Certified Fraud Examiner (CFE) MCQ Flashcards
7 cards from real CFE practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Certified Fraud Examiner (CFE) MCQ flashcards as text
A payroll clerk adds a fictitious employee to the payroll system and diverts the paychecks to their own account. This scheme is called:
Answer: Ghost employee scheme
A ghost employee scheme involves adding a non-existent (or former) employee to payroll and diverting the wages to the perpetrator.
Which of the following statements about Benford's Law is CORRECT?
Answer: It predicts that lower leading digits (1, 2, 3) occur more frequently in naturally occurring data sets
Benford's Law states that in many naturally occurring numerical data sets, the digit 1 appears as the leading digit about 30% of the time, with frequency decreasing for higher digits.
Which of the following best describes a 'shell company' used in a fraudulent billing scheme?
Answer: A fictitious entity created to receive fraudulent payments from the victim organization
In fraudulent billing schemes, perpetrators set up shell companies—entities with no real operations—to receive payments for goods or services never provided.
When conducting a fraud examination, the 'net worth method' is primarily used to:
Answer: Indirectly prove undisclosed income by analyzing changes in a suspect's net worth
The net worth method detects hidden income by showing that a suspect's net worth increased more than can be explained by known legitimate income.
Which of the following is the MOST reliable internal control for preventing check tampering?
Answer: Requiring dual signatures on all checks above a threshold
Requiring dual signatures on large checks ensures that no single individual can unilaterally authorize disbursements, reducing the risk of tampering.
Which legal concept allows a fraud examiner to testify about conclusions drawn from their investigation, even if those conclusions are based on specialized knowledge?
Answer: Expert witness testimony
Expert witnesses are permitted to offer opinion testimony on matters within their specialized knowledge, including fraud examination findings.
The ACFE's Report to the Nations consistently shows that the MOST common initial detection method for occupational fraud is:
Answer: Tips
According to the ACFE's Report to the Nations, tips are by far the most common way occupational fraud is initially detected, often via hotlines.