CIA CIA Fraud Examination & Prevention 1 — Questions and Answers
Question 1: According to the fraud triangle, which of the following is NOT one of the three elements that contribute to fraudulent behavior?
- Pressure
- Rationalization
- Opportunity
- Greed (Correct answer)
Correct answer: Greed
The fraud triangle consists of pressure, rationalization, and opportunity — greed is not a recognized element of the model.
Question 2: Which type of fraud involves an employee creating fictitious vendors and submitting false invoices for payment?
- Skimming
- Ghost vendor scheme (Correct answer)
- Lapping
- Kiting
Correct answer: Ghost vendor scheme
A ghost vendor scheme involves setting up fictitious vendors in the accounts payable system to divert company funds to the fraudster.
Question 3: The Association of Certified Fraud Examiners (ACFE) Report to the Nations identifies which category as causing the greatest median loss per case?
- Asset misappropriation
- Financial statement fraud (Correct answer)
- Corruption
- Payroll fraud
Correct answer: Financial statement fraud
Financial statement fraud, while less frequent than other schemes, causes the greatest median loss per case according to ACFE data.
Question 4: Which internal control is most effective at preventing check tampering fraud?
- Periodic bank reconciliations
- Dual authorization for check issuance (Correct answer)
- Monthly expense reports
- Annual external audits
Correct answer: Dual authorization for check issuance
Dual authorization (requiring two approvers) prevents a single employee from issuing unauthorized checks without accomplice involvement.
Question 5: What is 'lapping' in the context of accounts receivable fraud?
- Recording fictitious sales to inflate revenue
- Using one customer's payment to cover a stolen prior payment (Correct answer)
- Writing off customer balances and pocketing cash
- Issuing duplicate payments to vendors
Correct answer: Using one customer's payment to cover a stolen prior payment
Lapping involves stealing a customer's payment and then covering it with a subsequent customer's payment, creating a rolling shortage.
Question 6: Which data analytics technique is commonly used to detect potential payroll fraud such as ghost employees?
- Regression analysis
- Benford's Law analysis
- Matching employee records to payroll disbursements (Correct answer)
- Horizontal financial statement analysis
Correct answer: Matching employee records to payroll disbursements
Matching HR employee records against payroll disbursements identifies payments made to individuals who do not appear in the active employee database.
CIA CIA Fraud Examination & Prevention 1
According to the fraud triangle, which of the following is NOT one of the three elements that contribute to fraudulent behavior?