CFE Financial Transaction and Fraud Schemes Flashcards

1
Q

Testimony concerning firsthand observations is comes from what type of witness?

A

Lay witness

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2
Q

Main function of SEC Rule 10b-5

A

Prohibits false statements and the fraudulent activity in connection with the purchase or sale of any security.

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3
Q

In civil litigation cases, the plaintiff usually does what?

A

Offers evidence first.

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4
Q

Churning is what?

A

The excessive trading of a customer account to generate commission while disregarding the customer’s interests.

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5
Q

To commence an involuntary bankruptcy proceeding, there must be at least:

A

12 or more creditors at least 3 are needed to file

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6
Q

US Federal Rule of Evidence 702 requires judges to do what before allowing an expert witness to testify?

A

Will the expertise of the witness assist the jury in understanding the evidence?

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7
Q

An investigator can be held liable for a true statement made about a suspect when they?

A

Publicly disclose private facts.

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8
Q

A counterclaim made a defendant is against whom?

A

The original plaintiff in the action.

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9
Q

What is necessary to prove concealment of material facts?

A

D had knowledge of material fact that he failed to disclose.
D acted with intent to mislead the victim.
D failed to disclose a material fact that he had a duty to disclose.

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10
Q

To determine if a misrepresentation in an offer or sale of securities is material, an examiner should consider?

A

Whether a reasonable investor would wish to know the information to make an informed decision.

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11
Q

Does the Foreign Corrupt Practices Act prohibit all payments to foreign officials?

A

No, facilitating or grease payments are permitted, bribes are not.

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12
Q

CIP’s are?

A

Customer Identification Programs

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13
Q

An expert’s opinion at trial may only be based on evidence that ha already been entered into evidence?

A

False

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14
Q

Mediation Agreements are?

A

Enforceable as binding contracts

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15
Q

Evidence proven by inference or indirectly is?

A

Circumstantial evidence.

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16
Q

Defamation is?

A

An unprivileged publication of a false statement about a person that causes harm to that person’s reputation.

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17
Q

During pretrial discovery, the prosecution is not

A

Entitled to the D’s work product if D did not ask for the prosecution’s

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18
Q

Death of a taxpayer can be used as a defense to tax fraud allegations?

A

False

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19
Q

These agencies investigate and prosecute bankruptcy fraud

A

FBI investigates and USAO prosecutes

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20
Q

Tax evasion is

A

any fraudulent actions that a taxpayer commits to avoid reporting or paying taxes..

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21
Q

Tax avoidance is

A

legal means of lowering ones tax bill through legitimate means.
Tax Avoidance is legal

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22
Q

Money Service Business (MSB) examples

A

currency exchangers, check cashers, money transmitters

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23
Q

A witness can be impeached by introducing prior arrests/convictions?

A

Yes, but not DUI

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24
Q

Types of securities?

A

stocks, bonds, and CD’s

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25
Q

If an employee embezzles money, reports the illegal income their federal taxes and pays it back, what may they do on their tax return?

A

deduct the amount stolen and paid back as a loss incurred in a transaction entered into for profit.

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26
Q

A reason why an identity thief would not choose a business vs individual?

A

Businesses usually engage in less transactions than individuals

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27
Q

In a construction contract, the amount withheld from each draw by the contractor is referred to as?

A

Retainage or holdback

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28
Q

Vertical analysis is?

A

the expression of the relationship or percentage of component items to a specific base item on the income statement.

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29
Q

Horizontal analysis is?

A

A technique for analyzing the percentage change in the individual financial statement items from one year to the next.

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30
Q

Ratio analysis is?

A

A means of measuring the relationship between any two different financial statement amounts.

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31
Q

What happens when an employee records a fictitious refund of goods at the employee’s cash register?

A

The inventory is overstated.

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32
Q

Factoring groups do what from telemarking operations at a discount?

A

Buy credit card receipts

33
Q

Employment identify theft is?

A

When someone impersonates another to get a job.

34
Q

Failure to record corresponding revenues and expenses in the same accounting period may result in?

A

Making sales revenue from pure profit, inflating earnings. In the next period, earning would have fallen by the same amount.

35
Q

Failing to record bad debt expenses for the period will result in fraudulently overstated accounts receivables?

A

True

36
Q

Physical access controls refer to?

A

The process by which users are allowed to access physical objects, like builidngs

37
Q

Logical access controls are?

A

tools used to control access to computer information systems.

38
Q

Bid tailoring schemes do what?

A

A procurement employee, often in collusion with a contractor, drafts bid specifications in a way that give unfair advantage to a certain contractor.

39
Q

Entries to the left side of an account are?

A

Debits.
Asset and expense accounts are increased with debit and decreased by credits.
Liabilities, owner equity and revenue accounts are increased with credits and decreased by debits.

