Asset Misappropriation Flashcards
7 cards from real CFS practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Asset Misappropriation flashcards as text
Check kiting exploits:
Answer: The float time between deposit and clearance across multiple bank accounts
Check kiting artificially inflates account balances by exploiting the processing float—the delay between depositing a check and its clearing—to draw against funds that do not yet exist.
A 'false refund' scheme in a retail environment involves:
Answer: Processing a refund transaction for a non-existent return and pocketing the cash
In a false refund scheme, an employee processes a return in the point-of-sale system without any actual merchandise being returned, then removes the cash from the register.
According to ACFE research, what is the most common initial detection method for occupational fraud, including asset misappropriation?
Answer: A tip from an employee or other informant
ACFE research consistently shows that tips are the most frequent initial detection method for occupational fraud, underscoring the critical importance of anonymous reporting hotlines.
An employee splits a $20,000 purchase order into four $4,999 orders to stay below the $5,000 manager approval threshold. This is known as:
Answer: Threshold splitting or structuring
Structuring or threshold splitting involves deliberately dividing transactions to remain below authorization limits, bypassing controls designed to provide oversight of larger expenditures.
Which control is most effective at preventing a single employee from executing a billing scheme undetected?
Answer: Segregating duties so that no single employee can both add vendors and approve payments
Segregation of duties ensures that the person who can add vendors to the master file cannot also approve payments, requiring collusion between at least two employees to execute a billing scheme.
An anonymous tip hotline is considered a critical anti-fraud control primarily because it:
Answer: Provides employees a safe, confidential channel to report suspected misconduct without fear of retaliation
Confidential hotlines lower the personal risk of reporting by protecting the reporter's identity, which ACFE data shows makes tips the single most effective detection mechanism for occupational fraud.
According to ACFE guidance, which combination of proactive controls most significantly reduces both fraud losses and detection time in organizations?
Answer: Surprise audits, proactive data monitoring and analytics, and segregation of duties
ACFE research demonstrates that organizations employing proactive controls—surprise audits, continuous data analytics monitoring, and duty segregation—suffer materially lower fraud losses and detect schemes significantly faster.