CPI Financial Investigation & Fraud Detection 2

Question 1

A Ponzi scheme is best described as:

Accepted Answer

A fraudulent investment operation paying returns to existing investors using funds from new investors

Answer

A scheme where investors profit from recruiting new members rather than selling products

Answer

A type of insurance fraud involving staged accidents

Answer

An embezzlement scheme targeting government pension funds

Question 2

What is 'check kiting' in the context of banking fraud?

Accepted Answer

Exploiting float time between banks by depositing and withdrawing funds before checks clear

Answer

Forging a payee's signature on a stolen check

Answer

Altering the dollar amount on a legitimate check

Answer

Issuing checks with a future date to delay payment

Question 3

Which financial statement shows a company's assets, liabilities, and equity at a specific point in time?

Accepted Answer

Balance sheet

Answer

Income statement

Answer

Cash flow statement

Answer

Statement of retained earnings

Question 4

What is the primary indicator of a 'phantom employee' payroll fraud scheme?

Accepted Answer

Payroll records showing employees who do not actually work for the organization

Answer

Employees receiving overtime pay without prior authorization

Answer

Workers misclassified as independent contractors

Answer

Employees padding their timesheets with extra hours

Question 5

The Bank Secrecy Act (BSA) requires financial institutions to file a Suspicious Activity Report (SAR) for transactions that may involve:

Accepted Answer

Money laundering, fraud, or other criminal activity

Answer

Any cash transaction exceeding $1,000

Answer

International wire transfers above $5,000

Answer

Credit card transactions in foreign currencies

Question 6

Which method of financial investigation involves comparing a subject's known income against their actual expenditures and lifestyle to detect unreported income?

Accepted Answer

Net worth method

Answer

Comparative balance sheet analysis

Answer

Ratio analysis

Answer

Horizontal trend analysis

Question 7

In accounts payable fraud, which internal control is most effective at preventing duplicate invoice payments?

Accepted Answer

Implementing a three-way match process comparing purchase orders, receipts, and invoices

Answer

Requiring all invoices to be submitted by email

Answer

Requiring vendor signatures on all payment checks

Answer

Limiting accounts payable access to senior management only