CFE Investigation

Question 1

Structure data is?

Answer 1

the type of data found in a database, consisting of recognizable and predictable structures.

Question 2

Unstructured data is?

Answer 2

data that would not be found in a traditional spreadsheet or database. They are typically text base.

Question 3

Controlled answer techniques are used to what?

Answer 3

to stimulate a desired answer or impression. These techniques direct the interview toward a specific point.

Question 4

Pretexting is?

Answer 4

the act of impersonating someone else or making false or misleading statements to obtain, sell, or buy information about a person or organization.

Question 5

Under the Gramm-Leach-Bliley Act made it a criminal offense to engage in pretexting with financial institutions. In this context, pretexting is?

Answer 5

the act of obtaining customer information from financial institutions using deceptive tactics.

Question 6

Steganography is?

Answer 6

the process of hiding one piece of information within an apparently innocent file

Question 7

A fraud examination report documents what?

Answer 7

the results of a fraud examination and is generally created by one or more critical members of the fraud examination team

Question 8

The purpose of an expert report is to what?

Answer 8

inform the parties, the judge, and the jury (if applicable) about the expert’s opinion of the case, as well as his credibility for commenting on such issues.

Question 9

During the introductory portion of an interview, the interviewer must state the interview’s purpose in a general way. This is known as?

Answer 9

establishing the interview theme.

Question 10

Predication is?

Answer 10

the totality of circumstances that would lead a reasonable, professionally trained, and prudent individual to believe that a fraud has occurred, is occurring, or will occur.

Question 11

These types of questions have a suggested answer?

Answer 11

Leading questions

Question 12

Calibrating (or norming) is the process of?

Answer 12

observing behavior before critical questions are asked, as opposed to doing so during questioning.

Question 13

The first phase of the data analysis process is the?

Answer 13

The planning phase. This phase consists of several important steps, including:

• Understanding the data
• Defining examination objectives
• Building a profile of potential frauds
• Determining whether predication exists

Question 14

Natural numbers are those numbers that are?

Answer 14

not ordered in a particular numbering scheme and are not human-generated or generated from a random number system. For example, most vendor invoice totals or listings of payment amounts will be populated by currency values that are natural numbers.

Question 15

non-natural numbers are?

Answer 15

designed systematically to convey information that restricts the natural nature of the number. Any number that is arbitrarily determined, such as the price of inventory held for sale, is considered a non-natural number.

(e.g., employee identification numbers and telephone numbers

Question 16

The U.S. Privacy Act of 1974 establishes a code of information practices that regulates what?

Answer 16

the collection, maintenance, consumption, and distribution of personally identifiable information that is maintained by federal agencies.

Question 17

What is a letter rogatory?

Answer 17

A formal request by the courts of one country seeking judicial assistance from the courts of another country

Question 18

The fraud theory approach is?

Answer 18

an investigative tool designed to help fraud examiners organize and direct examinations based on the information available at the time. According to the fraud theory approach, when conducting investigations into allegations or signs of fraud, the fraud examiner should:

• Analyze the available data.
• Create a hypothesis.
• Test the hypothesis.
• Refine and amend the hypothesis.

Question 19

Textual analytics is?

Answer 19

a method of using software to extract usable information from unstructured text data.

Through the application of linguistic technologies and statistical techniques—including weighted fraud indicators (e.g., fraud keywords) and scoring algorithms—textual analytics software can categorize data to reveal patterns, sentiments, and relationships indicative of fraud.

Question 20

Metadata is?

Answer 20

Data about data.

Question 21

The U.S. Right to Financial Privacy Act prohibits?

Answer 21

financial institutions from disclosing financial information about individual customers to governmental agencies without the customers’ consent, a court order, a subpoena, a search warrant, or other formal demand.

Question 22

Normally, the interviewer should ask accusatory or admission-seeking questions when all of the following are true:

Answer 22

• There is a reasonable probability that the respondent has committed the act in question.
• All other reasonable investigative steps have been completed and as much information as possible has been developed from other sources.
• The interviewer can reasonably control the interview’s place, time, and subject matter.

Question 23

Duplicate testing is used to identify transactions with?

Answer 23

duplicate values in specified fields.

Question 24

Illustrators are?

Answer 24

motions made primarily with the hands that demonstrate points when talking

Question 25

The primary concern when analyzing digital evidence is to?

