RCMS RCMS Financial Crimes & Fraud Prevention 1 — Questions and Answers
Question 1: Which federal law primarily governs anti-fraud efforts by requiring accurate financial reporting and internal controls for public companies?
- Sarbanes-Oxley Act (SOX) (Correct answer)
- Bank Secrecy Act (BSA)
- Dodd-Frank Act
- Gramm-Leach-Bliley Act
Correct answer: Sarbanes-Oxley Act (SOX)
SOX mandates accurate financial reporting and robust internal controls to prevent corporate fraud at publicly traded companies.
Question 2: What is 'occupational fraud' as defined by the Association of Certified Fraud Examiners (ACFE)?
- The use of one's occupation for personal enrichment through deliberate misuse of employer resources (Correct answer)
- Fraud committed by outsiders posing as employees
- Cybercrime targeting employee credentials
- Identity theft of a company's brand
Correct answer: The use of one's occupation for personal enrichment through deliberate misuse of employer resources
Occupational fraud involves employees exploiting their positions to steal or misuse organizational resources for personal gain.
Question 3: Which of the following is a red flag indicating potential asset misappropriation?
- Employees living beyond apparent means (Correct answer)
- Employees requesting overtime frequently
- Managers conducting performance reviews
- Staff completing mandatory training
Correct answer: Employees living beyond apparent means
Living beyond one's apparent means is a classic behavioral red flag for asset misappropriation or embezzlement.
Question 4: A compliance officer discovers that invoices are being submitted by a vendor that shares an address with an employee. This most likely indicates:
- A shell company billing scheme (Correct answer)
- A legitimate vendor relationship
- An error in vendor onboarding
- A pricing dispute
Correct answer: A shell company billing scheme
Overlapping addresses between a vendor and employee is a common indicator of a fraudulent shell company billing scheme.
Question 5: Under the Foreign Corrupt Practices Act (FCPA), which type of payment to a foreign official is explicitly prohibited?
- Payments to obtain or retain business (Correct answer)
- Nominal gifts within company policy
- Legitimate travel expenses for facility tours
- Charitable donations to approved nonprofits
Correct answer: Payments to obtain or retain business
The FCPA prohibits bribery of foreign government officials to obtain or retain business, with limited exceptions for facilitating payments.
Question 6: Which internal control is most effective at preventing check tampering fraud?
- Segregation of duties between check preparation and authorization (Correct answer)
- Requiring all employees to take annual leave
- Installing cameras in the finance department
- Conducting background checks at hiring
Correct answer: Segregation of duties between check preparation and authorization
Segregating check preparation from authorization ensures no single employee can create and approve fraudulent checks.
RCMS RCMS Financial Crimes & Fraud Prevention 1
Which federal law primarily governs anti-fraud efforts by requiring accurate financial reporting and internal controls for public companies?