CAPA Fraud Prevention and Detection

Question 1

Which type of AP fraud involves an employee creating fictitious vendors to submit and approve fraudulent invoices?

Accepted Answer

Shell company fraud

Answer

Skimming

Answer

Duplicate payment fraud

Answer

Payroll padding

Question 2

What is the primary purpose of segregation of duties in AP fraud prevention?

Accepted Answer

To ensure no single employee controls an entire transaction from start to finish

Answer

To speed up invoice processing

Answer

To reduce the number of AP staff needed

Answer

To comply with tax regulations

Question 3

Which red flag most strongly indicates potential duplicate payment fraud?

Accepted Answer

Multiple invoices with the same amount from the same vendor within a short period

Answer

Invoices submitted on weekdays

Answer

Invoices referencing purchase orders

Answer

Vendor invoices with itemized line details

Question 4

An AP employee who approves invoices from a vendor in which they have an undisclosed ownership interest is committing which type of fraud?

Accepted Answer

Conflict of interest fraud

Answer

Lapping

Answer

Kiting

Answer

Bid rigging

Question 5

Which control is most effective at detecting fictitious vendor fraud?

Accepted Answer

Periodic vendor master file audits comparing vendor data to employee records

Answer

Requiring invoices to be submitted by email

Answer

Allowing vendors to self-register in the system

Answer

Paying all invoices within 30 days

Question 6

What is 'billing scheme' fraud in accounts payable?

Accepted Answer

Submitting false invoices or inflating invoices to cause the company to pay more than owed

Answer

Theft of checks before they are mailed to vendors

Answer

Intercepting and cashing vendor refund checks

Answer

Creating ghost employees in payroll

Question 7

Which analytical technique is commonly used in AP fraud detection to identify unusual payment patterns?

Accepted Answer

Benford's Law analysis

Answer

Break-even analysis

Answer

Net present value calculation

Answer

Straight-line depreciation review