Exam (elaborations)
CFE Exam Financial Transactions And Fraud Schemes With Correct Solutions 2024
- Course
- Institution
CFE Exam Financial Transactions And Fraud Schemes With Correct Solutions 2024
[Show more]
Content preview
CFE Exam Financial Transactions AndFraud Schemes With Correct Solutions
2024
Shell vCompanies v- vcorrect vanswer.Fictitious ventities vcreated vfor vthe vsole vpurpose vof
vcommitting vfraud; vusually v involve v an vemployee vmaking vfraudulent vpayments vto vthe
vdummy vcompany. vMost vshell vcompany v schemes v involve v the vpurchase vof vservices
vrather vthan vgoods. vThe vprimary v reason vfor vthis vis vthat vservices vare vnot vtangible. vIf van
vemployee vsets vup va vshell vcompany vto vmake vfictitious vsales vof v goods vto vtheir vemployer,
vthese v goods v will vobviously v never varrive. v By vcomparing v its vpurchases vto vits vinventory
vlevels, vthe v victim vorganization vmight vdetect vthe vfraud. vIt vis vmuch vmore vdifficult vfor vthe
v victim vorganization vto vverify v that vthe vservices v were vnever v rendered. vFor vthis v reason,
vmany vemployees vinvolved v in vshell vcompany vschemes vbill vtheir vemployers vfor vthings
vlike v"consulting vservices."
New vaccount vfraud v- vcorrect vanswer.Fraud vthat voccurs von van vaccount vwithin vthe vfirst
vninety vdays v that vit v is vopen; voften, vperpetrators vopen vthese vaccounts v with vthe vsole vintent
vof vcommitting vfraud. vPrompt, vdecisive vaction vis vnecessary v to vmanage vand/or vclose
vapparent vproblem vaccounts. vSome vof vthe vmore vcommon vred vflags vof vpotential vnew
vaccount vschemes vare:
* vCustomer vresidence voutside vthe vbank's vtrade varea
* vDress vand/or vactions vinconsistent vor vinappropriate vfor vthe vcustomer's vstated vage,
voccupation, vor vincome vlevel
* vNew vaccount vholder vrequesting vimmediate vcash vwithdrawal vupon vdeposit
* vRequest vfor vlarge vquantity vof vtemporary vchecks
* vServices vincluded vwith vthe vaccount vthat vdo vnot vmatch vthe vcustomer's vpurpose
* vMissing vor vinaccurate vcustomer vapplication vinformation
* vInvalid vphone vnumbers vor vaddresses vin vcustomer vaccount vinformation
* vUse vof va vmail vdrop vaddress v(a vservice vwhere va vnon-affiliated vparty vcollects vand
vdistributes vmail vfor vindividuals v or ventities)
* vLarge vcheck vor vautomated vteller vmachine v(ATM) vdeposits vfollowed vby vrapid
v withdrawal vor vtransfer vof vfunds v(a vpass-through vaccount)
* vBusiness vaccounts vwithout vstandard vbusiness vtransactions, vsuch vas vpayroll vor
vtransactions vthat v would vbe vexpected vin vthat vbusiness
* vTransactions vwithout va vclear vpurpose vin vjurisdictions vknown vfor vhigh vlevels vof
vcorruption
* vOpening vdeposit vthat vis va vnominal vcash vamount
,* vRare vcustomer vID vtype
* vApplicants vover vthe vage vof v25 vwith vno vcredit vhistory
* vCustomers vwho vcannot vremember vbasic vapplication vinformation v(i.e., vphone vnumber,
vaddress)
Markey vDivision v- vcorrect vanswer.(or vmarket vallocation) vschemes vinvolve vagreements
vamong vcompetitors vto vdivide vand vallocate vmarkets vand vto vrefrain vfrom vcompeting vin
veach vother's vdesignated vportion vof vthe vmarket.
Ratio vAnalysis v- vcorrect vanswer.a vmeans vof vmeasuring vthe vrelationship vbetween vany
vtwo vdifferent vfinancial vstatement vamounts. vThe vrelationship vand vcomparison vare vthe
vkeys v to vthe vanalysis, vwhich v allows vfor vinternal vevaluations vusing vfinancial vstatement
vdata. vTraditionally, vfinancial vstatement v ratios vare vused vin vcomparisons vto van ventity's
vindustry vaverage. vThey v can vbe v very v useful v in vdetecting vred vflags vfor va vfraud
vexamination.
