Falsely increasing the perpetual inventory figure C. Physical padding of inventory D. Writing off stolen inventory as scrap

" Falsely increasing the perpetual inventory figure

"_________________ is the most common type of identity theft. A. Medical identity theft B. Business identity theft C. Financial identity theft D. Criminal identity theft

" Financial identity theft

"_____________________ 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. A. Accounting fraud B. Material misstatement C. Occupational fraud D. Financial statement fraud

" Financial statement fraud

"Which of the following best describes how a baiting scheme works in the context of identity theft? A. Fraudsters use telephone calls or voice messages to manipulate targets into revealing personal or business information. B. Fraudsters use imitation websites to trick computer users into entering sensitive data. C. Fraudsters trick victims into inserting malware-infected data storage devices into their computers. D. Fraudsters impersonate the victim's bank to persuade the victim into releasing information. Submit Answer

" Fraudsters trick victims into inserting malware-infected data storage devices into their computers.

"Which of the following is NOT an example of a business email compromise scheme? A. Fraudsters posing as a company's foreign supplier send an email to the company and request that funds be transferred to an alternate account controlled by the fraudsters. B. Fraudsters use botnets to send massive amounts of emails for the purpose of enticing users to click on a fraudulent URL. C. Fraudsters use the compromised email account of a high-level executive to pose as the executive and ask an employee to transfer funds to the fraudsters' account. D. Fraudsters use the compromised email account of a high-level executive to request employees' tax information or other personally identifiable information from the person responsible for maintaining such information.

" Fraudsters use botnets to send massive amounts of emails for the purpose of enticing users to click on a fraudulent URL.

"Karl finds a residential property with a non-resident owner. He then forges contractual property documents showing that the owner is transferring ownership of the property completely to Karl, such as would normally happen during a property sale. The property owner is unaware that Karl has created and filed the documents. Later, Karl takes the falsified documents to a lender and borrows money against the property. Which of the following best describes Karl's scheme? A. Property flipping B. Fraudulent sale C. Air loan D. Unauthorized draw on home equity line of credit

" Fraudulent sale

"Delta, a Certified Fraud Examiner and expert accounting witness in the United States, was explaining to the jury that a company's financial statements must include information on changes in accounting methods, contingent liabilities, significant subsequent events, and all other information necessary for users to make valid, informed decisions. Delta was explaining the concept of: A. Consistency B. Going concern C. Full disclosure D. None of the above

" Full disclosure

"Which of the following schemes refers to the falsification of personnel or payroll records, causing paychecks to be generated to someone who does not actually work for the victim company? A. Ghost employee scheme B. Falsified salary scheme C. Inflated commission scheme D. Record alteration scheme

" Ghost employee scheme

"All of the following are types of expense reimbursement schemes EXCEPT: A. Multiple reimbursements B. Ghost expense reports C. Mischaracterized expenses D. Fictitious expenses

" Ghost expense reports

"The assumption that a business will continue indefinitely is reflected in the accounting concept of: A. Cost B. Going concern C. Objective evidence D. Materiality

" Going concern

"Which of the following statements is TRUE with regard to gross margin? A. Gross margin is equal to net sales less cost of goods sold. B. Gross margin is another term for net income. C. Gross margin is equal to revenues less operating expenses. D. Gross margin is the top line of the income statement.

" Gross margin is equal to net sales less cost of goods sold.

"Shredding sensitive documents with a cross-cut shredder, sending and receiving mail at a secure site, and employing a perimeter security system at the office are all measures aimed to do which of the following? A. Prevent misappropriation of office supplies. B. Protect digital documentation. C. Guard manual file systems. D. Catch a fraudster in the act.

" Guard manual file systems.

"All of the following are measures that would be helpful in preventing cash larceny schemes EXCEPT: A. Assigning an employee's duties to another individual when that employee goes on vacation B. Having all employees use the same cash register for their transactions C. Sending out a company-wide communication informing employees of the company's surprise cash count policy D. Ensuring that the duties of making bank deposits and performing bank reconciliations are assigned to different individuals

" Having all employees use the same cash register for their transactions

"Which of the following control procedures will NOT help prevent payroll fraud? A. Having the employee who prepares the payroll also review and sign all payroll checks B. Keeping the payroll accounting function independent of the general ledger function C. Maintaining personnel records separately from payroll and timekeeping functions D. Prenumbering payroll checks and issuing them in numerical sequence

" Having the employee who prepares the payroll also review and sign all payroll checks

"Generally speaking, under U.S. GAAP, _________________ is the proper basis for recording a piece of equipment on a company's books. A. Estimated replacement value B. Appraised value C. Historical cost D. Current market value

" Historical cost

"Traditionally, there are two methods of percentage analysis of financial statements. They are: A. Balance sheet and income statement analysis B. Horizontal and vertical analysis C. Vertical and historical analysis D. Horizontal and historical analysis

" Horizontal and vertical analysis

"Which of the following is the best description of what is shown on a company's income statement? A. How much profit (or loss) the company earned over a particular period of time B. The company's financial position at a specific point in time C. The company's sources and uses of cash during a particular period of time D. The changes in the total owners' equity amount listed on the balance sheet

" How much profit (or loss) the company earned over a particular period of time

"To detect provider fraud, a fraud examiner should be alert for which of the following red flags? I. Pressure for rapid processing of claims II. Frequent telephone inquiries on claim status III. No supporting documentation for charges (e.g., lab results) IV. Patient's address on the claim form is the same as the provider's A. I and II only B. II and III only C. I, II, III, and IV D. III and IV only

" I, II, III, and IV

"Which of the following types of accounting changes must be disclosed in an organization's financial statements? I. Changes in estimates II. Changes in accounting principles III. Changes in reporting entities A. I and II only B. II and III only C. I, II, and III D. I and III only

" I, II, and III

"Which of the following are considered red flags of insider computer fraud? I. Access privileges limited to those required to perform assigned tasks. II. Access logs are not reviewed. III. Production programs are run during normal business hours. IV. Exception reports are not reviewed and resolved. A. II and IV only B. III and IV only C. I and III only D. I, II, III, and IV

