[Aug-2026] Download Real ACFE CFE-Fraud-Schemes-and-Financial-Crimes Exam Dumps Test Engine Exam Questions
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NEW QUESTION # 155
Which of the following is NOT a medium that commonly causes an organization's proprietary information to be compromised?
- A. Documents that were shredded using a cross-cut shredder
- B. Reports to company shareholders
- C. Information displayed at an employee's workstation
- D. Speeches made by executives
Answer: A
Explanation:
Detailed Explanation:
* Rationale for Correct Answer: Properly shredded documents using a cross-cut shredder are very difficult to reconstruct, making them not a common medium for information leaks. By contrast, shareholder reports, executive speeches, and workstation displays often contain sensitive data that can be exploited by competitors or fraudsters.
* Analysis of Incorrect Options:
* A - Shareholder reports can reveal strategy and financial vulnerabilities.
* C - Executive speeches sometimes unintentionally disclose sensitive plans.
* D - Information left visible at workstations is a known security risk.
* Key Concept: Protection of proprietary information against espionage and fraud.
Reference: ACFE Manual, Fraud Prevention and Deterrence - Information Security .
NEW QUESTION # 156
Which of the following statements describes a best practice for preventing procurement fraud?
- A. Companies should assign the responsibility of approving invoice payments to the person who maintains the vendor master file so discrepancies can be better identified.
- B. Companies should limit comprehensive audits of procurement activities to once a year to create a consistent data point for comparison from one year to the next.
- C. Companies should implement vendor-monitoring procedures that address the red flags of the vendor schemes that pose the greatest risk.
- D. Companies should conduct background checks on vendors after they have been added to the company's vendor master file.
Answer: C
Explanation:
The correct answer is D. Procurement fraud prevention requires ongoing vendor monitoring based on the organization's highest-risk vendor schemes. Monitoring should focus on practical red flags, such as unusual pricing, duplicate vendors, related-party indicators, excessive change orders, suspicious payment patterns, or vendors lacking proper support. Option A violates segregation of duties because the person maintaining the vendor master file should not also approve invoice payments. Option B is weak because vendor background checks should occur before vendors are added to the master file, not after. Option C is incorrect because procurement monitoring should be ongoing and risk-based, not restricted to annual reviews. The ACFE material emphasizes vendor management, vendor master file controls, and monitoring based on relevant red flags.
NEW QUESTION # 157
In which phase of the competitive bidding process do fraudsters attempt to influence the selection of a contractor by restricting the pool of competitors from whom bids are sought?
- A. Need recognition
- B. False specification
- C. Solicitation
- D. Submission
Answer: C
Explanation:
Detailed Explanation:
* Rationale for Correct Answer: During the solicitation phase , corrupt employees may attempt to eliminate legitimate competitors by restricting the list of vendors invited to bid. This unfairly favors a particular supplier, often in exchange for bribes or kickbacks.
* Analysis of Incorrect Options:
* A. Need recognition - Involves creating false or unnecessary demand, not restricting bidders.
* C. False specification - Relates to vague or tailored specifications, not bid solicitation.
* D. Submission - Occurs after solicitation when vendors submit bids.
* Key Concept: Solicitation phase schemes - restricting competition.
Reference: ACFE Fraud Examiners Manual (2020 International Edition) , Corruption - Procurement and Bid-Rigging Schemes .
NEW QUESTION # 158
To prevent cash larceny schemes from occurring, a company should implement which of the following measures?
- A. Designate responsibility for both collecting cash and disbursing company funds to the same employee.
- B. Limit employees' knowledge about unscheduled cash counts being conducted periodically.
- C. Announce to employees that they will all be using the same cash register for transactions.
- D. Assign the normal duties of an employee who is on vacation to other employees at the company.
Answer: D
Explanation:
The correct answer is D. Assigning the duties of an employee who is on vacation to other employees supports mandatory vacation and job rotation controls. These controls help prevent and detect cash larceny by interrupting the fraudster's control over cash handling and concealment procedures. If a dishonest employee must be absent and another employee performs the same duties, irregularities such as missing cash, altered records, delayed deposits, or unsupported adjustments are more likely to surface. Option A relates more to surprise cash counts, which are useful, but the stronger preventive control in this list is rotation through vacation coverage. Option B weakens accountability because employees should use separate registers or identifiers. Option C violates segregation of duties by combining custody and disbursement authority.
