ACFE Asset Misappropriation Schemes 2 — Questions and Answers
Question 1: An employee submits expense reports for the same business meal twice using slightly different dates. This is best classified as which type of scheme?
- Duplicate reimbursement scheme (Correct answer)
- Shell company scheme
- Inventory theft
- Payroll ghost employee
Correct answer: Duplicate reimbursement scheme
Duplicate reimbursement schemes involve submitting the same expense multiple times, sometimes with altered details to avoid detection.
Question 2: Which internal control is MOST effective at detecting skimming at a retail point-of-sale?
- Mandatory vacation policies
- Surprise cash counts and register reconciliations (Correct answer)
- Segregation of purchasing duties
- Annual inventory audits
Correct answer: Surprise cash counts and register reconciliations
Surprise cash counts compared against register tapes or POS records expose discrepancies created by skimming before cash is recorded.
Question 3: A purchasing manager creates a fictitious vendor, approves invoices to that vendor, and diverts payments to a personal bank account. Which element distinguishes this from a simple billing scheme?
- The use of a personal bank account
- The manager's approval authority
- The fictitious nature of the vendor (Correct answer)
- The absence of goods or services
Correct answer: The fictitious nature of the vendor
A shell company or fictitious vendor scheme is specifically characterized by the vendor having no real existence, making it a subset of billing fraud.
Question 4: Lapping is primarily associated with which asset misappropriation category?
- Inventory theft
- Cash skimming of receivables (Correct answer)
- Payroll fraud
- Non-cash misappropriation
Correct answer: Cash skimming of receivables
Lapping conceals stolen receivable payments by applying later customers' payments to earlier accounts, a classic cash skimming concealment technique.
Question 5: An employee in accounts payable alters a legitimate vendor's bank account number in the system to redirect payments to her own account. This is an example of:
- Check tampering
- ACH/EFT fraud (Correct answer)
- Billing scheme
- Register disbursement fraud
Correct answer: ACH/EFT fraud
Redirecting ACH or EFT payments by changing vendor banking details in the system is a form of electronic payment fraud, not check tampering.
Question 6: Which ratio analysis technique is MOST useful for identifying fictitious employee payments?
- Gross margin analysis
- Days sales outstanding trend
- Headcount-to-payroll cost ratio over time (Correct answer)
- Accounts payable turnover
Correct answer: Headcount-to-payroll cost ratio over time
Monitoring the ratio of payroll expense to headcount highlights periods where payroll cost rises without a corresponding increase in employees, suggesting ghost employees.
Question 7: A warehouse employee steals raw materials and conceals the theft by falsifying inventory count sheets. The ACFE classifies this under which broad category?
- Fraudulent statements
- Corruption
- Non-cash misappropriation (Correct answer)
- Cash on hand theft
Correct answer: Non-cash misappropriation
Theft of non-cash assets such as inventory or supplies falls under the non-cash misappropriation category of asset misappropriation.
ACFE Asset Misappropriation Schemes 2
An employee submits expense reports for the same business meal twice using slightly different dates.
This is best classified as which type of scheme?