Chapter 01
27. The ACFE does NOT include which of the major categories of occupational fraud listed below?
a.
asset misappropriations.
b.
corruption.
c.
fraudulent statements.
d.
pension fraud.
Moderate
LO: 1-3
United States – BUSPROG: – Technology
United States – IL – AICPA: BB: – Industry
Bloom’s: Remembering
28. What is the most cost-effective way to minimize the cost of fraud?
a.
Prevention
b.
Detection
c.
Investigation
d.
Prosecution
a
Easy
LO: 1-1
United States – BUSPROG: – Technology
United States – IL – AICPA:BB: – Critical Thinking
Bloom’s: Evaluation
29. Fraud in companies such as WorldCom, Enron, Waste Management, Sunbeam, Rite-Aid, Phar-Mor, Parmalat, and
ZZZZBest are examples of:
a.
Customer fraud.
b.
Investment scams.
c.
Vendor fraud.
d.
Management fraud.
30. Which of the following statements is true?
a.
Fraud usually results from unintentional errors.
b.
Fraud is more violent and traumatic than robbery.
c.
Fraud always involves deception, confidence and trickery.
d.
Losses from fraud are less than losses from robbery.
LO: 1-2
Bloom’s: Remembering
31. To be successful, plaintiffs in civil cases must prove their case by which of the following?
a.
Preponderance of evidence.
b.
Beyond a reasonable doubt.
c.
To a degree of reasonable mitigation.
d.
To the standard of prima facie.
United States – BUSPORG: – Communication
Bloom’s: Remembering
32. Which of the following is NOT an example of a fraud-fighting career?
a.
Working for the criminal investigation division of the IRS.
b.
c.
d.
LO: 1-4
United States – BUSPROG: – Technology
Bloom’s: Analyzing
Chapter 01
b.
Serving as an expert witness.
c.
Maintaining the security of public records.
d.
Defending an organization being sued in a civil case.
Incorrect. This is a fraud-fighting career.
Incorrect. This is a fraud-fighting career.
LO: 1-6
United States – BUSPROG: – Technology
Bloom’s: Remembering
33. Which of the following observations concerning occupational fraud is NOT true?
a.
It is clandestine.
b.
It is committed for the purpose of direct or indirect financial benefit to the employee.
c.
It usually involves two or more employees.
d.
It costs the employing organization assets, revenues, or reserves.
LO: 1-2
United States – BUSPROG: – Technology
Bloom’s: Understanding
34. Which of the following is NOT one of the major types of fraud classification schemes?
a.
Employee embezzlement
b.
Government fraud
c.
Investment scams
d.
Customer fraud
Incorrect. The six types of fraud include employee embezzlement.
Incorrect. The six types of fraud include customer fraud.
35. Which of the following frauds is usually the most expensive?
a.
Vendor fraud
b.
Customer fraud
c.
Occupational fraud
d.
Financial statement fraud
United States – BUSPROG: – Technology
Bloom’s: Understanding
36. Civil claims begin when one party files a complaint against another, usually for the purpose of:
a.
having a penalty imposed.
b.
sending the perpetrator to prison.
c.
proving the perpetrator guilty.
d.
being awarded financial restitution.
United States – BUSPROG: – Technology
Bloom’s: Understanding
37. Employee embezzlement can be direct or indirect. Indirect fraud occurs when:
a.
an employee uses company assets to run his/her private business.
b.
employees establish dummy companies and have their employers pay for goods that are not actually delivered.
c.
an employee receives a kickback from a vendor.
d.
an employee steals company cash, inventory, tools, or other assets.
LO: 1-2
United States – BUSPROG: – Technology
Bloom’s: Remembering
38. Telemarketing fraud usually falls into this category.
a.
Investment scams
b.
Management fraud
c.
Vendor fraud
d.
Embezzlement
a
Easy
LO: 1-3
Bloom’s: Remembering
39. The word “con,” which means to deceive, comes from the word:
a.
Contract.
b.
Conserve.
c.
Confuse.
d.
Confidence.
Correct. The word “con” comes from confidence.
