ADA Fraud Detection Analytics 2

Question 1

Which analytical approach traces financial transactions through multiple accounts or entities to detect complex money laundering schemes?

Accepted Answer

Network analysis

Answer

Network analysis maps relationships between entities and traces transaction flows across multiple accounts, making it effective for identifying layering schemes used in money laundering.

Question 2

In procurement fraud, what does 'splitting' refer to?

Accepted Answer

Breaking up contracts into smaller amounts to avoid competitive bidding thresholds

Answer

Splitting involves intentionally dividing purchases into smaller amounts to circumvent competitive bidding requirements or authorization thresholds, bypassing required procurement controls.

Question 3

Which machine learning technique is most commonly used in fraud detection to classify transactions as fraudulent or legitimate based on historical labeled data?

Accepted Answer

Supervised classification

Answer

Supervised classification algorithms are trained on labeled historical data (known fraud vs. legitimate transactions) to learn distinguishing patterns and classify new transactions accordingly.

Question 4

Which red flag in procurement data most commonly indicates bid rigging among competing vendors?

Accepted Answer

A small group of vendors taking turns winning contracts in a rotating pattern

Answer

Bid rotation, where a small group of vendors takes turns winning contracts, is a key indicator of collusion, suggesting competitors are coordinating to divide business rather than competing legitimately.

Question 5

What does a 'related party' analysis in fraud detection primarily examine?

Accepted Answer

Undisclosed business relationships between employees and vendors or customers

Answer

Related party analysis examines whether employees have undisclosed financial relationships with vendors or customers that could create conflicts of interest or enable fraudulent schemes.

ADA - Audit Data Analytics Certification Practice Test

ADA - Audit Data Analytics Certification Practice Test

ADA Fraud Detection Analytics 2