Investigation 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 Investigation flashcards as text
What is the significance of the 'Garrity warning' in a fraud investigation involving a public employee?
Answer: It informs the employee that statements made under compulsion cannot be used in criminal proceedings
A Garrity warning advises public employees that compelled statements made under threat of job loss cannot be used against them in criminal proceedings.
Which financial statement fraud scheme involves recording revenue before it is earned or realizable?
Answer: Premature revenue recognition
Premature revenue recognition records sales before all revenue recognition criteria are met, overstating current period income.
During a fraud investigation, a key witness refuses to cooperate. In a private investigation (non-law enforcement), what legal tool can COMPEL testimony?
Answer: A civil subpoena issued through litigation
In civil proceedings, a subpoena can compel witness testimony or document production; private investigators without law enforcement authority must rely on civil process.
What is 'parallel construction' and why is it controversial in fraud investigations?
Answer: Concealing the true origin of evidence by reconstructing an alternative discovery narrative
Parallel construction conceals how evidence was originally obtained by creating a false alternative discovery story, raising serious legal and ethical concerns.
Which element of fraud, as defined by the ACFE, refers to the perpetrator's justification or rationalization of the fraudulent act?
Answer: Rationalization
The Fraud Triangle's rationalization element represents the mental process by which perpetrators justify their actions to themselves, such as 'I'm just borrowing the money.'
When conducting a background investigation on a fraud suspect, which source provides the MOST comprehensive information about prior civil litigation?
Answer: PACER (Public Access to Court Electronic Records)
PACER provides access to federal court records including civil suits, bankruptcies, and criminal cases, making it a primary source for litigation history.
Which type of analysis compares a company's financial ratios to industry benchmarks to identify anomalies that may indicate fraud?
Answer: Industry comparative analysis
Industry comparative analysis benchmarks a company's financial metrics against industry peers to identify outliers that may signal fraudulent manipulation.