NEW QUESTION # 159
Troy collects rare books and learns of a dealer who is selling a book he has been searching for. Which of the following detection measures would be MOST EFFECTIVE in helping Troy avoid a potential collectibles fraud scheme?
- A. Ensure that the dealer has a social media presence.
- B. Ask the dealer to provide a description of the book's physical condition.
- C. Request a list of other rare books the dealer has sold.
- D. Require a professional appraisal of the book before purchasing it.
Answer: D
Explanation:
The correct answer is C. Collectibles fraud often involves misrepresenting authenticity, rarity, condition, provenance, or value of items such as rare books, art, coins, stamps, or memorabilia. A professional appraisal before purchase is the strongest option because it provides independent evaluation of authenticity and value.
A dealer's social media presence does not prove legitimacy. A list of prior sales might be fabricated or unverifiable. A dealer's description of condition is useful but still comes from the seller and might be biased or false. The ACFE consumer fraud materials identify art and rare-item schemes as consumer fraud risks, and independent verification is an important safeguard before paying for expensive collectibles.
NEW QUESTION # 160
Undisclosed payments made by vendors to employees of purchasing companies are referred to as:
- A. None of the above
- B. Bid-rigging
- C. Presolicitation
- D. Kickbacks
Answer: D
Explanation:
Detailed Explanation:
* Rationale for Correct Answer: Kickbacks are undisclosed payments made by vendors to employees of purchasing companies to secure favorable treatment. They are a classic form of bribery under the corruption classification of the Fraud Tree.
* Analysis of Incorrect Options:
* A. Bid-rigging - Involves collusion among bidders, not secret payments.
* C. Presolicitation - A phase in procurement fraud, not the scheme itself.
* D. None of the above - Incorrect, as kickbacks are the precise answer.
* Key Concept: Kickbacks - secret vendor payments for favorable purchasing treatment.
Reference: ACFE Fraud Examiners Manual (2020 International Edition) , Corruption - Kickback Schemes .
NEW QUESTION # 161
Conflict of interest cases are more easily prevented than detected.
- A. True
- B. False
Answer: A
Explanation:
Detailed Explanation:
* Rationale for Correct Answer: Conflict of interest cases are difficult to detect because the transactions often appear legitimate on their face. However, they can be prevented more effectively through proactive controls such as disclosure requirements, vendor vetting, and employee training. The Fraud Examiners Manual (2020) emphasizes that prevention mechanisms are more effective than detection when it comes to conflicts of interest.
* Analysis of Incorrect Options:
* B. False - Incorrect because detection is challenging; prevention is comparatively easier.
* Key Concept: Prevention vs. detection in Conflict of Interest schemes .
Reference: ACFE Fraud Examiners Manual (2020) , Corruption: Conflict of Interest .
NEW QUESTION # 162
According to the Fraud Tree, cash has three following schemes:
- A. Cash distribution, skimming, and fraud analysis
- B. Cash larceny, cash distribution, and fraudulent disbursements
- C. Skimming, cash larceny, and fraudulent disbursements
- D. Fraud analysis, skimming, and cash misappropriations
Answer: C
Explanation:
Detailed Explanation:
* Rationale for Correct Answer: According to the ACFE Fraud Tree, cash-related asset misappropriation schemes fall into three categories: Skimming (off-book theft), Cash Larceny (on- book theft), and Fraudulent Disbursements (bogus outflows such as billing, payroll, and check tampering) .
* Analysis of Incorrect Options:
* B. Fraud analysis, skimming, and cash misappropriations - "Fraud analysis" and "cash misappropriations" are not fraud tree categories.
* C. Cash larceny, cash distribution, and fraudulent disbursements - "Cash distribution" is not a fraud tree category.
* D. Cash distribution, skimming, and fraud analysis - Includes non-fraud tree terms.
* Key Concept: Fraud Tree - Cash Schemes: Skimming, Cash Larceny, Fraudulent Disbursements.
