CFE Asset Misappropriation Schemes 5 — Questions and Answers
Question 1: Which of the following scenarios best illustrates a 'fictitious refund' scheme at a retail company?
- A cashier processes a refund for merchandise returned by a customer and keeps the cash
- A cashier processes a refund for merchandise that was never returned and pockets the cash (Correct answer)
- A manager reverses a previous overcharge and credits the customer account
- A cashier issues store credit instead of a cash refund without authorization
Correct answer: A cashier processes a refund for merchandise that was never returned and pockets the cash
A fictitious refund scheme involves processing a return transaction for merchandise that was not actually returned, generating cash that the employee steals.
Question 2: A company discovers that its petty cash fund consistently requires reimbursement more frequently than expected. The most likely fraudulent explanation is:
- Employees are using the fund for approved minor purchases more efficiently
- The fund custodian is making unsupported disbursements and pocketing cash (Correct answer)
- The fund amount was set too low for current business needs
- Inflation has increased the cost of typical petty cash purchases
Correct answer: The fund custodian is making unsupported disbursements and pocketing cash
Frequent, unexplained depletion of petty cash beyond normal usage patterns is a classic indicator of the custodian stealing from the fund.
Question 3: Under the ACFE Fraud Tree, which of the following is classified as a 'fraudulent disbursement' scheme?
- Skimming receipts from cash sales
- Stealing blank company checks from the supply cabinet
- Submitting fictitious expense reimbursement claims (Correct answer)
- Diverting incoming customer payments before recording them
Correct answer: Submitting fictitious expense reimbursement claims
Fraudulent disbursements involve causing the company to issue payments through legitimate-appearing channels, such as reimbursing fabricated personal expenses.
Question 4: An examiner reviewing accounts receivable finds several large balances that have been written off as uncollectible, all approved by the same accounts receivable clerk. What fraud scheme should be suspected?
- Lapping of customer payments
- Skimming with write-off concealment (Correct answer)
- Billing scheme using fictitious customers
- Kiting between customer accounts
Correct answer: Skimming with write-off concealment
Writing off a customer's balance as bad debt after pocketing their payment is a common concealment technique that removes the evidence of the original theft.
Question 5: Which of the following internal controls is specifically designed to prevent check tampering?
- Requiring purchase orders for all acquisitions over $500
- Storing blank checks in a locked location accessible only to authorized personnel (Correct answer)
- Reconciling vendor statements to accounts payable ledgers monthly
- Rotating employees among different job functions quarterly
Correct answer: Storing blank checks in a locked location accessible only to authorized personnel
Restricting physical access to blank check stock prevents unauthorized individuals from writing or altering checks payable to themselves.
Question 6: A fraud examiner is analyzing expense reports and finds that an employee consistently submits meal receipts just below the $75 threshold that requires a detailed business purpose justification. This pattern most likely indicates:
- The employee is unusually cost-conscious and budget-aware
- The employee is structuring expenses to avoid required documentation controls (Correct answer)
- The company's policy threshold is set at the appropriate level
- The pattern is coincidental and requires no further investigation
Correct answer: The employee is structuring expenses to avoid required documentation controls
Consistently submitting amounts just below a control threshold is a structuring technique that signals awareness of the control and deliberate avoidance of its requirements.
Question 7: Which of the following represents the strongest evidence that a ghost employee scheme has been occurring?
- An employee who works in a different building than their supervisor
- A payroll record with no corresponding HR personnel file, time records, or tax withholding history (Correct answer)
- An employee paid by direct deposit who has never visited the payroll office
- Payroll records that show consistent hours across all pay periods
Correct answer: A payroll record with no corresponding HR personnel file, time records, or tax withholding history
A ghost employee has no supporting HR documentation, no verifiable work history, and no legitimate employment records because they do not actually exist.
CFE Asset Misappropriation Schemes 5
Which of the following scenarios best illustrates a 'fictitious refund' scheme at a retail company?