Fraud Prevention & Detection Flashcards

Which scheme involves an employee stealing incoming customer payments before they are recorded?

Answer: Skimming

Skimming is the theft of cash before it is entered into the accounting system, making it one of the hardest schemes to detect.

The ACFE's Report to the Nations consistently finds that the most common method of detecting occupational fraud is:

Answer: Tips

According to ACFE research, tips — often received through hotlines — are the leading fraud detection method across all organization sizes.

Which action by management most strongly signals an anti-fraud culture to employees?

Answer: Visibly investigating and disciplining all fraud perpetrators

Consistently enforcing consequences for fraud demonstrates that the organization takes misconduct seriously, deterring future fraud.

A 'lapping' scheme is most likely to be detected by:

Answer: Comparing customer account balances to statements and confirming directly with customers

Lapping involves misapplying one customer's payment to another's account; direct customer confirmations reveal discrepancies the perpetrator has hidden.

Which internal control helps ensure that only authorized users can access sensitive financial systems?

Answer: Role-based access controls

Role-based access controls limit system access to what each user needs for their job, reducing the opportunity to commit or conceal fraud.

An employee alters a vendor's bank account number in the payment system to redirect funds to a personal account. This is best classified as:

Answer: Accounts payable tampering

Altering vendor payment details to divert funds is a form of accounts payable tampering, a type of asset misappropriation.

Which organizational characteristic is associated with higher fraud risk according to fraud research?

Answer: Rapid growth with decentralized controls

Organizations experiencing rapid growth often outpace their control infrastructure, creating gaps that fraudsters exploit.