CFS CFS Fraud Schemes & Classifications 2

Question 1

Check kiting exploits which banking vulnerability?

Accepted Answer

The float period between check deposit and fund clearance

Answer

Check kiting exploits the bank float by writing checks between accounts before funds are cleared, artificially inflating balances to withdraw nonexistent funds.

Question 2

Which fraud scheme involves artificially inflating a company's reported revenue through fictitious sales?

Accepted Answer

Fictitious revenue scheme

Answer

A fictitious revenue scheme records sales that never occurred, directly inflating reported revenue and assets on the financial statements.

Question 3

Bid rigging in a procurement fraud context most commonly involves:

Accepted Answer

Colluding with vendors to predetermine the winning bidder

Answer

Bid rigging is a form of corruption where competitors or insiders collude to ensure a predetermined vendor wins a contract, typically in exchange for kickbacks.

Question 4

Which expense reimbursement fraud involves an employee submitting the same expense more than once?

Accepted Answer

Duplicate reimbursement scheme

Answer

Duplicate reimbursement fraud occurs when an employee submits the same receipt or expense claim multiple times, often through different channels or time periods.

Question 5

Which term describes a fraud where management intentionally records expenses in the wrong period to smooth earnings?

Accepted Answer

Income smoothing / timing differences

Answer

Income smoothing through timing differences involves shifting revenues or expenses between periods to present a more stable earnings picture, constituting financial statement fraud.

(CFS) Certified Fraud Specialist Practice Test

(CFS) Certified Fraud Specialist Practice Test

CFS CFS Fraud Schemes & Classifications 2