40
Q

A fraudster looking to conceal inventory shrinkage would do what?

A

Falsely decrease the perpetual inventory to match the lower physical inventory count.

41
Q

Assets are generally presented on the balance sheet in what order?

A

In order of liquidity.

42
Q

Lapping is?

A

Crediting one account by taking money from another to hide skimming.

43
Q

SPI is?

A

Safeguarding Proprietary Information

44
Q

Quick Ratio (a/k/a acid test ratio)

A

(cash + marketable securities + receivables) / current liabilities
compare quick assets over current liabilities

45
Q

Using a stolen credit card number to purchase goods is?

A

An account take over.

46
Q

Nonconforming goods or services fraud is (a/k/a product substitution or failure to meet contract specifications)?

A

Attempts by contractors to deliver goods or services that the procuring entity that do not conform to the contract specs.

47
Q

ID Theft Baiting is?

A

Tricking victims into inserting malware infected data storage into their computers.

48
Q

The statement of cash flow activities contains the following:

A

cash flows from operating activities
cash flows from investing activities
cash flows from financing activities

49
Q

Large amounts over overdue accounts receivable on the books is red flag of a fictitious revenue scheme?

A

True

50
Q

Most shell companies schemes involve the purchase of fictitious?

A

Services

51
Q

Corruption definition

A

The wrongful use of influence to procure benefit for the actor or other person, contrary to the the duty or rights of others.

52
Q

Competitive bidding mechanisms (4 stages)

A

Presolicitation, solicitation, bid evaluation and award, post award and administration phases.

53
Q

A company’s income statement shows?

A

How much profit (or loss) earned over a particular period of time.

54
Q

Unbundling (healthcare fraud) occurs when:

A

A provider charges a comprehensive code as well as one or more component codes.

55
Q

SMiShing is

A

A hybrid of phishing and short message service (SMS) that tries to dupe the victim into providing sensitive data

56
Q

Rock phisher does what?

A

Uses botnets to send massive amounts of phishing emails that contain a message from a financial institution and fraud URL.

57
Q

Debits increase:

A

asset and expense accounts

58
Q

Asset turnvoer ratio is

A

net sales / average total assets and used to determine the efficiency with which assets resources are used.

59
Q

The state of change ion owner’s equity acts as the connecting link between which two financial statements?

A

Income statement and balance sheet

60
Q

Pharming is?

A

An attach in which a user is fooled into entering sensitive data into a malicious website that imitate s legitimate one

61
Q

4 main types of reimbursement schemes

A

mischaracterized expenses
overstated expenses
fictitious expenses
Multiple reimbursements

62
Q

The underlying assumption that a business will continue indefinitely is?

A

Going concern.

63
Q

DRG is?

A

Diagnostic related groupings.

64
Q

DRG Creep occurs when?

A

Medical staff manipulate diagnostic codes to increase reimbursement.

65
Q

Debt to equity ratio is?

A

Total liabilities by total equity.

66
Q

What information security goal should e-commerce systems endeavor to meet for its users and asset holders?

A

Non-repudiation (parties cannot deny transaction - done through digital signatures, time stamps, etc).

67
Q

An FBAR (report of foreign bank and financial accounts) must be filed if?

A

the aggregate balance of all foreign financial accounts owned or controlled by a citizen is over $10K

68
Q

Frivolous tax return?

A

A return that is incorrect on its face value or does not contain enough info to determine the tax liability.

69
Q

Wire fraud requires an interstate or foreign

A

communication

70
Q

A mistake is not a legal defense that may properly be used in a US criminal case?

A

False

71
Q

Under the General Data Protection Regulation, an organization must inform data subjects what?

A

That they can withdraw their consent for the collection of data at any time.

72
Q

The stage of money laundering schemes where it is most often detected?

A

Placement

73
Q

CFE may not testify as to the?

A

guilt or innocence of someone

74
Q

An arrest occurs in the US when?

A

A reasonable person does not feel they are free to leave.

75
Q

To prove a claim of fraudulent misrepresentation of material facts, the defendant must have done?

A

Made a false statement
The false statement was material
The def. knew the misrepresentation was false

76
Q

In an inquisitorial judicial process, who drives the evidence gather portion of the proceedings (fact finding)?

A

the judge

77
Q

Mail fraud does not need to contain?

A

false or fraudulent representations

78
Q

Work product doctrine only applies to?

A

Documents and things prepared in anticipation of litigation or for trial.

79
Q

What must be proven to establish a perjury offense?

A

Def. made a false statement.
Def. made the statement while under oath.
The false statement was material or relevant to the proceedings.
Def. made the statement with knowledge of its falsity.