CFE Asset Misappropriation Schemes 3

Question 1

A purchasing manager splits a $45,000 purchase order into three $15,000 orders to avoid the $20,000 competitive bidding threshold. This is known as:

Accepted Answer

Bid splitting (or 'structured' purchasing)

Answer

Bid splitting involves breaking a large purchase into smaller amounts specifically to circumvent procurement thresholds that require competitive bidding.

Question 2

Which of the following is a characteristic behavioral red flag ('red flag') of an employee committing asset misappropriation?

Accepted Answer

Refusing to take vacation or cross-train colleagues on their duties

Answer

Employees who refuse vacations or resist having others learn their duties often do so to prevent the discovery of ongoing fraud schemes.

Question 3

The Occupational Fraud and Abuse classification system developed by the ACFE categorizes asset misappropriation into two main branches. These are:

Accepted Answer

Cash schemes and non-cash schemes

Answer

The ACFE's fraud tree divides asset misappropriation into cash schemes (skimming, larceny, fraudulent disbursements) and non-cash schemes (misuse and larceny of non-cash assets).

Question 4

An employee uses a company credit card to purchase personal electronics and then submits the expense report listing the items as 'office supplies.' This is best classified as:

Accepted Answer

Personal purchase scheme using company funds

Answer

A personal purchase scheme involves using a company-issued payment method to buy items for personal benefit, regardless of how it is labeled on the expense report.

Question 5

During a fraud examination, an examiner discovers that a company's accounts payable aging report shows many vendor invoices paid within one day of receipt, all approved by the same manager. This pattern is most consistent with:

Accepted Answer

A kickback or billing fraud scheme requiring rapid payment

Answer

Unusually rapid invoice approvals by a single individual suggest the approver has a personal interest in ensuring the vendor is paid quickly, a hallmark of kickback arrangements.

Certified Fraud Examiner Exam Practice Test

Certified Fraud Examiner Exam Practice Test

CFE Asset Misappropriation Schemes 3