CFS Asset Misappropriation 3

Question 1

Check kiting exploits:

Accepted Answer

The float time between deposit and clearance across multiple bank accounts

Answer

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.

Question 2

A 'false refund' scheme in a retail environment involves:

Accepted Answer

Processing a refund transaction for a non-existent return and pocketing the cash

Answer

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.

Question 3

According to ACFE research, what is the most common initial detection method for occupational fraud, including asset misappropriation?

Accepted Answer

A tip from an employee or other informant

Answer

ACFE research consistently shows that tips are the most frequent initial detection method for occupational fraud, underscoring the critical importance of anonymous reporting hotlines.

Question 4

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:

Accepted Answer

Threshold splitting or structuring

Answer

Structuring or threshold splitting involves deliberately dividing transactions to remain below authorization limits, bypassing controls designed to provide oversight of larger expenditures.

Question 5

Which control is most effective at preventing a single employee from executing a billing scheme undetected?

Accepted Answer

Segregating duties so that no single employee can both add vendors and approve payments

Answer

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.

(CFS) Certified Fraud Specialist Practice Test

(CFS) Certified Fraud Specialist Practice Test

CFS Asset Misappropriation 3