" II and IV only

"Which of the following are information security goals that an e-commerce system should endeavor to meet for its users and asset holders? I. Penetrability of data II. Materiality of data III. Integrity of data IV. Availability of data A. II and III only B. III and IV only C. I, II, and III only D. I, II, III, and IV

" III and IV only

"Ed Smith, a city commissioner, negotiated a land development deal with a group of private investors. After the deal was approved, the investors rewarded Smith with an all-expenses-paid trip, even though giving such rewards to government officials is prohibited by law. Which of the following is the most appropriate term to describe what has taken place? A. Economic extortion B. Collusion C. Need recognition D. Illegal gratuity

" Illegal gratuity

"Which of the following is a technical or administrative control for securing computer systems and communication networks? A. Implementing logical access controls B. Using an intrusion admission system C. Installing a network address prevention system D. Implementing privilege escalation

" Implementing logical access controls

"Which of the following best describes the difference between a flipping scheme and a flopping scheme in the context of mortgage fraud? A. In a flopping scheme, the second transaction in the scheme usually occurs several years after the first. B. In a flopping scheme, the lender is not one of the potential victims of the scheme. C. In a flopping scheme, the original seller always ends up as the final owner of the property. D. In a flopping scheme, the value of the first transaction is deflated instead of inflating the second transaction.

" In a flopping scheme, the value of the first transaction is deflated instead of inflating the second transaction.

"The ____________ details how much profit (or loss) a company earned over a particular period of time. A. Income statement B. Statement of changes in owners' equity C. Balance sheet D. Statement of cash flows

" Income statement

"The statement of changes in owners' equity acts as the connecting link between which two financial statements? A. Balance sheet and statement of retained earnings B. Income statement and balance sheet C. Income statement and statement of cash flows D. Statement of cash flows and balance sheet

" Income statement and balance sheet

"If a fraudster wants to conceal the removal of a liability from the books, which of the following actions will NOT balance the accounting equation? A. Increasing an asset B. Increasing owners' equity C. Increasing a different liability D. Increasing revenue

" Increasing an asset

"Which of the following groups is NOT a favorite target of identity thieves? A. Seniors B. Independent contractors C. College students D. Members of the military

" Independent contractors

"Heidi, a Certified Fraud Examiner and internal auditor for a health care program, has been asked to review the program's system of internal controls in the claims processing area. Heidi has decided to present the management of the unit with a list of general indicators for fraud that are applicable to many health insurance fraud schemes by program beneficiaries. All of the following would be included on Heidi's list EXCEPT: A. Threats of legal action when a claim is not paid quickly B. Individuals who mail their claim and ask for their claim payment to be sent through direct bank transfer C. Pressure by a claimant to pay a claim quickly D. Anonymous telephone or email inquiries regarding the status of a pending claim

" Individuals who mail their claim and ask for their claim payment to be sent through direct bank transfer

"All of the following can help prevent a computer from being infected by malicious software EXCEPT: A. Installing shareware into a system's root directory B. Updating the operating system regularly C. Updating with the latest security patches D. Using anti-malware software

" Installing shareware into a system's root directory

"Which of the following refers to the type of network security systems that are designed to supplement firewalls and other forms of network security by detecting malicious activity coming across the network or on a host? A. Intrusion admission systems B. Network access controls C. Intrusion detection systems D. Network address prevention systems

" Intrusion detection systems

"An analytical review reveals that Rollins Company's cost of goods sold increased by 80% last year. Its sales, however, only increased by 40%. What might this discrepancy indicate? A. Inventory has been depleted by theft. B. The quantity of items purchased decreased. C. There were more sales returns this year than in the prior year. D. Sales were unusually poor this year versus last year.

" Inventory has been depleted by theft.

"Which of the following describes the primary purpose of an ACH filter? A. It is a tool used by auditors to examine electronic payment activity on the bank records. B. It matches the details of incoming payments with those on a list of expected payments provided by the account holder. C. It enables account holders to provide their banks with a list of criteria to ensure only designated individuals get paid. D. It requires the bank to contact the account holder before any payments are made.

" It enables account holders to provide their banks with a list of criteria to ensure only designated individuals get paid.

"Which of the following statements is NOT true regarding the statement of changes in owners' equity? A. It acts as the connecting link between the balance sheet and the income statement. B. It serves a similar purpose to the statement of retained earnings. C. It shows how amounts on the income statement flow through to the balance sheet. D. It lists the major company shareholders and the change in their ownership equity over the fiscal year.

" It lists the major company shareholders and the change in their ownership equity over the fiscal year.

"Lindsey, a medical provider, provides monetary payments to existing patients and to other providers for referring new patients to her practice. Which of the following best describes Lindsey's scheme? A. Deductible forfeiture B. Kickback C. Fictitious services D. Beneficiary fraud

" Kickback

"David is an accounts receivable clerk at Richmond Storage Rental. Carson, who rents one of the company's storage units, submits his monthly payment to Richmond's office. Instead of applying the payment to Carson's account, David takes the money and keeps it for himself. The next payment that arrives comes from Fisher. Instead of applying Fisher's payment to the correct account, David applies it to Carson's account so that it doesn't appear delinquent. The next payment that arrives gets applied to Fisher's account, and David continues to apply incoming customer payments to the previous customer's account so that no one discovers his theft of Carson's payment. What type of scheme is David committing? A. Padding B. Substitution C. Lapping D. Kiting

" Lapping

"The method of concealing a receivables skimming scheme whereby one customer account is credited for a payment that was made on another account is called which of the following? A. Inventory padding B. Altered payee designation C. Lapping D. Currency substitution

" Lapping

"Loyalty programs are susceptible to fraud for all of the following reasons EXCEPT: A. Some airlines allow the conversion of travel points for tickets in another person's name. B. Loyalty points can often be used to purchase sellable items such as gift cards. C. Many loyalty programs allow the transfer of points from one account to another. D. Loyalty points can only be used for products or services offered by the original company.

" Loyalty points can only be used for products or services offered by the original company.

