Practice Questions Flashcards

In a lapping scheme, the fraudster typically:

Answer: Uses one customer's payment to cover a previous customer's stolen payment

Lapping involves stealing one customer's payment and covering it with a subsequent customer's payment, creating a perpetual cycle.

The Sarbanes-Oxley Act Section 302 requires which of the following?

Answer: CEOs and CFOs to personally certify the accuracy of financial reports

SOX Section 302 requires the principal executive and financial officers to personally certify the accuracy of periodic financial reports.

Which of the following is the most effective anti-fraud control according to ACFE research?

Answer: Hotlines for reporting tips

ACFE research consistently shows that tips—often received through hotlines—are the most common method of detecting fraud.

When conducting a fraud interview, the Cognitive Interview technique is designed to:

Answer: Maximize the amount of accurate information recalled by a witness

The Cognitive Interview is a structured questioning technique that helps witnesses recall more accurate details about events.

A 'ghost employee' scheme involves:

Answer: Adding fictitious employees to payroll and collecting their paychecks

Ghost employee schemes involve adding nonexistent workers to payroll and diverting their paychecks to the fraudster.

In financial statement fraud, channel stuffing refers to:

Answer: Pressuring distributors to accept excess inventory to inflate current-period sales

Channel stuffing involves shipping excess goods to distributors at period end to inflate reported sales figures.

Which federal law provides the primary basis for prosecuting money laundering in the United States?

Answer: 18 U.S.C. § 1956

18 U.S.C. § 1956 is the primary federal money laundering statute, criminalizing financial transactions involving the proceeds of specified unlawful activities.