Financial Transactions & Fraud Schemes Flashcards
7 cards from real ACFE practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Financial Transactions & Fraud Schemes flashcards as text
A company discovers that an employee has been submitting expense reports for personal meals and entertainment while falsely labeling them as business expenses. This is best classified as:
Answer: Expense reimbursement fraud
Expense reimbursement fraud occurs when employees claim personal expenses as business-related to receive unauthorized reimbursements.
In a check tampering scheme, an employee intercepts checks made payable to vendors and alters the payee name to herself before depositing them. This is an example of:
Answer: Altered payee scheme
An altered payee scheme involves changing the name of the legitimate payee on a check to redirect funds to the fraudster.
Which type of financial statement fraud involves recording revenue before it has been earned or before the earnings process is complete?
Answer: Premature revenue recognition
Premature revenue recognition records sales before all conditions for revenue recognition under accounting standards have been met.
A purchasing manager sets up a shell company and submits invoices to her employer for goods never delivered. The invoices are approved and paid. This scheme is categorized as:
Answer: Shell company scheme
A shell company scheme involves creating a fictitious business entity to submit fraudulent invoices to the victim organization.
The term 'larceny' in the context of asset misappropriation refers to:
Answer: Theft of cash or assets after they have been recorded in the books
Larceny involves the theft of assets that have already been recorded on the books, distinguishing it from skimming where assets are taken before recording.
Which laundering technique involves purchasing and reselling high-value assets such as real estate or jewelry to obscure the origins of illicit funds?
Answer: Asset conversion
Asset conversion is a layering technique where illegal proceeds are used to purchase legitimate assets that are later sold to generate apparently clean funds.
A red flag for potential payroll fraud is when:
Answer: Multiple employees share the same bank account for direct deposit
Multiple employees sharing one bank account is a strong indicator of ghost employee schemes where fictitious workers' wages are directed to the fraudster's account.