CIG CIG Fraud Detection & Prevention 1 — Questions and Answers
Question 1: Which of the following best describes 'occupational fraud' as defined by the Association of Certified Fraud Examiners (ACFE)?
- Fraud committed by outsiders against an organization
- The use of one's occupation for personal enrichment through deliberate misuse of organizational resources (Correct answer)
- Fraud perpetrated solely by senior executives
- Identity theft carried out in a workplace setting
Correct answer: The use of one's occupation for personal enrichment through deliberate misuse of organizational resources
The ACFE defines occupational fraud as the use of one's occupation for personal enrichment through the deliberate misuse or misapplication of the employing organization's resources or assets.
Question 2: The fraud triangle identifies three elements that contribute to fraudulent behavior. Which of the following is NOT one of those elements?
- Pressure
- Opportunity
- Rationalization
- Retaliation (Correct answer)
Correct answer: Retaliation
The fraud triangle consists of pressure, opportunity, and rationalization — retaliation is not a component of this model.
Question 3: Which internal control technique is most effective at detecting duplicate payment fraud?
- Segregation of duties
- Three-way match
- Duplicate payment detection software (Correct answer)
- Rotation of duties
Correct answer: Duplicate payment detection software
Duplicate payment detection software specifically scans for identical invoice amounts, vendor names, and dates to flag payments that may have been processed more than once.
Question 4: In government settings, 'ghost employees' are best detected by which of the following procedures?
- Reviewing travel expense reports
- Cross-referencing payroll records with HR active employee files (Correct answer)
- Conducting random drug testing
- Auditing vendor payment histories
Correct answer: Cross-referencing payroll records with HR active employee files
Matching payroll records against HR's list of active employees will reveal fictitious employees whose names appear on the payroll but do not actually work for the agency.
Question 5: What does the term 'skimming' refer to in the context of fraud?
- Falsifying inventory records after the fact
- Stealing cash before it is recorded in the accounting system (Correct answer)
- Inflating expense reimbursements
- Submitting fraudulent vendor invoices
Correct answer: Stealing cash before it is recorded in the accounting system
Skimming is an off-book fraud scheme in which cash is stolen before it is ever entered into the organization's accounting records.
Question 6: Which red flag is most commonly associated with a billing scheme involving a fictitious vendor?
- Vendor address matches an employee's home address (Correct answer)
- Vendor invoices are submitted quarterly
- Vendor provides discounts for early payment
- Vendor has been on the approved list for over five years
Correct answer: Vendor address matches an employee's home address
A vendor address that matches an employee's personal address is a classic red flag indicating the employee may have created a fictitious vendor to route payments to themselves.
CIG CIG Fraud Detection & Prevention 1
Which of the following best describes 'occupational fraud' as defined by the Association of Certified Fraud Examiners (ACFE)?