Certified Fraud Examiner - Financial Transactions and Fraud Schemes Exam (CFE-Financial-Transactions-and-Fraud-Schemes) Free Practice Test

Question 1

Undisclosed payments made by vendors to employees of purchasing companies are referred to as:

A. None of the above

B. Presolicitation

C. Kickbacks

D. Bid-rigging

Correct Answer: C

Explanation: Only visible for TestSimulate members. You can sign-up / login (it's free).

Question 2

A scheme is classified as a Conflict of Interest:

A. when an employee must have some kind of ownership or employment interest in the vendor submitting the invoice.

B. when a purchaser must have some kind of ownership or employment interest in the vendor submitting the purchase.

C. when a dealer must have some kind of dealership interest in the vendor submitting the stock.

D. when a salesman must have some kind of ownership or employment interest in the vendor submitting the sales.

Correct Answer: A

Explanation: Only visible for TestSimulate members. You can sign-up / login (it's free).

Question 3

A fraudster poses as ABC Organization's chief executive officer (CEO) and sends an email to an employee requesting that company funds be transferred to an account that the fraudster owns. This is an example of which of the following types of fraud schemes?

A. Electronic piggybacking

B. Executive email attack

C. Business email compromise

D. Reverse social engineering

Correct Answer: C

Explanation: Only visible for TestSimulate members. You can sign-up / login (it's free).

Question 4

Joe's automobile insurance policy expired in June. In August, Joe was involved in an automobile accident, and his vehicle was severely damaged. After the accident, Joe contacted his insurance company and reinstated the policy. In September, Joe then submitted a claim with a September accident date for the damages that occurred to his vehicle in August. Joe has engaged in which of the following insurance schemes?

A. Inflated damages

B. Past posting

C. Staged accident

D. Vehicle repair

Correct Answer: B

Explanation: Only visible for TestSimulate members. You can sign-up / login (it's free).

Question 5

__________ can be defined as conduct detrimental to the organization and to the employee.

A. Employee deviance

B. Employee fraud

C. All of the above

D. Employee theft

Correct Answer: A

Explanation: Only visible for TestSimulate members. You can sign-up / login (it's free).

Question 6

Which of the following is a method of identity theft prevention that is recommended for businesses?

A. Use government identification numbers as employee identification numbers

B. Collect government identification numbers from customers only when legally required to gather that information

C. Use encryption only when sending personal information externally through a hardwired internet connection

D. Audit practices involving the handling of information only when regulators require it

Correct Answer: B

Explanation: Only visible for TestSimulate members. You can sign-up / login (it's free).

Question 7

One of the simplest ways to justify unacceptable conduct and avoid guilt feelings is to invent a good reason for ________.
One's actions (i.e., Rationalization)

Correct Answer:

* Rationale for Correct Answer:Rationalization is the cognitive process by which fraud perpetrators justify their unethical conduct so they can commit fraud without feeling like criminals. A common way is to "invent a good reason" for their actions (e.g., "I deserve it," "I'll pay it back," "Everyone else is doing it"). Thus, the correct completion is "one's actions" or more precisely, Rationalization.
* Analysis of Incorrect Options:Since this is a fill-in-the-blank, the distractors are implied. The only correct concept here is rationalization of one's actions.
* Key Concept:Rationalization - one leg of the fraud triangle.
Reference:ACFE Fraud Examiners Manual (2020 International Edition), Fraud Theory - Rationalization in Cressey's Fraud Triangle.

Question 8

Hannah is a manager at a financial institution. To safeguard the bank and its customers from electronic funds transfer (EFT) fraud, Hannah is implementing several preventive measures. Which of the following is NOT a measure Hannah should take to prevent EFT fraud?

A. If a customer reports the loss or theft of an access device, then cancel the existing card, PIN, or other form of access and issue a new one.

B. Send a welcome letter to new customers to determine if the address submitted on the account application is valid.

C. Mail PINs and other associated account information together to reduce the chance of those items being lost during transit.

D. Separate the duties of bank employees so that the responsibilities for the issuance of access devices are separate from the issuance of PINs.

Correct Answer: C

Explanation: Only visible for TestSimulate members. You can sign-up / login (it's free).

Question 9

Any expenses that are incurred but not paid by the end of the year are counted in our records of profit and loss, and are called:

A. Accruals

B. Financial record

C. Depreciations

D. Expenses

Correct Answer: A

Explanation: Only visible for TestSimulate members. You can sign-up / login (it's free).

Question 10

According to Marshall, ______ are probable future economic benefits obtained or controlled by a particular entity as a result of past transactions or events.

A. Liabilities

B. None of the above

C. Assets

D. Credentials

Correct Answer: C

Explanation: Only visible for TestSimulate members. You can sign-up / login (it's free).

Question 11

Which of the following are used in a short-term skimming scheme?

A. Understated sales, theft of incoming checks, and check-for-currency substitutions

B. False company accounts, understated sales, and theft of incoming checks

C. Unrecorded sales, understated sales, and theft of incoming checks

D. Unrecorded sales, understated sales, and dual endorsements

Correct Answer: C

Explanation: Only visible for TestSimulate members. You can sign-up / login (it's free).

Question 12

Which of the following is NOT the aspect of inventory purchase?

A. Inventory purchases purposely increase in year 1 only to be liquidated in year 2.

B. Increased sales in year 2 are unexpected and purchase of inventory does not keep pace with the sales.

C. Might be some fraud scheme in inventory.

D. Inventory for year 2 will be much greater than year 1.

Correct Answer: D

Explanation: Only visible for TestSimulate members. You can sign-up / login (it's free).

Welcome to TestSimulate

ACFE Certified Fraud Examiner - Financial Transactions and Fraud Schemes (CFE-Financial-Transactions-and-Fraud-Schemes) Free Practice Test