CAP Fraud Detection & Prevention 4

Question 1

Which federal agency oversees the investigation of mail fraud involving charitable solicitations?

Accepted Answer

U.S. Postal Inspection Service

Answer

The U.S. Postal Inspection Service investigates fraud conducted through the mail, including fraudulent charitable solicitation campaigns.

Question 2

What is the primary purpose of a nonprofit's conflict of interest policy?

Accepted Answer

To identify and manage situations where personal interests could improperly influence organizational decisions

Answer

Conflict of interest policies require disclosure and recusal when a decision-maker's personal interests could bias their organizational decisions.

Question 3

A charity solicits donations for a specific named fund but commingles those funds with general operating revenue. This practice is:

Accepted Answer

Potentially fraudulent and a breach of donor intent

Answer

Restricted gifts must be used for their designated purpose; commingling and misuse constitutes a violation of donor intent and may constitute fraud.

Question 4

Which due diligence step is most important before a CAP advisor recommends a gift to an international charity?

Accepted Answer

Confirming U.S. tax-deductibility status and anti-money-laundering compliance

Answer

International gifts require confirming deductibility (often via a U.S. fiscal sponsor) and compliance with OFAC and anti-terrorism financing rules.

Question 5

A nonprofit board member notices that expense reimbursements have increased 300% without a corresponding increase in activity. The best next step is:

Accepted Answer

Requesting a detailed expense audit and documentation review

Answer

Unexplained spikes in reimbursements are a classic fraud indicator requiring immediate documentation review and audit.

(CAP) Certified Philanthropic Advisor Practice Test