Fraud Examination and Prevention Flashcards
7 cards from real CBA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Fraud Examination and Prevention flashcards as text
What is the primary purpose of a fraud risk assessment in banking?
Answer: To identify and evaluate the likelihood and impact of potential fraud schemes
A fraud risk assessment identifies and evaluates potential fraud schemes, their likelihood, and potential impact to help prioritize prevention and detection controls.
According to the ACFE Fraud Triangle, which three elements must all be present for occupational fraud to occur?
Answer: Pressure, opportunity, and rationalization
The ACFE Fraud Triangle identifies pressure (incentive or need), opportunity (weak controls), and rationalization (personal justification) as the three necessary conditions for occupational fraud.
Which type of bank fraud involves an employee creating fictitious loans to generate fraudulent commissions or misappropriate proceeds?
Answer: Loan origination fraud
Loan origination fraud occurs when employees create fictitious or unsupported loans to earn commissions or divert loan proceeds for personal gain.
What is 'check kiting' in the banking context?
Answer: Exploiting float time between banks to artificially inflate account balances
Check kiting exploits the float period between when a check is deposited and when it clears, allowing a fraudster to artificially inflate available balances across multiple accounts at different banks.
Which internal control is most effective at preventing unauthorized wire transfers?
Answer: Dual control requiring two authorized individuals to initiate and approve each transfer
Dual control requiring two authorized individuals to both initiate and approve wire transfers is the most effective preventive control, ensuring no single person can unilaterally execute a transfer.
Which behavioral red flag most commonly indicates potential employee embezzlement at a bank?
Answer: An employee living beyond apparent financial means who refuses to take vacation
Employees living beyond their means and refusing to take vacation — to prevent another employee from discovering their scheme — are classic behavioral red flags for embezzlement.
What is the primary role of a Certified Fraud Examiner (CFE) during a bank internal audit engagement?
Answer: To investigate suspected fraud, gather evidence, and support potential legal or disciplinary action
A CFE's primary role is to investigate suspected fraud using specialized techniques, gather and preserve evidence, document findings, and support potential prosecution or disciplinary proceedings.