"Which of the following statements concerning fraud involving special care facilities is TRUE? A. Many patients in special care facilities are less likely to report fraud because they often are not responsible for their own financial affairs B. When fraud is committed against special care facilities, it is common for victims to obtain repayment from the perpetrators C. It is difficult for fraud in special care facilities to be committed in high volume because patients are located in close proximity to each other D. All of the above

" Many patients in special care facilities are less likely to report fraud because they often are not responsible for their own financial affairs

"Which U.S. GAAP principle requires corresponding expenses and revenue to be recorded in the same accounting period? A. Matching B. Conservatism C. Full disclosure D. Consistency

" Matching

"Which of the following does NOT happen in a fictitious refund scheme? A. The company's inventory is overstated. B. Merchandise is returned to the stock room. C. The register log balances with the amount of money in the register. D. A fraudster processes a transaction as if a customer were returning merchandise.

" Merchandise is returned to the stock room.

"Which of the following is NOT a common red flag of procurement fraud schemes involving collusion among contractors? A. More competitors than usual submit bids on a project or product. B. There is limited competition within the industry. C. Bid prices begin to fall when a new competitor enters the competition. D. The same contractors bid on each project or product. Submit Answer

" More competitors than usual submit bids on a project or product.

"Baker used his company credit card to pay for a business dinner at which he was entertaining a client, knowing the credit card bill would be paid by Baker's employer. Baker saved the receipt and later filed an expense report seeking reimbursement for the cost of the meal, attaching the receipt as support. This is an example of what kind of fraud? A. False billing scheme B. Multiple reimbursement scheme C. Personal purchases with company funds D. Mischaracterized expense scheme

" Multiple reimbursement scheme

"Which of the following types of procurement fraud schemes involves procurement employees who convince their employer, the procuring entity, that it needs excessive or unnecessary products or services? A. Nonconforming goods schemes B. Need recognition schemes C. Bid manipulation schemes D. Bid tailoring schemes

" Need recognition schemes

"Which of the following is an information security goal that an e-commerce system should endeavor to meet for its users and asset holders? A. Systems reliability B. Exactness C. Access authority D. Non-repudiation

" Non-repudiation

"A contractor who delivers materials of lesser quality than specified in the contract or uses a lower quality staff than specified in the contract might be involved in which of the following types of procurement fraud schemes? A. Nonconforming goods or services fraud B. Material mischarging fraud C. Product division fraud D. Labor mischarging fraud

" Nonconforming goods or services fraud

"Jason, an employee at Go Marketing, has just informed his supervisor that he intends to leave the company and go to work for a competitor. Upon accepting his resignation, Jason's boss reminds him of a document that he signed several years prior in which Jason agreed not to divulge confidential or proprietary company information. What is the name of the document that Jason signed? A. Noncompetition agreement B. Employee testimonial statement C. Nondisclosure agreement D. Employee awareness statement

" Nondisclosure agreement

"Which of the following is an accurate definition of SMiShing? A. Obtaining sensitive data by impersonating a government official B. Stealing data from payroll accounts through the use of computers C. Obtaining sensitive data through the use of short message services D. Stealing private financial data through the use of voice mail

" Obtaining sensitive data through the use of short message services

"When a construction developer submits a draw request to a lender, all of the following would be red flags for loan fraud EXCEPT: A. Invoice documentation that appears altered B. Missing inspection reports C. Failure to include lien releases from each subcontractor D. Omission of developer's personal account statements

" Omission of developer's personal account statements

"All of the following are best practices for ensuring separation of duties within the information technology department and between information systems and business unit personnel EXCEPT: A. IT departments should not overlap with information user departments. B. Program developers should not be responsible for testing programs. C. Only programmers should be server administrators. D. End users should not have access to production data outside the scope of their normal job duties.

" Only programmers should be server administrators.

"Publicly available information that anyone can lawfully obtain by request, purchase, or observation is known as which of the following? A. Open-source information B. Free-source information C. Confidential-source information D. Wide-source information

" Open-source information

" "In a construction loan, developer overhead is a ripe area for abuse. The purpose of developer overhead is to provide: A. Labor reimbursements B. Profit margin C. Budget shortfall D. Operating capital

" Operating capital

"Zach was booking travel arrangements for a business trip. He purchased an airline ticket online using his own funds and obtained a receipt for the ticket via email. Using photo-editing software, Zach inflated the ticket price on the electronic receipt and submitted the altered receipt to his employer for reimbursement. This is an example of what type of fraud scheme? A. Multiple reimbursement scheme B. Overstated expense scheme C. Mischaracterized expense scheme D. Personal purchases with company funds

" Overstated expense scheme

"Which of the following is the term used to describe the method of gaining unauthorized access to a computer system in which attackers use an automated process to guess a system user's passwords? A. Password sniffing B. Password cracking C. Password logging D. Password engineering

" Password cracking

"Jeremy is involved in an automobile accident but does not have insurance. To be reimbursed for the damages, he gets insurance, waits a short time, and then reports the vehicle as having been in an accident. He has committed an insurance scam known as _____________. A. Past posting B. Ditching C. Churning D. None of the above

" Past posting

"Which of the following statements about the methods used to make corrupt payments in bribery and corruption schemes is INCORRECT? A. Payers often make corrupt payments by using their credit cards to pay recipients' transportation, vacation, and entertainment expenses. B. Payers often make corrupt payments by making outright payments falsely described as innocent loans. C. Payers often make corrupt payments by buying assets from recipients and allowing the recipients to retain title or use of the items. D. Payers often make corrupt payments by selling property to recipients at prices higher than the property's market value. Submit Answer

" Payers often make corrupt payments by selling property to recipients at prices higher than the property's market value.

"There are two methods for recognizing revenue on long-term construction contracts. Which of the following is one of those methods? A. Partial-contract method B. Cost-to-completion method C. Percentage-of-completion method D. Contract-valuation method

" Percentage-of-completion method

"All of the following are methods of identity theft prevention recommended for businesses EXCEPT: A. Perform audits of information-handling practices only when required to do so by regulators. B. Restrict the use of laptops to those employees who need them to do their jobs. C. Limit employees' access to customers' personal information. D. Conduct background checks on prospective employees when permitted by law to do so.

" Perform audits of information-handling practices only when required to do so by regulators.