Easy
LO: 1-2
United States – BUSPROG: – Technology
Bloom’s: Remembering
40. In fraud prosecution cases, ______ matter consists of the underlying data and all corroborating information available.
a.
evidential
b.
Incorrect. This is not an example of indirect fraud.
c.
d.
Incorrect. This is not an example of indirect fraud.
LO: 1-3
United States – BUSPROG: – Technology
Bloom’s: Understanding
Chapter 01
b.
remedial
c.
supplemental
d.
elementary
a
1
Moderate
United States – BUSPROG: – Technology
Bloom’s: Understanding
41. The study conducted by the Association of Certified Fraud Examiners in 2008 estimated that U.S. organizations lose
_____ percent of their annual revenues to fraud.
a.
8
b.
7
c.
23
d.
17
b
1
Moderate
LO: 1-1
United States – BUSPROG: – Technology
Bloom’s: Remembering
42. A company was the victim of several frauds that totaled approximately $10 million in one year. With a profit margin
of 10 percent, and assuming that the company’s product sold for $1,000 per unit, how many additional units must the
company sell to compensate for the fraud losses?
a.
1 million
b.
100 million
c.
100,000
d.
10,000
c
43. Given below are the profit margins and fraud related losses of four economies. Which economy will have to generate
the maximum dollar amount of additional revenues to recover the loss to aggregate income?
Economy A 10% $225 million
Economy B 10% $150 million
Economy C 5% $100 million
Economy D 2% $ 50 million
a.
Economy A
b.
Economy D
c.
Economy C
d.
Economy B
LO: 1-1
United States – BUSPROG: – Technology
Bloom’s: Analyzing
44. The GDP in the economy of Ponziland was $5 billion in the year prior to the frauds (year 1). The economy were
growing at 4 percent. Frauds during the year reduce aggregate income by $200 million. During the year, the economy has:
a.
shrunk by 1 percent.
b.
grown by only 1 percent.
c.
remained flat.
d.
grown by 4 percent.
d.
LO: 1-1
United States – BUSPROG: – Technology
Bloom’s: Applying
45. What is the single most critical element for a fraud to be successful?
a.
Criminal intent
b.
Confidence
c.
Greed
d.
Compulsion
Easy
LO: 1-2
United States – BUSPROG: – Technology
Bloom’s: Remembering
46. Fraud statistics come from all of the following sources EXCEPT:
a.
Government agencies
b.
Researchers
c.
Insurance Companies
d.
Victims
e.
Fraud perpetrator
e
Incorrect. This is a source for statistics.
Incorrect. This is a source for statistics.
Incorrect. This is a source for statistics.
Incorrect. This is a source for statistics.
Easy
LO: 1-1
United States – BUSPROG: – Technology
Bloom’s: Remembering
c.
Difficult
LO: 1-1
United States – BUSPROG: – Technology
Bloom’s: Analyzing
47. Which of the following skills would be least beneficial in a career as a fraud-fighting professional?
a.
sales experience
b.
auto mechanic
c.
data entry clerk
d.
journalist
Moderate
LO: 1-6
United States – BUSPROG: – Technology
Bloom’s: Applying
48. Which of the following would NOT be acceptable as fraud-related experience to satisfy the education requirements to
apply for CFE certification?
a.
auditor (internal or external)
b.
investigator for law enforcement agency or private sector
c.
experience in the Human Resources department of an organization
d.
paralegal for a prosecuting attorney
c
Moderate
LO: 1-6
Bloom’s: Applying
49. Which of the following statements regarding fraud on behalf of an organization is true?
a.
Middle management is usually the perpetrator.
b.
This type of fraud benefits top executives as it generally increases stock price.
c.
This type of fraud includes inflating expenses in order to save of corporate income taxes.
d.
Financial statement fraud is common among publically-traded companies who must meet the public’s
expectations.
Easy
LO: 1-4
United States – BUSPROG: – Technology
Bloom’s: Remembering
50. Which individual listed is most likely to commit financial statement fraud in order to benefit an organization?
a.
an executive
b.
an internal auditor
c.
a floor manager (line supervisor)
d.
the company Treasurer
a