CAP Fraud Detection & Prevention 2

Question 1

Which red flag most commonly indicates a fictitious charitable organization?

Accepted Answer

A name nearly identical to a well-known charity

Answer

Scammers frequently use names that closely mimic reputable charities to confuse donors into misdirecting gifts.

Question 2

A donor receives a solicitation claiming 100% of contributions go directly to program services. What should a CAP advisor note?

Accepted Answer

It is a common fraudulent claim since all organizations have some overhead

Answer

No legitimate charity can operate with zero overhead; claims of 100% program spending are a classic fraud indicator.

Question 3

What is 'affinity fraud' in the context of charitable giving?

Accepted Answer

Fraud that exploits trust within a specific community, religious group, or ethnic group

Answer

Affinity fraud exploits the trust and relationships within identifiable groups to perpetrate scams more effectively.

Question 4

Which internal control best prevents a single employee from perpetrating financial fraud at a nonprofit?

Accepted Answer

Segregation of duties between authorization, custody, and recordkeeping

Answer

Segregating duties ensures no single individual controls all phases of a financial transaction, reducing fraud opportunity.

Question 5

A charity solicits disaster relief funds but has no history of disaster work. This is an example of:

Accepted Answer

Opportunistic fraud exploiting donor urgency

Answer

Fraudsters frequently launch disaster-relief appeals capitalizing on emotional urgency without any infrastructure to deliver aid.

(CAP) Certified Philanthropic Advisor Practice Test