Answer 25

maintain the integrity of the data at all times.

Question 26

A direct method uses the subject’s?

Answer 26

books and records (or financial transaction records belonging to third parties) to analyze the relationship between a suspect’s receipt and subsequent disposition of funds or assets

Question 27

an indirect method employs?

Answer 27

circumstantial evidence to analyze the relationship between a suspect’s receipt and subsequent disposition of funds or assets.

Question 28

There are three general approaches to obtaining the verbal confession:

Answer 28

chronologically, by transaction, or by event.

Question 29

The net-worth method (or comparative net-worth analysis) is used to?

Answer 29

prove illicit income circumstantially by showing that a person’s assets or expenditures for a given period exceed that which can be accounted for from known or admitted legitimate sources of income

Question 30

The three key elements in the fraud triangle are?

Answer 30

opportunity, motivation, and rationalization

Question 31

Manipulators are?

Answer 31

motions like picking lint from clothing, playing with objects such as pencils, or holding one’s hands while talking. Manipulators are displacement activities that reduce nervousness.

Question 32

The following are examples of data analysis queries that can be performed by data analysis software on asset accounts to help detect fraud:

Answer 32

• Generate depreciation to cost reports.
• Compare book and tax depreciation and indicate variances.
• Sort asset values by asset type or monetary amount.
• Select samples for asset existence verification.
• Recalculate expense and reserve/provision amounts using replacement costs

Question 33

A matrix is a type of visual aid, in the form of a grid, that shows?

Answer 33

the relationship (or points of contacts) between a number of entities.

Question 34

The bank deposits method is recommended as a primary method of proof when?

Answer 34

most of the subject’s income is deposited in a financial institution and the subject’s books and records are unavailable, withheld, incomplete, or maintained on a cash basis.

Question 35

The net-worth method of tracing assets would yield the best result when?

Answer 35

several of the subject’s assets or liabilities have changed during the period under examination and the subject’s financial records are not available.

Question 36

Double-negative questions are?

Answer 36

questions that have two forms of negation within a single clause. Double-negative questions, or statements containing double negatives, are confusing and often suggest an answer opposite to the correct one. Therefore, they should not be used. For example: “Didn’t you suspect that something wasn’t right?”

Question 37

If a fraud examiner working in the United States needs information on registration and disciplinary information regarding firms and individuals in the U.S. futures industry, he should contact the?

Answer 37

The National Futures Association (NFA) is an industry-wide, self-regulatory organization authorized by the U.S. Commodity Exchange Act; it operates under the supervision of the Commodity Futures Trading Commission (CFTC).

The NFA oversees the commodities markets, and it is a one-stop information source for all types of registration and disciplinary information regarding firms and individuals in the futures industry. This information includes registration status and employment history; disciplinary actions filed by the NFA, the CFTC, and the commodity exchanges; and customer complaints filed under the CFTC’s Reparations Program.

Question 38

Mutual legal assistance (MLA) is?

Answer 38

a process by which countries request and provide assistance in law enforcement matters, such as gathering information, obtaining provisional remedies, and enforcing foreign orders and judgments.

Question 39

Multi-file processing allows?

Answer 39

the user to relate several files by defining relationships between multiple files, without the use of the Join command.

Question 40

is net worth analysis a direct or indirect method?

Answer 40

indirect

Question 41

Using the correlation analysis function, fraud examiners can?

Answer 41

determine the relationships among different variables in the raw data.

Question 42

What are the steps of the planning phase of the data analysis process, which is the first phase that should be undertaken?

Answer 42

Defining the examination objectives, determining whether predication exists, and building a profile of potential frauds

Question 43

During the preparation phase of the data analysis process, which is the 2nd phase, the fraud examiner must complete several important steps, including:

Answer 43

• Identifying the relevant data
• Obtaining the requested data
• Verifying the data
• Cleansing and normalizing the data

Question 44

The expenditures method (also known as the sources and application of funds method) compares what?

Answer 44

the suspect’s known expenditures and known sources of funds during a given period of time.

Question 45

The fraud examination report conveys what?

Answer 45

all evidence necessary to evaluate the case, and it can be used to corroborate previously known facts. An accurate report will add credibility to the fraud examination and to the fraud examiner’s work.