Reference: ACFE Fraud Examiners Manual (2020 International Edition) , Fraud Tree - Cash .
NEW QUESTION # 163
Georgina works for TAK Intelligence, a competitive intelligence firm. She is tasked with gathering intelligence about ERO Corp., a competitor of one of TAK's clients. To gather the intelligence, Georgina poses as a customer and contacts ERO. She then elicits sensitive information from an ERO employee.
Georgina's approach is an example of:
- A. Baiting
- B. Scavenging
- C. Human intelligence
- D. Open-source intelligence
Answer: C
Explanation:
Detailed Explanation:
* Rationale for Correct Answer: Human intelligence (HUMINT) involves gathering information directly from people, often through deception, elicitation, or impersonation. Georgina's posing as a customer to obtain confidential details fits this method.
* Analysis of Incorrect Options:
* B. Baiting - A social engineering tactic using false promises (e.g., malware disguised as freebies).
* C. Scavenging - Collecting discarded information (e.g., dumpster diving).
* D. Open-source intelligence - Gathering data from public records, news, or websites, not through elicitation.
* Key Concept: Methods of competitive intelligence and social engineering.
Reference: ACFE Manual, Fraud Prevention and Deterrence - Intelligence Gathering Methods .
NEW QUESTION # 164
Which of the following measures would likely be MOST EFFECTIVE in helping to prevent fraudulent billing schemes?
- A. Separating the purchasing and payment functions
- B. Prohibiting competitive bidding from potential contractors
- C. Using an external vendor to negotiate procurement contracts
- D. Requiring all fraud tips to be reported to employees' direct supervisors
Answer: A
Explanation:
The correct answer is B. Separating the purchasing and payment functions is a core preventive control against billing schemes. Billing fraud often occurs when an employee can initiate purchases, approve vendors, authorize invoices, and process payments without independent review. By segregating these duties, the organization reduces the opportunity for fictitious vendors, shell company invoices, inflated invoices, and personal purchases with company funds. Option A might assist procurement negotiations, but it does not directly address internal authorization and payment control. Option C would weaken procurement controls because competitive bidding helps prevent favoritism and inflated pricing. Option D is also improper because employees should have independent reporting channels, such as hotlines, not only direct supervisors. The ACFE materials emphasize separation of duties, approvals, documentation, and competitive bidding as billing- fraud controls.
NEW QUESTION # 165
Which of the following elements is required for a contract, transaction, or scheme to qualify as an investment contract?
- A. The investment resulted in profits solely due to the investor's own management efforts.
- B. The investment is in a common enterprise.
- C. The investment must have been made with cash.
- D. The investment was witnessed by a notary at the time it was made or entered into.
Answer: B
Explanation:
The required element is that the investment is in a common enterprise. The ACFE material explains that the investment-contract analysis parallels the Howey test, under which all required elements must exist: an investment of money or other assets, a common enterprise, an expectation of profit, and profits derived primarily from the efforts of others. Option A is incorrect because profits must come from the efforts of people other than the investor, not solely from the investor's own management efforts. Option B is too narrow because the investment may involve money or another asset. Option C is incorrect because notarization is not an element of an investment contract. Therefore, the common-enterprise requirement makes option D correct.
NEW QUESTION # 166
Which of the following methods would NOT be helpful in detecting a skimming scheme?
- A. Confirming customers' unpaid account balances
- B. Comparing cash register totals to the cash count
- C. Examining journal entries for false credits made to the inventory
- D. Performing physical inventory counts
Answer: C
Explanation:
Detailed Explanation:
* Rationale for Correct Answer: Skimming involves theft of cash before it is recorded in the books.
Examining journal entries for false credits to inventory would detect inventory fraud, not skimming.
Therefore, B is not useful for detecting skimming.
* Analysis of Incorrect Options:
* A - Confirming customer balances can reveal payments that were never posted because they were skimmed.
* C - Physical counts may expose discrepancies caused by skimming disguised as inventory shortages.
* D - Comparing register totals to actual cash can reveal missing amounts due to skimming.
* Key Concept: Skimming detection focuses on reconciling recorded vs. unrecorded cash.
