Trivia Flashcards

The term 'skimming' in occupational fraud refers to which type of scheme?

Answer: Removing cash before it is recorded in the accounting system

Skimming is an off-book fraud where cash is stolen before it is entered into the accounting records, making it difficult to detect through normal reconciliations.

Which element is NOT part of the classic fraud triangle?

Answer: Capability

The classic fraud triangle consists of pressure, opportunity, and rationalization; 'capability' was added by David Wolfe and Dana Hermanson to form the fraud diamond.

What does the term 'shell company' refer to in a fraud context?

Answer: A fictitious or inactive entity used to disguise financial transactions

A shell company is an entity with no real operations used to funnel fraudulent payments, launder money, or conceal asset ownership.

Under the ACFE's occupational fraud classification system, which category includes financial statement fraud?

Answer: Financial statement fraud

The ACFE Occupational Fraud and Abuse Classification System (Fraud Tree) has three primary branches: asset misappropriation, corruption, and financial statement fraud.

What is 'check tampering' in the context of occupational fraud?

Answer: All of the above

Check tampering encompasses altering checks, forging signatures, intercepting and redirecting checks, and concealing the fraud — making 'all of the above' correct.

Which ratio is commonly used to detect potential revenue fraud by comparing recorded cash receipts to reported sales?

Answer: Cash-to-sales ratio

The cash-to-sales ratio helps detect revenue fraud — if reported sales rise but cash receipts do not keep pace, it may indicate fictitious revenue.

The concept of 'tone at the top' in fraud prevention primarily refers to which of the following?

Answer: Management's visible commitment to ethical conduct

Tone at the top describes how senior management's ethical attitude and visible commitment to integrity shapes the organization's culture and reduces fraud risk.