"_________ is an attack in which a user is fooled into entering sensitive data into a malicious website that imitates a legitimate website. A. SMiShing B. Spear phishing C. Phishing D. Pharming

" Pharming

"_______________ is a system by which the bank verifies checks presented for payment against the list provided by the company of approved checks written on the account. A. Positive pay B. Check matching C. Verification control D. Payment patrol

" Positive pay

"Which of the following is NOT a common type of credit card fraud? A. Card counterfeiting B. Profiling C. Advance payments D. Skimming

" Profiling

"Which of the following is NOT a type of physical access control device that can be used to control access to physical objects? A. Biometric systems B. Locks and keys C. Profiling software D. Electronic access cards

" Profiling software

"All of the following measures are recommended to help mitigate the risk of billing schemes EXCEPT: A. Separate the purchasing function from the payment function. B. Provide objective compensation for purchasing staff. C. Implement a hotline function. D. Prohibit competitive bidding.

" Prohibit competitive bidding.

"Which of the following can best be described as fraud perpetrated by medical practitioners, medical suppliers, or medical institutions on patients or health care programs to increase their own income by illicit means? A. Beneficiary fraud B. Provider fraud C. Insurer fraud D. Uncovered party fraud

" Provider fraud

"Which of the following statements about ransomware is TRUE? A. Ransomware is a form of malware that locks a user's operating system and restricts access to data files until a payment is made. B. Ransomware is a program or command procedure that gives the appearance of being useful but in fact contains hidden malicious code that causes damage. C. Ransomware is a classification of malware designed to simplify or automate online criminal activities. D. Ransomware is a type of software that collects and reports information about a computer user without the user's knowledge or consent.

" Ransomware is a form of malware that locks a user's operating system and restricts access to data files until a payment is made.

"Which of the following is a means of measuring the relationship between two different financial statement amounts? A. Ratio analysis B. Transaction detail analysis C. Statement comparison D. Relational comparison

" Ratio analysis

"Which of the following is NOT an effective control to protect against skimming schemes? A. Restricting the accounts receivable clerk from preparing the bank deposit B. Reconciling the sales records to the cash receipts C. Installing visible video cameras to monitor a store's cash registers D. Reconciling the physical inventory count with the perpetual inventory records

" Reconciling the sales records to the cash receipts

"Which of the following financial statement manipulations is NOT a type of improper asset valuation scheme? A. Overstated accounts receivable B. Inflated inventory valuation C. Recording expenses in the wrong period D. Booking of fictitious assets

" Recording expenses in the wrong period

"Which of the following would be considered a timing difference financial statement fraud scheme? A. Recognizing revenue in Year 1 when the service is performed, even though the customer doesn't have to pay until Year 2 B. Recording revenue in Year 1 when the payment is received, even though the service won't be performed until Year 2 C. Waiting to record revenue on a contract until a construction job is complete D. Recognizing a percentage of revenue on a construction project corresponding to the percentage of the project that is complete

" Recording revenue in Year 1 when the payment is received, even though the service won't be performed until Year 2

"Which of the following is a measure that management can take to prevent an organization's computers from being infected by malicious software? A. Regularly update the organization's operating systems. B. Only allow systems to boot with removable storage devices. C. Prevent employees from opening any emails with attachments. D. Require that users reuse passwords for important accounts.

" Regularly update the organization's operating systems.

"ABC Company purchases a material amount of products from another entity whose operating policies can be controlled by ABC Company's management, but it does not disclose this situation on its financial statements. In which type of improper disclosure scheme has ABC Company engaged? A. Accounting change B. Significant event C. Improper asset valuation D. Related-party transaction

" Related-party transaction

"___________ involve paying individuals to undergo unnecessary medical procedures that are then billed to the patient's insurer or health care program. A. False cost reporting schemes B. Fictitious patient schemes C. Rent-a-patient schemes D. DRG creep schemes

" Rent-a-patient schemes

"In most construction contracts, a certain amount will be withheld from each draw request by the contractor. This amount is not paid until the contract has been finished and approved by the owner. The withheld amount is referred to as which of the following? A. Good faith deposit B. Withholding C. Retainage D. None of the above

" Retainage

"Falsified prescriptions for equipment, excessive supplies, noncovered supplies, and scooter scams are forms of fraud commonly involving what type of health care entity? A. Hospitals B. Out-patient services groups C. Special care facilities D. Reusable medical equipment suppliers

" Reusable medical equipment suppliers

"Samantha operates a medical lab from a mobile trailer. Her business model is to go to an area, recruit patients for an array of unnecessary tests, and bill health care programs for those tests. She also typically bills for services never actually performed using the patient data collected. Soon after, she moves the trailer to a new location and starts the process again. Which of the following best describes Samantha's scheme? A. Fictitious provider scheme B. Front organization C. Rolling lab D. DME fraud

" Rolling lab

"Of the following, who should conduct physical observations of a company's inventory in order to most effectively prevent inventory theft? A. Purchasing supervisor B. Purchasing agents C. Sales representative D. Warehouse personnel

" Sales representative

"In a/an _____________ scheme, the company that initially conned a consumer contacts that consumer and offers to help retrieve the lost money. However, the investigation requires an upfront fee and the consumer is swindled again. A. Double-hustle B. Advance-fee C. Scavenger D. Retrieval

" Scavenger

"Cooper is an intelligence professional for Whetstone Intelligence, a competitive intelligence firm. She is tasked with gathering intelligence about Cryptic Global, the major competitor of Whetstone's biggest client. To gather the intelligence, Cooper infiltrates Cryptic Global's office by posing as a member of its cleaning crew and collects information left around employees' computers and desks. Cooper's approach is an example of: A. Spoofing B. Scavenging C. Shoulder surfing D. Dumpster diving

" Scavenging

"Which of the following is NOT a method that is used to conceal inventory shrinkage? A. Performing a forced reconciliation of the inventory records B. Writing off stolen inventory as scrap C. Placing empty boxes on warehouse shelves D. Selling merchandise without recording the sale

" Selling merchandise without recording the sale

"Which of the following practices is a potential indicator of a bid splitting scheme? A. Frequent use of sole-source procurement contracts B. Low employee turnover in an organization's procurement department C. Two or more purchases from the same supplier in amounts just above competitive bidding limits D. Sequential purchases under the competitive bidding limits that are followed by change orders

" Sequential purchases under the competitive bidding limits that are followed by change orders

"Most shell company schemes involve the purchase of fictitious: A. Services B. Supplies C. Inventory D. Goods

" Services

"Which of the following is NOT a symptom that might indicate a malware infection? A. Unexplained changes to the system's memory occur. B. Several system programs launch automatically at startup. C. A system's files are erased with no warning. D. Excessive pop-up windows appear without cause.

" Several system programs launch automatically at startup.

"Favorite targets for intelligence-gathering purposes include employees in all of the following departments EXCEPT: A. Marketing B. Shipping and receiving C. Research and development D. Purchasing

" Shipping and receiving

"___________________ is the unaccounted-for reduction in a company's inventory that results from error or theft. A. Shrinkage B. Defalcation C. Shortness D. Depreciation

" Shrinkage

"Jason, a server at a popular restaurant, takes a customer's credit card to process a payment. While he is on the other side of the dining area with his back turned, Jason swipes the card through a small device that he regularly uses to steal his customers' credit card information. Jason is engaging in a scheme known as credit card ________. A. Scanning B. Skimming C. Pinching D. Probing

" Skimming

"The removal of cash from a victim organization before the cash is entered in the organization's accounting system is: A. A fraudulent disbursement B. Cash larceny C. Skimming D. Lapping

" Skimming

"Which of the following is an example of an off-book fraud? A. Skimming B. Billing schemes C. Ghost employee schemes D. Cash larceny

" Skimming

"Cash theft schemes fall into which of the following two categories? A. Skimming and unrecorded sales B. Skimming and cash larceny C. Unrecorded sales and false discounts D. Register manipulation and understated sales

" Skimming and cash larceny

"Which of the following statements is TRUE? A. Both cash larceny and skimming are equally difficult to detect. B. Cash distraction is the most difficult type of cash receipts scheme to detect. C. Cash larceny schemes are generally more difficult to detect than skimming schemes. D. Skimming schemes are generally more difficult to detect than cash larceny schemes.

" Skimming schemes are generally more difficult to detect than cash larceny schemes.

"__________ is the term used for including additional coverages in an insurance policy without the insured's knowledge. A. Sliding B. Twisting C. Churning D. None of the above

" Sliding

"Common methods of inflating health care billings include all of the following EXCEPT: A. Altered claims B. Sliding policies C. Added services D. Code manipulation

" Sliding policies

"How do smart cards differ from ordinary credit cards? A. Smart cards are immune from physical, side-channel, and environmental attacks. B. Smart cards contain special holograms that identify the cardholder. C. Smart cards are embedded with a microchip that is not easily replicated. D. Smart cards are designed to prevent fraudulent online card-not-present transactions.

" Smart cards are embedded with a microchip that is not easily replicated.

"All of the following are types of medical provider fraud EXCEPT: A. Rolling labs B. Smurfing C. Fictitious services D. Fictitious providers

" Smurfing

"When a fraudster calls someone at the target company and cajoles or tricks the person into providing valuable information, that corporate espionage technique is referred to as which of the following? A. Replicating B. Spamming C. Social engineering D. None of the above

" Social engineering

"All of the following are payroll scheme types EXCEPT: A. Ghost employees B. Falsified hours and salary C. Stolen paychecks D. Commission schemes

" Stolen paychecks

"Which of the following is a method by which contractors can inflate labor costs in negotiated contracts? A. Use higher-wage personnel to perform work at lower rates. B. Account for learning-curve cost reductions. C. Subcontract to affiliated companies at inflated rates. D. Use valid cost schedules.

" Subcontract to affiliated companies at inflated rates.

" "Which of the following is a way that dishonest contractors collude to circumvent the competitive bidding process? A. Submit token bids that are not serious attempts to win the contract. B. Use obscure publications to publish bid solicitations. C. Submit bids that are competitive in price. D. Submit invoices for work that was not performed or materials that were not delivered.

" Submit token bids that are not serious attempts to win the contract.

"A Ponzi scheme can be characterized as an ostensibly legitimate, yet ultimately fraudulent, investment opportunity wherein the promoter pays previous investors with money gained from new victims. A. True B. False

" TRUE

"A favored device of phony charities is to send school-age children door to door to say that they are raising money for antidrug programs or for a group that takes underprivileged kids on trips. A. True B. False

" 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. A. True B. False

" TRUE

"A fraudster can understate expenses and their related liabilities to make a company appear more profitable than it actually is. A. True B. False

" TRUE

"A large amount of overdue accounts receivable on the books is a red flag of a fictitious revenue scheme. A. True B. False

" TRUE

"A property flipping scheme occurs when someone purchases a piece of real estate and sells it shortly thereafter at an unjustly inflated value. A. True B. False

" TRUE

"A pyramid scheme is designed to pay off its earliest investors. A. True B. False

" TRUE

"A pyramid scheme is promoted by encouraging victim investors to recruit new members. The more members recruited, the higher the investor rises in the ranks of the enterprise, and the more money the investor is supposed to make. A. True B. False

" TRUE

"A recommended practice to detect expense reimbursement schemes is to compare current period expenses to both historical expenditure amounts and budgeted expense amounts. A. True B. False

" TRUE

"A register disbursement scheme is easier to conceal when register employees have the authority to void their own transactions. A. True B. False

" TRUE

"According to the going concern principle under U.S. GAAP, if there is substantial doubt about a company's ability to fulfill its financial obligations over the next year, it must be disclosed in the company's financial statements. A. True B. False

" TRUE

"Advance-fee swindles, debt consolidation schemes, and diploma mills are all examples of consumer fraud schemes. A. True B. False

" TRUE

"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. A. True B. False

" TRUE

"As a sale is made, the appropriate charges for cost of goods sold, or other expenses directly corresponding to the sale, should be recorded in the same accounting period. A. True B. False

" TRUE

"At the end of each fiscal year, the accounts reflected on the income statement are reduced to a zero balance. A. True B. False

" TRUE

"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. A. True B. False

" TRUE

"Billing for experiments with new medical devices that have not yet been approved by a jurisdiction's health care authority is one form of medical fraud. A. True B. False

" TRUE

"Calendars and schedules displayed at an employee's workstation can inadvertently provide a company's competitors with valuable proprietary information. A. True B. False