Reference: ACFE Manual, Cash Receipts - Skimming Schemes .
NEW QUESTION # 167
In which of the following process, all bidders are legally supposed to be placed on the same plane of equality, bidding on the same terms and conditions?
- A. Bid solicitation
- B. Bid-rigging
- C. Competitive bidding
- D. Kickbacks
Answer: C
Explanation:
Detailed Explanation:
* Rationale for Correct Answer: In a legitimate competitive bidding process , all bidders must be treated equally, with the same access to information, terms, and conditions. This ensures fairness and prevents procurement fraud.
* Analysis of Incorrect Options:
* A. Bid-rigging - The manipulation of competitive bidding, not the fair process.
* B. Kickbacks - Involve secret payments, not equal bidding.
* D. Bid solicitation - The stage of inviting bids, not the equal treatment requirement.
* Key Concept: Competitive bidding - foundation of fairness in procurement.
Reference: ACFE Fraud Examiners Manual (2020 International Edition) , Corruption - Procurement and Competitive Bidding Principles .
NEW QUESTION # 168
__________ may be defined as the offering, giving, receiving, or soliciting anything of value to influence an official act.
- A. Corruption
- B. Bribery
- C. Diverting business to vendors
- D. Lacking approval authority
Answer: B
Explanation:
Detailed Explanation:
* Rationale for Correct Answer: Bribery is specifically defined as offering, giving, receiving, or soliciting anything of value to influence an official act or business decision. It is one of the four primary corruption categories.
* Analysis of Incorrect Options:
* A. Corruption - Broader category; bribery is one part of it.
* B. Diverting business to vendors - A conflict of interest scheme, not bribery.
* D. Lacking approval authority - Refers to control weaknesses, not corruption.
* Key Concept: Bribery definition and its role in corruption.
Reference: ACFE Fraud Examiners Manual (2020 International Edition) , Corruption - Bribery .
NEW QUESTION # 169
Which of the following is FALSE regarding electronic payment tampering?
- A. The individual who makes electronic payments on behalf of the company should also set ACH filters to ensure that only designated individuals are paid.
- B. Positive pay is recommended for ACH transactions to ensure their legitimacy.
- C. The lack of physical evidence makes electronic payment tampering more difficult to detect than traditional check tampering.
- D. ACH blocks allow account holders to notify their banks that ACH debits should not be allowed on specific accounts.
Answer: A
Explanation:
Detailed Explanation:
* Rationale for Correct Answer: In sound internal controls, the person initiating electronic payments should not also be responsible for setting filters or approving transactions . This creates a segregation of duties violation. Therefore, statement D is false.
* Analysis of Incorrect Options:
* A. Positive pay for ACH - True; it helps verify transactions.
* B. ACH blocks - Correct; a control against unauthorized debits.
* C. Lack of physical evidence - True; electronic fraud lacks paper trails, making detection harder.
* Key Concept: Electronic payment tampering controls .
Reference: ACFE Fraud Examiners Manual (2020) , Fraudulent Disbursements: Electronic Payment Fraud .
NEW QUESTION # 170
Tammy made one cash deposit each day over the span of a few weeks at automated teller machines owned by her bank. The cash deposits ranged from $9,000 to $9,900. Tammy lives in a jurisdiction that requires all deposits of $10,000 or more to be reported to the government. Based on these facts, Tammy is MOST LIKELY committing a(n):
- A. Remote deposit capture scheme
- B. Structuring scheme
- C. Reverse deposit scheme
- D. Integration scheme
Answer: B
Explanation:
Tammy is most likely committing a structuring scheme. Structuring occurs when a person deliberately breaks transactions into smaller amounts to avoid mandatory reporting thresholds. Here, Tammy repeatedly deposits cash in amounts between $9,000 and $9,900, just below the $10,000 reporting requirement. That pattern strongly indicates an attempt to avoid currency transaction reporting. A reverse deposit scheme and remote deposit capture scheme do not describe the deliberate splitting of cash deposits to evade reporting. Integration is a later stage of money laundering in which illicit funds are reintroduced into the economy as apparently legitimate funds, but Tammy's activity is focused on avoiding detection during placement. The ACFE material identifies repeated deposits just under the reporting threshold as a classic red flag of smurfing or structuring.
