CFL Financial Fraud & Forensic Analysis 2

Question 1

An accounts receivable clerk steals a customer's payment and conceals the theft by applying a later customer's payment to the first customer's account. What is this scheme called?

Accepted Answer

Lapping

Answer

Lapping hides skimmed receivables by continually applying later receipts to earlier customers' accounts.

Question 2

Under Benford's Law, roughly what percentage of naturally occurring numbers in a large data set should begin with the digit 1?

Accepted Answer

30.1%

Answer

Benford's Law predicts a leading digit of 1 about 30.1% of the time, far more often than a uniform 11.1%.

Question 3

The fraud diamond expands the classic fraud triangle by adding which fourth element?

Accepted Answer

Capability

Answer

Wolfe and Hermanson added capability, meaning the perpetrator's traits and skills, to pressure, opportunity, and rationalization.

Question 4

What most clearly separates a Ponzi scheme from a pyramid scheme?

Accepted Answer

A Ponzi scheme uses a central operator who pays earlier investors with new investors' money, while pyramid participants recruit others directly

Answer

Ponzi investors deal with a central promoter who claims investment returns, while pyramid schemes openly pay participants for recruiting.

Question 5

Check kiting takes advantage of which banking feature?

Accepted Answer

The float period between depositing a check and the funds clearing

Answer

Kiting moves checks between accounts at different banks so balances look inflated while checks have not yet cleared.

CFL - Certified Financial Litigator Practice Test

CFL - Certified Financial Litigator Practice Test

CFL Financial Fraud & Forensic Analysis 2