" TRUE

"Corruption is the wrongful use of influence to procure a benefit for the actor or another person, contrary to the duty or the rights of others. A. True B. False

" TRUE

"Credit card receipts, bank statements, and birthday cards can all provide dumpster divers with useful information for committing an identity theft scheme. A. True B. False

" TRUE

"Credits decrease asset and expense accounts. A. True B. False

" TRUE

"DRG creep occurs when staff members at medical institutions intentionally manipulate diagnostic and procedural codes in a pattern to increase claim reimbursement amounts. A. True B. False

" TRUE

"Employees are often willing to abide by nondisclosure agreements, but they sometimes do not understand that the information they are communicating might be confidential. A. True B. False

" TRUE

"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. A. True B. False

" TRUE

"Failing to record bad debt expense for the period will result in fraudulently overstated accounts receivable. A. True B. False

" TRUE

"Fraud in financial statements generally takes the form of overstated assets or revenue and understated liabilities and expenses. A. True B. False

" TRUE

"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. A. True B. False

" TRUE

"Gaps in the sequence of transactions on the register log might indicate that a fraudulent register disbursement scheme is taking place. A. True B. False

" TRUE

"If a company hires an employee from a competitor, it might open itself up to claims from the competitor that it is unlawfully using proprietary information taken by the employee. A. True B. False

" TRUE

"If a customer reports the loss or theft of an access device, the financial institution should attempt to prevent fraud related to electronic funds transfers by canceling the existing card, PIN, or other form of access and issuing a new one. A. True B. False

" TRUE

"If an employee is aware that surprise cash counts are conducted, he will generally be less inclined to commit a cash larceny scheme. A. True B. False

" TRUE

"In a take-the-money-and-run scheme, fraudsters lure potential victims using fake vacation rental listings or websites advertising properties that do not actually exist. A. True B. False

" TRUE

"In credit repair scams, the fraudster promises to "erase" or "doctor" an applicant's credit history, but in reality there is no way to erase bad credit. A. True B. False

" TRUE

"In double-entry accounting, every transaction in the accounting records will have both a debit and a credit side, and these sides will always be equal. A. True B. False

" TRUE

"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. A. True B. False

" TRUE

"Kickbacks are improper, undisclosed payments made to obtain favorable treatment. A. True B. False

" TRUE

"Lack of employee education concerning nondisclosure agreements is one of the primary reasons employees communicate confidential information to outside parties. A. True B. False

" TRUE

"Liam, a loan officer, and other real estate insiders colluded to steal a homeowner's identity, take out a second mortgage on the individual's property, and split the proceeds. Liam and his co-conspirators' actions would best be described as a fraudulent second lien scheme. A. True B. False

" TRUE

"Loyalty fraud typically results from fraudsters gaining access to a rewards account by obtaining login credentials through phishing or hacking. A. True B. False

" TRUE

"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. A. True B. False

" TRUE

"Non-repudiation refers to a method used to guarantee that parties involved in an e-commerce transaction cannot deny their participation in it. A. True B. False

" TRUE

"Not every company that runs its business using a pyramid structure is operating an illegal pyramid scheme. A. True B. False

" TRUE

"Off-book sales of goods always cause shrinkage. A. True B. False

" TRUE

"Payers can make corrupt payments by giving recipients hidden interests in profit-making enterprises. A. True B. False

" TRUE

"Performing a physical inventory count is an effective way to detect a skimming scheme. A. True B. False

" TRUE

"Real estate scams are easily recognized, as there is almost always an element of time pressure or ""now-or-never"" pitch from the perpetrator. A. True B. False

" TRUE

"Revenue should not be recognized for work that is to be performed in subsequent accounting periods, even though the work might currently be under contract. A. True B. False

" TRUE

"Sales and cost of goods sold almost always move together, unless there have been changes in purchase prices, quantities purchased, or quality of products being purchased. A. True B. False

" TRUE

"Shareholders' reports and company newsletters might give a competitor valuable information about a company's product secrets. A. True B. False

" TRUE

"Skimming schemes can involve the theft of cash sales or the theft of accounts receivable payments. A. True B. False

" TRUE

"Smart cards include a wide variety of hardware and software features capable of detecting and reacting to tampering attempts and countering possible attacks. A. True B. False

" TRUE

"The asset turnover ratio is calculated by dividing net sales by average total assets. A. True B. False

" TRUE

"The most effective way to prevent and detect electronic payment fraud is through proper separation of duties. A. True B. False

" TRUE

"There is nothing inherently wrong with a company engaging in related-party transactions, as long as the transactions are fully disclosed. A. True B. False

" TRUE

"To help prevent identity theft, businesses should strive to limit the personal information they collect from customers. A. True B. False

" TRUE

"To help promote employee awareness of sensitive information, company data should be classified into different security levels based on value and sensitivity. A. True B. False

" TRUE

"Unauthorized credit card activity resulting from a stolen card typically takes place within hours of the card's theft and before the victim reports the loss. A. True B. False

" TRUE

"Unauthorized personal use of a company vehicle constitutes misuse of a noncash asset, a form of asset misappropriation. A. True B. False

" TRUE

"When a medical provider performs a service for a patient but bills the patient's insurer for a more complex and more expensive service, this practice is called upcoding. A. True B. False

" TRUE

"When an employee signs a legally enforceable noncompetition agreement, the provisions of the noncompetition agreement continue after the employee leaves the company where he signed the agreement. A. True B. False

" TRUE

"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, corporate security, and records management. A. True B. False

" TRUE

"The most common giveaway scheme, in which a postcard arrives in the mail telling the recipient he has already won a prize such as a luxurious vacation or cash, is known as: A. The ""Fly and Buy"" B. The ""Bait and Switch"" C. The ""1-in-5"" D. None of the above

" The "1-in-5"

"The emerging environment of everyday objects that use embedded sensors to collect and transmit data through the Internet is best known as: A. The Emerging Technology Domain B. The Smart Technology Network C. The Deep Web D. The Internet of Things

" The Internet of Things

"To ensure separation of duties within the information technology department and between information systems and business unit personnel, computer operators should be responsible for performing computer programming. A. True B. False

" The Internet of Things

"Which of the following statements is TRUE regarding a fictitious refund scheme? A. Inventory is returned to the store B. The amount of cash in the register balances with the register log C. The victim company's inventory is understated D. All of the above

" The amount of cash in the register balances with the register log

"Pharming differs from phishing in that in a pharming scheme: A. The attacker has to rely on having the user click on a link in an email or other message to direct him to the malicious website that is imitating a legitimate website. B. The attacker does not have to rely on having the user click on a link in an email or other message to direct him to the malicious website that is imitating a legitimate website. C. The attacker delivers the solicitation message via telephones using Voice over Internet Protocol (VoIP) instead of email. D. The attacker delivers the solicitation message via SMS (the protocol used to transmit text messages via mobile devices) instead of email. Submit Answer

" The attacker does not have to rely on having the user click on a link in an email or other message to direct him to the malicious website that is imitating a legitimate website.

