Asset Misappropriation Schemes Flashcards

An employee steals a company laptop and then signs a surplus property disposal form to make it appear the laptop was properly scrapped. Which category of asset misappropriation does this represent?

Answer: Non-cash asset larceny

Theft of physical non-cash assets such as equipment, combined with falsified disposal documentation, falls under the non-cash larceny branch of asset misappropriation.

Which of the following best describes a 'pass-through' vendor scheme?

Answer: An employee-controlled entity buys goods and resells them to the employer at an inflated price

In a pass-through scheme, the fraudster's entity purchases goods at market price and resells them to the employer at a markup, capturing the profit as illicit gain.

Data analytics used to detect payroll fraud would most likely flag which of the following as suspicious?

Answer: Two employees sharing the same bank account routing and account number

Duplicate bank account numbers on different employee records indicate a ghost employee whose pay is being diverted to a real person's account.

A buyer at a manufacturing company receives cash payments from a supplier in exchange for steering contracts to that supplier. Under the ACFE classification, this is best described as:

Answer: Corruption — bribery/kickback

Receiving payments for influencing business decisions on behalf of another party is a corruption scheme (bribery/kickback), not asset misappropriation, under the ACFE fraud tree.

Which of the following payroll schemes is most likely to be revealed by comparing current payroll records to terminated employee files?

Answer: Ghost employee scheme using former employee identities

Continuing to pay a terminated employee's record after separation, and diverting the funds, is detected when active payroll is compared against the HR termination list.

The Benford's Law analysis technique is used in fraud examinations primarily to:

Answer: Detect anomalies in the natural distribution of leading digits in financial data

Benford's Law predicts the frequency of leading digits in naturally occurring datasets; deviations from this distribution can signal fabricated or manipulated numbers.

An employee forges a supervisor's signature on a check made payable to herself. To conceal the theft, she records the disbursement as a payment to a legitimate vendor. This concealment technique is known as:

Answer: Journal entry manipulation

Recording the fraudulent disbursement as a payment to a real vendor through a journal entry masks the theft within routine operating transactions.