CFE Trivia 4

Question 1

Which U.S. law created the Public Company Accounting Oversight Board (PCAOB)?

Accepted Answer

Sarbanes-Oxley Act

Answer

The Sarbanes-Oxley Act of 2002 (SOX) established the PCAOB to oversee auditors of public companies in response to major accounting scandals like Enron.

Question 2

In fraud investigation, what is a 'net worth analysis' used to detect?

Accepted Answer

Unexplained increases in a suspect's personal wealth

Answer

Net worth analysis compares a person's increase in net worth to known legitimate income sources to identify unexplained wealth that may indicate fraud proceeds.

Question 3

Which type of fraudulent disbursement involves creating payments to fictitious employees on the payroll?

Accepted Answer

Ghost employee scheme

Answer

A ghost employee scheme involves adding fictitious employees to the payroll so the fraudster can divert the corresponding paychecks.

Question 4

What does 'Benford's Law' help fraud examiners identify?

Accepted Answer

Unusual patterns in the leading digits of numerical data

Answer

Benford's Law states that in naturally occurring datasets, lower leading digits appear more frequently; deviations from this pattern can signal manipulated or fabricated numbers.

Question 5

Which of the following is an example of a 'conflict of interest' scheme?

Accepted Answer

A manager approving contracts with a vendor in which the manager has an undisclosed ownership stake

Answer

A conflict of interest occurs when an employee has an undisclosed personal interest in a transaction that benefits themselves at the expense of the employer.

Certified Fraud Examiner Exam Practice Test

Certified Fraud Examiner Exam Practice Test

CFE Trivia 4