RCMS Financial Crimes & Fraud Prevention Flashcards

What does the 'fraud triangle' model identify as the three elements necessary for occupational fraud to occur?

Answer: Pressure, opportunity, and rationalization

The fraud triangle, developed by Donald Cressey, identifies pressure, opportunity, and rationalization as the three conditions that enable fraud.

Which U.S. agency is primarily responsible for enforcing the FCPA's anti-bribery provisions against U.S. companies?

Answer: Department of Justice (DOJ)

The DOJ holds primary responsibility for criminal enforcement of FCPA anti-bribery provisions, while the SEC handles civil enforcement for issuers.

A company's compliance program should include a financial fraud risk assessment that is performed at minimum:

Answer: Periodically and when significant organizational changes occur

Fraud risk assessments should be conducted periodically and updated whenever significant changes occur, such as mergers, new products, or leadership changes.

Which financial statement fraud scheme involves recording revenue that has not been earned?

Answer: Fictitious revenue scheme

A fictitious revenue scheme records sales or income that never occurred, inflating financial results to mislead investors or lenders.

What is the primary purpose of a 'hotline' in a financial crimes compliance program?

Answer: To provide an anonymous channel for reporting suspected fraud or misconduct

Hotlines give employees and third parties a confidential way to report suspected fraud, which is the most common method for detecting occupational fraud per the ACFE.

Which of the following best describes 'lapping' as a fraud scheme?

Answer: Stealing cash receipts and covering the shortage with subsequent customer payments

Lapping involves stealing a payment from one customer and covering it with a later payment from another, creating a rolling shortage.