CFE Flashcards
In Cressy’s fraud triangle, its three of the legs are Opportunity, Pressure, and ___?
Rationalization
Which of the following offender types are people who take the money and run?
Absconders
When situational pressures and perceived opportunities are low and personal integrity is high, occupational fraud is much more likely to occur than when the opposite is true. T/F
False
White collar crime is also known as ___ ___?
Occupational fraud
___ ___ can be defined as conduct detrimental to the organization and to the employee.
Employee deviance
According to a survey, in principal perpetrator, males in a majority of cases account for __ percent of fraud versus __ percent in which a female was the primary culprit.
61 percent
39 percent
The principal way to detect omitted credits from books of account is through?
___ ___
Trend analysis
Complying with ___ ___ is not a reason why senior management would overstate business statements.
Debit covenants
What are the four basic measures, if properly installed and implemented that may help prevent inventory fraud?
Proper documentation,
Segregation of duties,
Independent checks,
Physical safeguards.
What are the four classifications for corruption?
- Bribery
- Economic extortion
Illegal gratuities
Conflicts of Interest
The most common method of detection in corruption cases is?
Tips
Undisclosed payments made by vendors to employees of purchasing companies are referred to as?
Kickbacks
Every bribe is a two-sided transaction, in which where a vendor bribes a purchaser, there is someone on the vendor’s side of the transaction who is not making an illicit payment. T/F
False
What is the process that all bidders are legally supposed to be placed on the same plane of equality, bidding on the same terms and conditions?
___ ___
Competitive bidding
The more power a person has over the bidding process, the more likely the person can influence the selection of a supplier. T/F
True
When a victim company purchases unnecessary goods or services from a supplier at the direction of the corrupt employee, this results in?
___ ___ ___
A need recognition scheme
In which phase of competitive bidding process, are fraudsters attempt to influence the selection of a contractor by restricting the pool of competitors from whom bids are sought?
Solicitation
What is a way to eliminate competition in the solicitation phase of the selection process?
Solicit bid from ___ ___
fictitious suppliers
The person or persons who have access to ___ ___ are often the targets of unethical vendors seeking an advantage in the process.
Sealed bids
To ensure ___ ___ is not the reason to bribe employees of the purchaser.
Bid-splitting
__ __ means breaking a public work project or purchase of equipment, or supplies into segments.
Bid splitting
Collusion or bid-rigging between bidders is called?
Contract acceptance
A ___ __ ___occurs when an employee, manager, or executive has an undisclosed economic or personal interest in a transaction that adversely affects the organization.
Conflict of interest
The fraudster’s interest lies with an employee other than a company. T/F
False
A special scheme in which employees know their employer is seeking to purchase a certain asset and take advantage of the situation by purchasing the asset themselves is ___ ___ __ ___.
Turnaround sale or flip
___ is required if and when officers, executives or other persons in trusted positions become subjects of a criminal indictment.
Disclosure
Which are check tempering frauds in which an employee prepares a fraudulent check and submits it usually along with legitimate checks to an authorized maker who signs it without proper review?
Concealed check scheme
Maintain the presence of a manager or supervisor near the area of the cash register as a deterrent to theft is a prevention for ___ ___ ___.
Register disbursement scheme
The most common method for billing scheme is ___?
Tips
Which of the following is not the type of billing scheme?
Invoicing via accomplice companies
A voucher is a file that includes the ___ ___ that was sent to the vendor, the vendor invoice listing the cost and quantity of items purchased, and the internal receiving reports that verify the purchased items have been ___.
Purchase order
Delivered
A fabricated name and the post office box that an employee uses to collect disbursements from false billings is called a ___ ___.
Shell company
One reason employees might be hesitant to use PO boxes in shell company schemes is that some businesses are specially vary of sending checks to vendors that have street addresses only. T/F
False
Most of the shell company schemes involve the purchase of goods rather than services. T/F
False
A person is said to be in ___ ___ act, when the business which he transacts, or the money or property which he handles, is not for his own benefit, but for another person.
Fiduciary Capacity
Larceny by fraud or deception means that
- Fails to correct a false impression
- Fails to disclose a known lien, adverse claim or other legal impediment
- ___ __ ___ __ ___ ___.
Creates or reinforces a false impression
Which of the following are not of basic types of non-sharable problems?
Larceny by fraud
According to Marshall, ___ are probable future economic benefits obtained or controlled by a particular entity as a result of past transactions or events.
Assets
A tangible asset is one which is capable of being ___ __ ___
Perceived and or Appraised
____ normally are carried on an organization’s books as expenses because they tend to be consumed by the organization within a year of purchase.
Supplies
___ are the amounts which are owed to other entities.
Liabilities
Asset misappropriations have an effect on the liabilities and do also have an indirect effect on the equity account. T/T
False
Occupational fraud and abuse is a (an) ___ of doing business, in much the same way that we pay expenses for electricity, taxes, and wages.
Expense
When expenses used to produce income all of them should be matched in a consistent manner against that income, this is referred to ___ ___ ___.
Accrual basis accounting
Any expenses that are incurred but not paid by the end of the year are counted in our records of profit and loss, are called ___.
Accruals
___ ___ is a process by which a bookkeeper records all transactions and can adjust the books.
Journal entries
___ increase assets and expenses and/or decrease liabilities and/or equity.
Debit
___ decrease assets and expenses and/or increase liabilities and/or equity.
Credit
Delivery has not occurred or services have not been rendered when?
A written order exists but contains a right of return.
___ and ___ are used to increase (or decrease) the equity account.
Journal entries and transactions
By removing a tangible asset from the business (a debit), the books will be __ __ __ by the exact amount of the tangible asset misappropriated.
Out of balance
Once the expense account is closed, it becomes a historical item and probably will never be reviewed again. T/F
True
According to fraud tree, cash has the 3 following schemes.
- Fraudulent disbursements
- ___ ___
- ___
Skimming
Cash larceny
Skimming cases are more likely to be detected by ___.
Accidents
The most basic skimming scheme occurs when an employee sells goods or ___ to a customer, collects the customer’s payment, but makes no record of the ___.
services
sale
The prime targets for skimming schemes which are hard to monitor and predict such as late fees and parking fees, are
Revenue sources
Theft of incoming checks usually occurs when a ___ ___ is (are) in charge of opening the mail and recording the receipt of payments.
single employee
Financial statement fraud is committed by
- Organized criminals
- Mid and lower level employees
- ___ ___
Senior management
In which approach do fraudsters produce whatever financial statements they wish, perhaps using just a typewriter or a personal computer?
Outside accounting system
___ ___ is not standard of generally accepted accounting principles.
Quality control
A typical issue involving material and fraud would be ___.
Misappropriations
The 10 Generally Accepted Accounting Principles are
- Monetary Unit Principle
- Cost Principle
- Full Disclosure Principle
- Going Concern Principle
- Matching Principle
Revenue Recognition Principle Materiality Principle Conservatism Principle Economic Entity Principle Time Period Principle
___ means that the financial figures presented by the company are at least as much as reflected int he statements, if not more.
Conservatism
“Anticipate possible losses and omit potential profits”, this results in ___ ___.
Asymmetrical accounting
___ ___ assumes the business will go on indefinitely in the future.
Going concern
___ ___ ___ is the amount of money that would be realized upon the sale of the asset at some point in the future, less the costs associated with owing, operating and selling it.
Net realizable value
How many accounts are affected in fraudulent accounting entries and therefore same number of categories on the financial statement?
One
___ __ ___ revenues involve the recording of sales of goods or services that did not occur.
Fictitious or fabricated
Revenue is recognized when it is ___ __ ___.
Realized and earned