"How does positive pay help prevent check fraud? A. The bank verifies checks presented for payment against a list of approved checks provided by the company. B. The bank scans all checks presented for payment to determine whether the signatures are forged. C. Positive pay controls which vendors the company's bank can deposit checks from. D. Positive pay establishes a maximum amount above which the company's bank will not accept checks drawn against the account.

" The bank verifies checks presented for payment against a list of approved checks provided by the company.

"A fraud scheme in which an accountant fails to write down obsolete inventory to its current fair market value has what effect on the company's current ratio? A. The current ratio will be artificially deflated. B. The current ratio will be artificially inflated. C. The current ratio will not be affected. D. It is impossible to determine.

" The current ratio will be artificially inflated.

"Unscrupulous debt consolidation schemes include each of the following EXCEPT: A. The debt consolidation company writes a letter to the debtor's creditors and arranges a payment plan. B. The debt consolidation company charges an upfront processing fee and then disappears. C. The debt consolidation company guarantees the debtor will receive a loan or credit card regardless of the debtor's credit ratings. D. The debt consolidation company collects payments, but does not appropriately forward them.

" The debt consolidation company writes a letter to the debtor's creditors and arranges a payment plan.

"Why is the health care industry concerned about the potential effect of the Electronic Data Interchange (EDI) on fraudulent activity? A. The tools required to detect EDI fraud are difficult to use B. Only a few types of health care transactions can be processed by EDI C. The efficiency of EDI allows for more vendors and thus more claims to process D. All of the above

" The efficiency of EDI allows for more vendors and thus more claims to process

"For a ghost employee scheme involving an hourly employee to be successful, all of the following must happen EXCEPT: A. The ghost employee must be a fictitious person. B. Timekeeping information must be collected for the ghost employee. C. A paycheck must be issued to the ghost employee. D. The ghost employee must be added to the payroll.

" The ghost employee must be a fictitious person.

"When fabricating a counterfeit credit card, which of the following is the most difficult facet to reproduce? A. The card thickness B. The magnetic strip C. The hologram D. The embossed numbers

" The hologram

"All of the following are red flags of fraudulent insurance claims EXCEPT: A. A theft claim includes a lot of recently purchased expensive property. B. A claim is made a short time after the policy's inception. C. The insured does not have a history of making insurance claims. D. A fire loss claim does not include family heirlooms or other sentimental items.

" The insured does not have a history of making insurance claims.

"Which of the following is an acceptable justification for a departure from generally accepted accounting principles (GAAP)? A. Departing from GAAP would make the company appear more profitable B. Adhering to GAAP is significantly more expensive than using an alternative method C. The literal application of GAAP would render the financial statements misleading D. None of the above

" The literal application of GAAP would render the financial statements misleading

"The warehouse supervisor at South Corp. has stolen $50,000 worth of inventory over the last year. He has made no effort to conceal his theft in any of the inventory records. During an analytical review of the financial statements, which of the following red flags might South Corp.'s auditors find that would indicate the inventory theft? A. The percentage change in cost of goods sold was significantly higher than the percentage change in sales. B. The percentage change in sales was significantly higher than the percentage change in cost of goods sold. C. Sales and cost of goods sold moved together. D. None of the above possible outcomes would indicate inventory theft.

" The percentage change in cost of goods sold was significantly higher than the percentage change in sales.

"Which of the following is the most accurate description of logical access? A. The process by which computer systems' contents are encrypted B. The process by which users are allowed to access and use physical objects C. The process by which users are allowed to use computer systems and networks D. The process by which users can bypass application security over the software and libraries

" The process by which users are allowed to use computer systems and networks

"Which of the following activities is included in the bid evaluation and award phase of procurements involving open and free competition? A. The procuring employees develop the bid specifications. B. The procuring employees assess the bids or proposals. C. The procuring employees issue the solicitation document. D. The procuring employees perform their contractual obligations.

" The procuring employees assess the bids or proposals.

"All of the following activities are included in the presolicitation phase of procurements involving open and free competition EXCEPT: A. The procuring entity develops the bid specifications. B. The procuring entity identifies its needs. C. The procuring entity issues the solicitation document. D. The procuring entity determines the method for acquiring the goods or services.

" The procuring entity issues the solicitation document.

"Which of the following activities is included in the post-award and administration phase of procurements involving open and free competition? A. The procuring entity develops the bid specifications. B. The procuring entity evaluates the bids or proposals. C. The procuring entity issues the solicitation document. D. The procuring entity performs its contractual obligations.

" The procuring entity performs its contractual obligations.

"The solicitation phase of procurements involving open and free competition includes which of the following activities? A. The procuring entity identifies its needs and develops the criteria used to award the contract. B. The prospective contractors prepare and submit their bids. C. The procuring entity determines the method for acquiring the goods or services. D. The procuring entity performs its contractual obligations.

" The prospective contractors prepare and submit their bids.

"Which of the following is NOT one of the key phases of procurement processes that employ competitive bidding mechanisms? A. The post-award and administration phase B. The solicitation phase C. The purchase and procurement phase D. The presolicitation phase

" The purchase and procurement phase

"Which of the following is NOT a red flag that might indicate the existence of a need recognition scheme? A. The purchasing entity's materials are being ordered at the optimal reorder point. B. The purchasing entity has unusually high requirements for stock and inventory levels. C. The purchasing entity does not have a satisfactory list of backup suppliers. D. The purchasing entity has large numbers of surplus items written off as scrap.

