CFA Asset Misappropriation & Embezzlement Flashcards

Which analytical technique is most useful for identifying duplicate vendor payments in a large accounts payable dataset?

Answer: Data matching and duplicate detection using ACL or IDEA

Data matching tools like ACL or IDEA can flag duplicate invoice numbers, amounts, or vendor details across thousands of transactions quickly.

An employee who approves vendor invoices AND receives goods creates which type of internal control weakness?

Answer: Failure of segregation of duties

Segregation of duties requires that authorization, custody, and recordkeeping functions be assigned to different individuals to prevent single-person fraud.

Benford's Law is most useful in fraud investigations for:

Answer: Detecting fabricated or manipulated numbers in financial data

Benford's Law predicts the natural frequency distribution of leading digits in large datasets, and deviations can indicate manipulated or invented figures.

A purchasing agent who approves invoices from a company secretly owned by their spouse is committing:

Answer: A conflict of interest corruption scheme

A conflict of interest exists when an employee has an undisclosed personal financial interest in a vendor and uses their position to benefit that vendor.

Which document is a fraud examiner most likely to review first when investigating suspected inventory theft?

Answer: Inventory count sheets and shrinkage reports

Inventory count sheets and shrinkage reports reveal discrepancies between recorded stock and physical quantities, which is the primary indicator of inventory theft.

The ACFE's Fraud Tree classifies asset misappropriation schemes into which two main branches?

Answer: Cash schemes and non-cash schemes

The ACFE Fraud Tree divides asset misappropriation into cash schemes (skimming, larceny, fraudulent disbursements) and non-cash schemes (misuse and larceny of assets).