NEW QUESTION # 171
CTR Window Repair receives a shipment of glass from a vendor and issues payment for the materials. CTR uses the glass to repair broken windows for several customers, but the company begins receiving complaints about the quality of the glass. Based on this information, which of the following detection measures would have been MOST EFFECTIVE in helping CTR determine whether the vendor committed a procurement fraud scheme before receiving the complaints?
- A. CTR should have compared the vendor's direct and indirect labor account totals for producing the glass from the prior year to the current year.
- B. CTR should have examined the packaging, appearance, and description of the glass to determine if it met contract specifications before using it.
- C. CTR should have interviewed the vendor's competitors to determine if the vendor is known in the industry for not adhering to contract requirements.
- D. CTR should have examined any change orders submitted by the vendor that would have increased the cost of the glass specified in the contract.
Answer: B
Explanation:
The correct answer is A. The facts indicate a possible nonconforming goods scheme, in which a vendor provides goods that fail to meet contract specifications while charging as though compliant goods were supplied. The most effective detection measure before customer complaints would have been an inspection of the glass upon receipt, including its packaging, appearance, description, and conformity with the contract.
This control helps identify substitutions, inferior materials, counterfeit goods, or products of lower quality than promised. Option B is indirect and less reliable than inspecting the goods. Option C relates to change order abuse rather than quality substitution. Option D focuses on the vendor's internal cost data and would not directly confirm whether the delivered glass met CTR's contract specifications.
NEW QUESTION # 172
What can make it easy for an employee to skim sales or receivables?
- A. Poor collection and recording procedures
- B. Register manipulations and recording procedures
- C. Revenue sources and recording procedures
- D. Internal audits and recording procedures
Answer: A
Explanation:
Detailed Explanation:
* Rationale for Correct Answer: Weak or poor collection and recording procedures create opportunities for employees to skim. Without strong controls over cash receipts and documentation, employees can divert funds without detection.
* Analysis of Incorrect Options:
* A. Revenue sources and recording procedures - Too general; it is weak procedures that matter.
* C. Internal audits and recording procedures - Audits help detect fraud, not enable it.
* D. Register manipulations and recording procedures - Describes concealment, not the root cause.
* Key Concept: Control weaknesses enable skimming.
Reference: ACFE Fraud Examiners Manual (2020 International Edition) , Cash Receipts - Causes and Opportunities for Skimming .
NEW QUESTION # 173
Which of the following statements about change order abuse is MOST ACCURATE?
- A. Change order abuse is a scheme typically committed by sole-source vendors.
- B. Change order abuse generally results in procuring entities paying the winning contractor less than the amount of the accepted bid.
- C. Change order abuse usually involves collusion among several contractors.
- D. Change order abuse often causes the procuring entity to lose the advantages offered by the competitive bidding process.
Answer: D
Explanation:
The correct answer is C. Change order abuse occurs after a contract has been awarded, when a contractor improperly increases the price, expands the work, or modifies contract terms through change orders. A corrupt contractor might submit a low bid to win the award and later recover profits through unnecessary or inflated change orders. This defeats the benefit of competitive bidding because the procuring entity no longer receives the price or terms that justified the original award. Option A is incorrect because the scheme usually increases, not decreases, the amount paid. Option B is too narrow because change order abuse can occur in competitive contracts. Option D is incorrect because the scheme often involves collusion between contractor and procurement personnel, not necessarily several contractors.
NEW QUESTION # 174
The price of an asset on which the asset is selling at on the open market in a transaction between a willing buyer and a willing seller is called:
- A. Cost value
- B. Fair value
- C. Material value
- D. Absolute value
Answer: B
Explanation:
Detailed Explanation:
* Rationale for Correct Answer: Fair value is defined as the price an asset would fetch in an orderly transaction between willing market participants. It reflects current market conditions, not historical cost.
* Analysis of Incorrect Options:
* A. Absolute value - Mathematical concept, not accounting.
* C. Cost value - Historical cost, not current market.
* D. Material value - Not a recognized accounting term.
* Key Concept: Fair Value Measurement under GAAP/IFRS.
