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

Shell company fraud involves setting up fake vendor entities to route fraudulent payments to employees or accomplices.

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

Segregation of duties ensures that different people handle authorization, recording, and custody so that fraud requires collusion between multiple employees.

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

Multiple invoices with identical amounts from the same vendor in a short timeframe is a classic indicator of duplicate billing or duplicate payment fraud.

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

Conflict of interest fraud occurs when an employee uses their position to benefit personally from transactions they influence, without disclosing the relationship.

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

Auditing the vendor master file and cross-referencing it with employee data can reveal shared addresses, phone numbers, or bank accounts that signal fictitious or related-party vendors.

CAPA - Certified Accounts Payable Associate Practice Test

CAPA - Certified Accounts Payable Associate Practice Test

CAPA Fraud Prevention and Detection