CFCI Study Guide Exam/136
Questions and Answers 2024
Fraud - -"Any illegal acts characterized by deceit, concealment, or violation
of trust. These acts are not dependent upon the perpetrated by individuals
and organizations to obtain money, property, or services; to avoid payment
or loss of services; or to secure personal or business ad-vantage."
-Main types of fraud - -Internal Fraud and External Fraud
-Internal Fraud - -which involves the employees of the company against
which the fraud is perpetrated
-External Fraud - -deceptive conduct by non-employees that
deprives the organization of value, and/or is undertaken for financial gain.
-embezzlement - -theft or misappropriation of funds placed in one's trust or
belonging to one's employer.
-financial fraud - -"cooking the books." This type of
fraud generally refers to falsely representing the financial condition of the
company, so as to inflate the value of stock, fraudulently boost executive
bonuses, or otherwise mislead shareholders, lenders, employees, investment
analysts, or other users of the information.
-Skimming (cash larceny) - -Accounts receivable fraud, this
involves simply stealing cash before it enters the organization's accounting
system.
-Billing Schemes - -Perpetrated by employees who cause their employer to
issue a payment to a false supplier by submitting invoices for fictitious goods
or services, inflated invoices, or invoices for personal purchases.
-check tampering - -taking advantage of employee access to blank
company checks, using a password to
steal computer-generated checks, or producing counterfeit checks.
-Employee reimbursement scheme - -making false claims for
reimbursement, or inflating or creating fictitious business expenses.
(Travel /meal reimbursement.
-corruption - -Bribery, illegal gratuities, and/or extortion.
, -bribery - -when something of value is offered or given to influence a
business decision
-Illegal Gratuities - -when something of value is given to an employee to
reward a business decision.
-Extortion - -when a person demands payment or seeks to influence a
business decision by threat of harm through loss of business or personal
injury.
-Kickback Schemes - -involving employees and vendors, often using inflated
billing or invoices for which the employee is paid a portion of the inflated or
fictitious invoice.
-credit card fraud - -the creation, sale, or use of a counterfeit credit card, or
the use of a stolen credit or debit card.
-C.N.P - -Card not present transactions
-identity fraud - -involves the unauthorized use of another person's personal
data for illegal financial benefit. Involves abusing the stolen information to
transact personal business in the victim's name.
-identity theft - -the fraudulent acquisition or stealing of confidential
personal information.
-2 categories that encompass Fraud - -Theft (stealing money, ID, or assests)
and deception (cooking the books, lying to shareholders, employees or
partners)
-Myth #1 of the Financial Services - -"We have very little fraud here" ex:
subprime mortgage fraud
-Myth #2 of Financial Services - -"Ethics and training compliance has us
covered" Fraud is not always covered in ethics policy or training.
-Myth #3 of Financial Services - -"Fraud is an unavoidable cost of doing
business" Fraud is usually not serious enough to destroy a financial service
firm, it is much more than necessary cost of doing business.
-Chapter 1 review points - -• The numbers do not lie: Fraud is a huge
worldwide problem—for all organizations.
• Financial services fraud. Seventy-one percent of financial institutions
experienced attempted payment fraud (check fraud, ACH fraud, or credit
card fraud in 2017).
Questions and Answers 2024
Fraud - -"Any illegal acts characterized by deceit, concealment, or violation
of trust. These acts are not dependent upon the perpetrated by individuals
and organizations to obtain money, property, or services; to avoid payment
or loss of services; or to secure personal or business ad-vantage."
-Main types of fraud - -Internal Fraud and External Fraud
-Internal Fraud - -which involves the employees of the company against
which the fraud is perpetrated
-External Fraud - -deceptive conduct by non-employees that
deprives the organization of value, and/or is undertaken for financial gain.
-embezzlement - -theft or misappropriation of funds placed in one's trust or
belonging to one's employer.
-financial fraud - -"cooking the books." This type of
fraud generally refers to falsely representing the financial condition of the
company, so as to inflate the value of stock, fraudulently boost executive
bonuses, or otherwise mislead shareholders, lenders, employees, investment
analysts, or other users of the information.
-Skimming (cash larceny) - -Accounts receivable fraud, this
involves simply stealing cash before it enters the organization's accounting
system.
-Billing Schemes - -Perpetrated by employees who cause their employer to
issue a payment to a false supplier by submitting invoices for fictitious goods
or services, inflated invoices, or invoices for personal purchases.
-check tampering - -taking advantage of employee access to blank
company checks, using a password to
steal computer-generated checks, or producing counterfeit checks.
-Employee reimbursement scheme - -making false claims for
reimbursement, or inflating or creating fictitious business expenses.
(Travel /meal reimbursement.
-corruption - -Bribery, illegal gratuities, and/or extortion.
, -bribery - -when something of value is offered or given to influence a
business decision
-Illegal Gratuities - -when something of value is given to an employee to
reward a business decision.
-Extortion - -when a person demands payment or seeks to influence a
business decision by threat of harm through loss of business or personal
injury.
-Kickback Schemes - -involving employees and vendors, often using inflated
billing or invoices for which the employee is paid a portion of the inflated or
fictitious invoice.
-credit card fraud - -the creation, sale, or use of a counterfeit credit card, or
the use of a stolen credit or debit card.
-C.N.P - -Card not present transactions
-identity fraud - -involves the unauthorized use of another person's personal
data for illegal financial benefit. Involves abusing the stolen information to
transact personal business in the victim's name.
-identity theft - -the fraudulent acquisition or stealing of confidential
personal information.
-2 categories that encompass Fraud - -Theft (stealing money, ID, or assests)
and deception (cooking the books, lying to shareholders, employees or
partners)
-Myth #1 of the Financial Services - -"We have very little fraud here" ex:
subprime mortgage fraud
-Myth #2 of Financial Services - -"Ethics and training compliance has us
covered" Fraud is not always covered in ethics policy or training.
-Myth #3 of Financial Services - -"Fraud is an unavoidable cost of doing
business" Fraud is usually not serious enough to destroy a financial service
firm, it is much more than necessary cost of doing business.
-Chapter 1 review points - -• The numbers do not lie: Fraud is a huge
worldwide problem—for all organizations.
• Financial services fraud. Seventy-one percent of financial institutions
experienced attempted payment fraud (check fraud, ACH fraud, or credit
card fraud in 2017).