" The purchasing entity's materials are being ordered at the optimal reorder point.

"Which of the following statements is TRUE with regard to the statement of cash flows? A. The statement of cash flows is often used in tandem with the income statement to determine a company's true financial performance. B. The statement of cash flows is not always necessary because most companies operate under cash-basis accounting rather than accrual accounting. C. There are four types of cash flows: cash flows from operating activities, from investing activities, from financing activities, and from revenue activities. D. The statement of cash flows shows a company's financial position at a specific point in time.

" The statement of cash flows is often used in tandem with the income statement to determine a company's true financial performance.

"Which of the following statements is NOT true regarding the statement of cash flows? A. The statement of cash flows reports a company's sources and uses of cash during the accounting period. B. There are three types of cash flows: cash flows from operating activities, from investing activities, and from financing activities. C. The statement of cash flows is often used in tandem with the income statement to determine a company's true financial performance. D. The statement of cash flows shows a company's financial position at a specific point in time.

" The statement of cash flows shows a company's financial position at a specific point in time.

"All of the following are correct statements about identity theft EXCEPT: A. One way to conceal identity theft is to change the victim's mailing address. B. Solicitations for pre-approved credit cards are especially valuable to identity thieves. C. The type of malware most commonly associated with identity theft is ransomware. D. Identity thieves often engage in pretexting by impersonating the victim's bank.

" The type of malware most commonly associated with identity theft is ransomware.

"What happens when an employee records a fictitious refund of goods at the employee's cash register? A. Inventory is returned to the store B. The register total is out of balance with the register log C. The victim company's inventory is overstated D. None of the above

" The victim company's inventory is overstated

"Early revenue recognition is classified as what type of financial fraud scheme? A. Fictitious revenues B. Improper asset valuations C. Improper disclosures D. Timing differences

" Timing differences

"What financial statement fraud scheme involves recording revenues and expenses in improper periods? A. Concealed expenses B. Timing differences C. Improper asset valuations D. Improper disclosures

" Timing differences

"Which of the following is a common reason why someone might commit financial statement fraud? A. To misuse company assets B. To attempt to get a coworker fired C. To obtain favorable terms on financing D. To harm a competitor's reputation

" To obtain favorable terms on financing

"In a financial statement fraud scheme in which capital expenditures are recorded as expenses rather than assets, the transactions will have the following effect on the organization's financial statements: A. Sales revenue will be overstated B. Net income will be overstated C. Total assets will be understated D. All of the above

" Total assets will be understated

"Jeff works as a teller at a bank. One of Jeff's friends came in as a customer and presented a cashier's check. Jeff could tell that the item was counterfeit, but the friend convinced him to cash it for a share of the proceeds. Which of the following best describes the scheme in which Jeff engaged? A. Theft of physical property B. Unauthorized disbursement of funds to outsiders C. False accounting entry D. Unauthorized use of collateral

" Unauthorized disbursement of funds to outsiders

"A health care provider's practice of charging a comprehensive code, as well as one or more component codes, by billing separately for subcomponents of a single procedure is known as ______________. A. Subdividing B. Unbundling C. Segregating D. None of the above

" Unbundling

"Michael, a medical provider, performs an appendectomy, a procedure that is supposed to be billed as one code. Instead, he intentionally submits two codes for the same procedure, one for an abdominal incision and one for removal of the appendix. Which of the following best describes Michael's scheme? A. Procedure compounding B. Unbundling C. Fictitious services D. Decompressing

" Unbundling

"Which of the following statements is TRUE with regard to a fictitious revenue scheme? A. Fictitious revenues must involve sales to a fake customer. B. The debit side of a fictitious sales entry usually goes to accounts payable. C. If a fictitious revenue scheme has taken place, there will typically be no accounts receivable on the books. D. Uncollected accounts receivable are a red flag of fictitious revenue schemes.

" Uncollected accounts receivable are a red flag of fictitious revenue schemes.

"Examples of fraud schemes perpetrated by health care institutions and their employees include all of the following EXCEPT: A. Unintentional misrepresentation of the diagnosis B. Improper contractual relationships C. DRG creep D. Billing for experimental procedures

" Unintentional misrepresentation of the diagnosis

"A medical provider billed an insurance company for a name-brand drug, while providing the patient with a generic version of the drug. This inflated billing scheme is known as which of the following? A. Replacement fraud B. Unbundling C. Undercharging D. Upcoding

" Upcoding

"All of the following are methods of identity theft prevention recommended for individuals EXCEPT: A. Instruct the post office to suspend mail during vacations. B. Use the same password or passphrase for all accounts. C. Avoid using unsecured, public Wi-Fi networks. D. Use biometric authentication when available.

" Use the same password or passphrase for all accounts.

"How does vertical analysis differ from horizontal analysis? A. Vertical analysis expresses the percentage of component items to a specific base item, while horizontal analysis analyzes the percentage change in individual financial statement items from one year to the next. B. Vertical analysis compares the performance of a parent company to its subsidiary, while horizontal analysis compares different companies across an industry. C. Vertical analysis is a means of measuring the relationship between any two different financial statement amounts, whereas horizontal analysis examines the relationship between specific financial statement ratios. D. Vertical analysis compares items on one financial statement to items on a different financial statement, while horizontal analysis compares items on the same financial statement.

" Vertical analysis expresses the percentage of component items to a specific base item, while horizontal analysis analyzes the percentage change in individual financial statement items from one year to the next.

"Matthew receives a voice mail message telling him that his credit card might have been used fraudulently. He is asked to call a phone number. When he calls the number, he hears a menu and a list of choices that closely resembles those used by his credit card company. The phone number even appears to be similar to that of his card issuer. Of which of the following types of schemes has Matthew become the target? A. Spear phishing B. Vishing C. SMiShing or tishing D. Pharming

" Vishing

"Which of the following is the best example of shoulder surfing? A. Accessing a computer network by convincing an authorized user to share log-in information B. Leaving a spyware-infected flash drive in a workplace break room C. Watching a customer enter a PIN code at an ATM machine D. Following an authorized person into a restricted area

" Watching a customer enter a PIN code at an ATM machine