Reference: ACFE Fraud Examiners Manual (2020 International Edition) , Accounting Concepts - Fair Value .
NEW QUESTION # 175
The act of an official or fiduciary person who unlawfully and wrongfully uses his station or character to procure some benefit, contrary to duty and rights of others, is called:
- A. Bribery
- B. Conflict of interest
- C. Overbilling
- D. Corruption
Answer: D
Explanation:
Detailed Explanation:
* Rationale for Correct Answer: This definition matches corruption , a broad category of occupational fraud in which employees use their influence in business transactions to gain personal benefit, in violation of their duties. Corruption schemes include bribery, conflicts of interest, illegal gratuities, and extortion.
* Analysis of Incorrect Options:
* A. Conflict of interest - A subtype of corruption, but narrower in scope.
* C. Bribery - Also a subtype, but the definition given covers the broader category.
* D. Overbilling - A billing scheme under fraudulent disbursements, not corruption.
* Key Concept: Corruption as defined in the Fraud Tree.
Reference: ACFE Fraud Examiners Manual (2020 International Edition) , Corruption - Definition and Schemes .
NEW QUESTION # 176
Which of the following statements about the different types of malware is MOST ACCURATE?
- A. A Trojan horse is a program that appears useful but contains hidden code that causes damage.
- B. Spyware is any software application that displays advertisements while it is operating.
- C. Ransomware is software that collects and reports information about a computer user without the user's knowledge or consent.
- D. A computer worm is a form of malicious software that locks a user's operating system and restricts access to data files.
Answer: A
Explanation:
The correct answer is C. A Trojan horse is malware that appears to be legitimate, useful, or harmless software but contains hidden malicious code. Once installed or executed, it can damage systems, steal information, create unauthorized access, or perform other harmful actions. Option A describes ransomware, not a worm; ransomware restricts access to systems or files and demands payment. A worm is self-replicating malware that spreads across networks. Option B describes adware more closely than spyware. Spyware secretly monitors and reports user activity or information. Option D also describes spyware rather than ransomware.
Professionally, the key distinction is the malware's function: concealment and deception for Trojan horses, self-replication for worms, surveillance for spyware, and restriction or encryption for ransomware.
NEW QUESTION # 177
Which of the following scenarios BEST describes an electronic funds transfer (EFT) fraud scheme?
- A. An individual uses another person's personal identifying information to fill out a credit card application in their name and plans to make online purchases using the new card.
- B. A hacker obtains the account and password information of consumers and uses them to direct funds from their accounts.
- C. A restaurant server secretly scans a customer's credit card information into a small device for fraudulent use at a later time.
- D. An employee of a person-to-person (P2P) provider misrepresents the number of hours that they worked to increase the amount of money earned on their paycheck.
Answer: B
Explanation:
Detailed Explanation:
* Rationale for Correct Answer: EFT fraud involves the unauthorized transfer of money from victims' accounts using stolen access credentials. A hacker using stolen log-in details to redirect funds is the textbook example.
* Analysis of Incorrect Options:
* A - Describes identity theft/credit card fraud, not EFT fraud.
* C - Describes skimming of card data, not EFT.
* D - Describes payroll fraud , not EFT.
* Key Concept: EFT fraud = unauthorized access to electronic banking/payment systems.
Reference: ACFE Manual, Financial Transactions - Electronic Payment Fraud .
NEW QUESTION # 178
_________ assumes the business will go on indefinitely in the future.
- A. Cost
- B. Fair value
- C. Materiality
- D. Going concern
Answer: D
Explanation:
Detailed Explanation:
* Rationale for Correct Answer: The going concern assumption means that a business will continue operating indefinitely and will not liquidate in the near future. This underpins the use of historical cost accounting and normal accrual-based reporting.
* Analysis of Incorrect Options:
* A. Materiality - Relates to significance of information, not continuity.
* C. Cost - Refers to historical cost valuation.
* D. Fair value - Refers to current market value, not continuity.
* Key Concept: Going Concern Assumption in accounting.
Reference: ACFE Fraud Examiners Manual (2020 International Edition) , Accounting Concepts - Basic Assumptions .
NEW QUESTION # 179
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