CFS CFS Fraud Schemes & Classifications 1

Question 1

Which category of occupational fraud involves an employee manipulating financial statements to misrepresent the company's financial position?

Accepted Answer

Financial statement fraud

Answer

Financial statement fraud involves intentional misstatements or omissions in financial statements to deceive users, and is one of the three main categories in the ACFE Fraud Tree.

Question 2

A Ponzi scheme is best characterized as:

Accepted Answer

Using new investor funds to pay returns to earlier investors

Answer

A Ponzi scheme pays returns to earlier investors using capital from newer investors rather than from legitimate profit, eventually collapsing when new investment slows.

Question 3

Which skimming scheme involves an employee stealing cash before it is recorded in the accounting system?

Accepted Answer

Off-book skimming

Answer

Off-book skimming occurs when cash is stolen before any record of the transaction is made, making it difficult to detect through normal reconciliation.

Question 4

A lapping scheme in accounts receivable fraud works by:

Accepted Answer

Using one customer's payment to cover a theft from another customer's account

Answer

Lapping involves stealing a customer's payment and then covering it with a subsequent payment from another customer, creating a perpetual cycle of theft concealment.

Question 5

Which type of fraud scheme involves an employee creating fictitious vendors to generate unauthorized payments?

Accepted Answer

Shell company scheme

Answer

Shell company schemes involve setting up fictitious vendor entities to submit invoices and receive payments for goods or services never provided.

(CFS) Certified Fraud Specialist Practice Test

(CFS) Certified Fraud Specialist Practice Test

CFS CFS Fraud Schemes & Classifications 1