CA Forensic Accounting & Fraud Detection Flashcards

Which analytical technique is commonly used in forensic accounting to identify unusual numeric patterns that may indicate fraud?

Answer: Benford's Law analysis

Benford's Law predicts the expected frequency distribution of leading digits in naturally occurring data and deviations from this pattern can signal fraudulent manipulation.

What is a 'ghost employee' scheme?

Answer: Adding fictitious employees to the payroll to collect their wages

A ghost employee scheme involves creating fictitious workers on the payroll so the fraudster can collect and divert their paychecks.

In a forensic investigation, what does 'chain of custody' refer to?

Answer: The chronological documentation tracking the handling and transfer of evidence

Chain of custody is the unbroken documentation showing the seizure, custody, control, transfer, and analysis of evidence, which is critical for admissibility in court.

Which type of occupational fraud involves an employee creating fictitious vendors and submitting fraudulent invoices for payment?

Answer: Billing scheme

A billing scheme involves submitting false invoices from fictitious or shell companies to steal funds through the accounts payable process.

What does 'money laundering' involve?

Answer: Concealing the origins of illegally obtained money to make it appear legitimate

Money laundering is the process of making illegally obtained proceeds appear to come from legitimate sources through a series of financial transactions.

Which professional designation is most closely associated with fraud examination in the United States?

Answer: CFE (Certified Fraud Examiner)

The Certified Fraud Examiner (CFE) credential, issued by the Association of Certified Fraud Examiners (ACFE), is specifically designed for professionals who investigate fraud.