CFI CFI Investigative Methodology & Crime Scene Analysis 2 — Questions and Answers
Question 1: When conducting a financial investigation, the 'net worth method' is used to:
- Assess a company's current market valuation
- Detect unreported income by comparing increases in net worth with reported income (Correct answer)
- Calculate outstanding pension fund liabilities
- Determine appropriate insurance coverage amounts
Correct answer: Detect unreported income by comparing increases in net worth with reported income
The net worth method detects hidden income by analyzing unexplained increases in a subject's net worth versus their reported earnings.
Question 2: The 'source and application of funds' method in financial investigations:
- Tracks where legitimate money was invested over time
- Identifies unexplained cash flows by comparing income sources with all expenditures (Correct answer)
- Calculates the total tax liability owed to authorities
- Audits corporate accounts for regulatory compliance
Correct answer: Identifies unexplained cash flows by comparing income sources with all expenditures
This method identifies financial discrepancies by comparing all known fund sources against all known applications of those funds.
Question 3: What does 'modus operandi' (MO) analysis help investigators determine?
- The precise legal classification of an offense under statute
- Patterns in how a perpetrator commits crimes that can link multiple incidents (Correct answer)
- A comprehensive psychological profile applicable to all criminals
- The appropriate sentencing recommendation for the court
Correct answer: Patterns in how a perpetrator commits crimes that can link multiple incidents
MO analysis identifies behavioral patterns in crime commission that can link separate incidents to the same perpetrator.
Question 4: In workplace investigations, the 'preponderance of evidence' standard means:
- Evidence must establish guilt beyond a reasonable doubt
- It is more likely than not (greater than 50%) that the alleged conduct occurred (Correct answer)
- All witnesses must independently agree on the core facts
- Physical evidence is required to support any finding
Correct answer: It is more likely than not (greater than 50%) that the alleged conduct occurred
The preponderance standard requires that the evidence shows the alleged conduct is more likely than not to have occurred.
Question 5: Which investigative technique involves reviewing financial records for unusual patterns to identify potential fraud?
- Covert physical surveillance of the subject
- Forensic accounting analysis (Correct answer)
- Direct confrontation interview technique
- Polygraph examination of the subject
Correct answer: Forensic accounting analysis
Forensic accounting analyzes financial records to identify irregularities, fraud patterns, and unexplained transactions indicative of wrongdoing.
Question 6: The principle of 'investigative objectivity' requires that a CFI:
- Focus exclusively on evidence that supports the initial complaint
- Follow all leads regardless of whether they support or contradict the allegations (Correct answer)
- Complete the investigation within a strictly defined timeframe
- Prioritize witness convenience over investigative thoroughness
Correct answer: Follow all leads regardless of whether they support or contradict the allegations
Investigative objectivity requires pursuing all evidence impartially, including exculpatory evidence that may contradict the original allegations.
CFI CFI Investigative Methodology & Crime Scene Analysis 2
When conducting a financial investigation, the 'net worth method' is used to: