CFE Exam - Financial and Fraud Schemes Questions and Answers
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Course
CFE
Institution
CFE
Illegal gratuity
o :## Items to reward a decision after the recipient made the decision. Like a
bribe
Extortion
o :## getting money by threats
Economic extortion
o :## When employee demands money through threats
Kickbacks
o :## Improper undisclosed payments made to obtain favorable treatme...
CFE Exam - Financial and Fraud Schemes Questions and
Answers
Illegal gratuity
o :## Items to reward a decision after the recipient made the decision. Like a
bribe
Extortion
o :## getting money by threats
Economic extortion
o :## When employee demands money through threats
Kickbacks
o :## Improper undisclosed payments made to obtain favorable treatment
Three ways to prove corrupt payments
o :## 1. Turn an inside witness
2. Secretly infiltrate ongoing transactions
3. Identify and trace corrupt payments through audit trail
Inventory shrinkage
, 2024/2025 2|Page
o :## Loss of inventory resulting from error or theft.
T/F: Falsely increasing perpetual inventory would only worsen the inventory shrinkage
problem
o :## True. Without manipulating the perpetual, inventory is already overstated.
Increasing it even more will create a larger difference to the sheet vs. floor
Insurance Premium Fraud
o :## Lying about certain information to insurer for a lower premium
Insurance Agent Fraud
o :## An agent would steal part of the insurance premium from the insured client.
Probably by charging the client more than the insurer is asking for.
Insurance Claimant Fraud
o :## Misrepresenting the circumstance of an injury to get a higher claim.
Organized Insurance Fraud
o :## United efforts of a lawyer, capper, a doctor, and claimant. Used in worker's
compensation fraud and medical fraud.
Ditching
, 2024/2025 3|Page
o :## Getting rid of a car to collect on an insurance policy to settle an outstanding
loan.
Sliding
o :## Including additional coverage in an insurance policy without the insured's
knowledge. This creates higher premium.
Past Posting
o :## First there is an accident. Then the person buys insurance, then waits a little
bit then claims on the accident.
Insurance agent fraud - premium fraud
o :## Agent collects on a premium but does not give to the insurer.
Insurance agent fraud - fictitious payee fraud
o :## Agent changes beneficiary on record to a fictitious person
Insurance agent fraud - fictitious death claims
o :## Agent obtains fake death certificate and requests death claim. The agent
steals the payment
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