ACFE Financial Transactions & Fraud Schemes 4

Question 1

An employee with access to the accounts payable system creates a duplicate payment by processing an invoice twice. To conceal the fraud, she deletes one invoice from the system after the payment clears. This is an example of:

Accepted Answer

Duplicate payment scheme

Answer

Duplicate payment schemes involve intentionally paying the same legitimate invoice more than once and diverting the second payment.

Question 2

Which characteristic most distinguishes a pyramid scheme from a Ponzi scheme?

Accepted Answer

In pyramid schemes, participants actively recruit new members to earn returns

Answer

In pyramid schemes, each participant must recruit others to earn money, creating an exponentially growing recruitment requirement that guarantees collapse.

Question 3

A company overstates its inventory balance by counting items that have already been sold. The primary effect of this manipulation on the financial statements is:

Accepted Answer

Understated cost of goods sold and overstated net income

Answer

Overstating ending inventory reduces cost of goods sold on the income statement, which directly inflates gross profit and net income.

Question 4

A 'ghost employee' scheme is detected when auditors find:

Accepted Answer

Payroll records for workers with no HR file, time records, or supervisors

Answer

Ghost employees are fictitious persons on the payroll who have no corresponding employment documentation, timesheets, or identifiable supervisors.

Question 5

In the context of financial statement fraud, 'channel stuffing' primarily involves:

Accepted Answer

Recording revenue from products shipped to customers who did not order them or have side agreements to return goods

Answer

Channel stuffing pushes excess inventory to distributors—often with undisclosed return rights—to artificially inflate period-end revenue figures.

(ACFE) Association of Certified Fraud Examiners Practice Test

(ACFE) Association of Certified Fraud Examiners Practice Test

ACFE Financial Transactions & Fraud Schemes 4