CFA Fraud Detection & Prevention Techniques 1

Question 1

Which of the following is a common red flag of fraud?

Accepted Answer

Living beyond means with no clear income source

Answer

Consistent reporting

Answer

Frequent vacations at own expense

Answer

Timely financial disclosures

Question 2

What is the primary purpose of internal controls?

Accepted Answer

To prevent and detect fraud

Answer

To create more paperwork.

Answer

To delay financial reporting.

Answer

To increase company expenses.

Question 3

Which technique is useful for uncovering fraudulent financial transactions?

Accepted Answer

Trend and ratio analysis

Answer

Ignoring irregularities

Answer

Assuming reports are correct without verification.

Answer

Relying only on verbal communication.

Question 4

What is a common method fraudsters use to conceal fraud?

Accepted Answer

Submitting falsified documents

Answer

Transparent reporting

Answer

Voluntary disclosure of errors

Answer

Internal audits

Question 5

Which department plays a key role in fraud prevention?

Accepted Answer

Internal Audit

Answer

Marketing

Answer

Public Relations

Answer

Sales

Question 6

What role does employee training play in fraud prevention?

Accepted Answer

It helps employees detect and report fraud

Answer

It discourages transparency.

Answer

It promotes workplace fraud.

Answer

It reduces productivity.

Question 7

Which type of fraud involves falsifying expense reports?

Accepted Answer

Expense reimbursement fraud

Answer

Payroll fraud

Answer

Vendor fraud

Answer

Asset misappropriation

Question 8

What is an effective way to report suspected fraud anonymously?

Accepted Answer

Whistleblower hotline

Answer

Publicly posting on social media.

Answer

Ignoring it.

Answer

Telling a coworker casually.

Question 9

Why are surprise audits effective in detecting fraud?

Accepted Answer

They disrupt concealment efforts

Answer

They allow fraudsters time to hide evidence.

Answer

They are announced well in advance.

Answer

They reduce morale permanently.