CBA Fraud Examination and Prevention

Question 1

What is the primary purpose of a fraud risk assessment in banking?

Accepted Answer

To identify and evaluate the likelihood and impact of potential fraud schemes

Answer

A fraud risk assessment identifies and evaluates potential fraud schemes, their likelihood, and potential impact to help prioritize prevention and detection controls.

Question 2

According to the ACFE Fraud Triangle, which three elements must all be present for occupational fraud to occur?

Accepted Answer

Pressure, opportunity, and rationalization

Answer

The ACFE Fraud Triangle identifies pressure (incentive or need), opportunity (weak controls), and rationalization (personal justification) as the three necessary conditions for occupational fraud.

Question 3

Which type of bank fraud involves an employee creating fictitious loans to generate fraudulent commissions or misappropriate proceeds?

Accepted Answer

Loan origination fraud

Answer

Loan origination fraud occurs when employees create fictitious or unsupported loans to earn commissions or divert loan proceeds for personal gain.

Question 4

What is 'check kiting' in the banking context?

Accepted Answer

Exploiting float time between banks to artificially inflate account balances

Answer

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.

Question 5

Which internal control is most effective at preventing unauthorized wire transfers?

Accepted Answer

Dual control requiring two authorized individuals to initiate and approve each transfer

Answer

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.

(CBA) Certified Bank Auditor Practice Test

(CBA) Certified Bank Auditor Practice Test

CBA Fraud Examination and Prevention