Fraud Detection & Prevention Flashcards
7 cards from real CAP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Fraud Detection & Prevention flashcards as text
Which red flag most commonly indicates a fictitious charitable organization?
Answer: A name nearly identical to a well-known charity
Scammers frequently use names that closely mimic reputable charities to confuse donors into misdirecting gifts.
A donor receives a solicitation claiming 100% of contributions go directly to program services. What should a CAP advisor note?
Answer: It is a common fraudulent claim since all organizations have some overhead
No legitimate charity can operate with zero overhead; claims of 100% program spending are a classic fraud indicator.
What is 'affinity fraud' in the context of charitable giving?
Answer: Fraud that exploits trust within a specific community, religious group, or ethnic group
Affinity fraud exploits the trust and relationships within identifiable groups to perpetrate scams more effectively.
Which internal control best prevents a single employee from perpetrating financial fraud at a nonprofit?
Answer: Segregation of duties between authorization, custody, and recordkeeping
Segregating duties ensures no single individual controls all phases of a financial transaction, reducing fraud opportunity.
A charity solicits disaster relief funds but has no history of disaster work. This is an example of:
Answer: Opportunistic fraud exploiting donor urgency
Fraudsters frequently launch disaster-relief appeals capitalizing on emotional urgency without any infrastructure to deliver aid.
Under IRS rules, which document must donors obtain for a gift of $250 or more to claim a charitable deduction?
Answer: A contemporaneous written acknowledgment from the charity
IRS regulations require a contemporaneous written acknowledgment from the recipient organization for deductible gifts of $250 or more.
What does the 'pressure' element of the fraud triangle refer to?
Answer: Personal financial stress or incentive motivating an individual to commit fraud
The fraud triangle identifies pressure (motivation), opportunity, and rationalization as the three conditions enabling fraud.