CFE Forensic Accounting & Financial Fraud Investigation 2

Question 1

Which scheme involves an employee creating fictitious vendors or ghost employees to divert company funds?

Accepted Answer

Disbursement fraud via fictitious payees

Answer

Skimming

Answer

Revenue recognition manipulation

Answer

Inventory theft

Question 2

What is 'check kiting' in the context of financial fraud?

Accepted Answer

Exploiting the float between banks by depositing checks before they clear to create artificial balances

Answer

Forging a supervisor's signature on checks

Answer

Intercepting and cashing checks intended for another party

Answer

Using stolen checks to purchase money orders

Question 3

In forensic accounting, what does the 'expenditure approach' to estimating unreported income involve?

Accepted Answer

Calculating income by totaling known personal expenditures and comparing to reported income

Answer

Reviewing all company expenditures for signs of inflated costs

Answer

Auditing expense reimbursements for personal charges

Answer

Analyzing capital expenditures for depreciation manipulation

Question 4

Which accounting principle requires that revenue be recognized when it is earned and realizable, regardless of when cash is received?

Accepted Answer

Accrual basis accounting

Answer

Matching principle

Answer

Conservatism principle

Answer

Going concern assumption

Question 5

When investigating embezzlement, which analytical procedure involves comparing current-period financial data to prior periods to identify unusual fluctuations?

Accepted Answer

Horizontal analysis

Answer

Vertical analysis

Answer

Ratio analysis

Answer

Regression analysis

Question 6

Which element must a forensic examiner typically prove to establish criminal fraud rather than mere civil negligence?

Accepted Answer

That the perpetrator acted with intent to deceive (scienter)

Answer

That the victim suffered a financial loss

Answer

That internal controls were inadequate

Answer

That the perpetrator had access to company funds

Question 7

What is the role of 'link analysis' in financial fraud investigations?

Accepted Answer

Mapping relationships between entities such as accounts, individuals, and transactions to reveal hidden connections

Answer

Analyzing hyperlinks in digital evidence to trace internet fraud

Answer

Reviewing chain-of-custody links in physical evidence handling

Answer

Calculating statistical links between financial ratios and fraud risk scores