Separation vof vDuties v- vcorrect vanswer.The vprimary vmeans vof vpreventing vcash vfraud;
vWhenever vone v individual vhas vcontrol vover vthe ventire vaccounting vtransaction v(e.g.,
vauthorization, vrecording, vand vcustody), vthe vopportunity v is vpresent vfor vcash vfraud. vEach
vof vthe vfollowing vduties/responsibilities vshould vbe vseparated:
- vCash vreceipts
- vBank vdeposits
- vBank vreconciliation
- vCash vdisbursements
If vone vperson vhas vthe vauthority vto vcollect vthe vcash, vdeposit vthe vreceipts, vrecord vthat
vcollection, vand vdisburse vcompany vfunds, vthe vrisk v of vfraud vis vhigh.
Entries vto vthe vleft vside vof van vaccount vare vreferred vto vas: v- vcorrect vanswer.Debits
Entries von vthe vright vside vof vthe vaccount vare: v- vcorrect vanswer.Credits
3 vbasic vways vto vprove vcorrupt vpayments v- vcorrect vanswer.1) vTurn van vinside vwitness.
2) vSecretly vinfiltrate vor vrecord vongoing vtransactions.
3) vIdentify vand vtrace vthe vcorrupt vpayments vthrough vaudit vsteps.
Pay-and-return vscheme v- vcorrect vanswer.an vemployee vintentionally vmishandles
vpayments vthat vare vowed vto v legitimate v vendors. vOne v way vto vdo vthis vis vto vpurposely
vdouble vpay van vinvoice. vFor vinstance, va vclerk vmight vintentionally vpay van v invoice vtwice
vand vthen vcall vthe v vendor vto vrequest vthat vone vof vthe vchecks vbe vreturned. vThe vclerk vthen
vintercepts vthe v returned vcheck.
Ponzi vScheme v- vcorrect vanswer.an villegal vbusiness vpractice vin vwhich vnew vinvestors'
vmoney v is vused vto vmake vpayments vto vearlier vinvestors. vThe vinvestment vopportunity v is
vtypically v presented v with vthe vpromise vof vuncommonly vhigh vreturns. vWhile vthe vscam vis
vpresented vas va vlegitimate v investment, vthere vis v little vor vno vactual vcommerce vinvolved.
vWhen van venterprise vpromotes van v investment vopportunity vthat vinvests v little vor vnone vof
, vthe vparticipants' vmoney vand vuses vnew vinvestments vto vmake vdividend vpayments, vthe
venterprise vis vrunning vthis.
Human vIntelligence v- vcorrect vanswer.gathered vfrom vsubject-matter vexperts vand
vinformed v individuals. vSuch vefforts vtypically v target v individuals v who vcan vprovide vthe vmost
v valuable vinformation.
This vapproach vexploits vtwo vweaknesses vof vcorporate vculture: v(1) vall vsalespeople vwant
vto vmake va vsale vand v(2) vmany v salespeople v will vdo valmost vanything vto vmake va vsale.
vOther vapproaches v include:
- vEmployment vinterviews v(real vand vfake)
- vFalse vlicensing vnegotiations
- vFalse vacquisition vor vmerger vnegotiations
- vHiring van vemployee vaway vfrom va vtarget ventity
- vPlanting van vagent vin va vtarget vorganization
- vSocial vengineering
two vmethods vof vpercentage vanalysis vof vfinancial vstatements v- vcorrect vanswer.Vertical
vAnalysis vand vHorizontal vAnalysis
Vertical vAnalysis v- vcorrect vanswer.a vtechnique vfor vanalyzing vthe vrelationships vamong
vthe vitems von van vincome vstatement, vbalance vsheet, vor vstatement vof vcash vflows v during va
vspecific vaccounting vperiod vby vexpressing vcomponents vas vpercentages vof va vspecified
vbase v value v within vthe vstatement vbeing vanalyzed.
Horizontal vAnalysis v- vcorrect vanswer.a vtechnique vfor vanalyzing vthe vpercentage vchange
vin vindividual vfinancial vstatement vline vitems vfrom vone vaccounting vperiod vto vthe vnext. vThe
vfirst vperiod vin vthe vanalysis v is vconsidered vthe vbase vperiod, vand vthe vchanges vto
vsubsequent vperiods vare vcomputed vas va vpercentage vof vthe vbase vperiod. v(Trend
vAnalysis)
Scavenging v- vcorrect vanswer.involves vcollecting vinformation vleft varound vcomputer
vsystems v(e.g., von vdesks vor v workstations).
Dumpster vDiving v- vcorrect vanswer.involves vobtaining vsensitive vinformation vby vlooking
vthrough vsomeone velse's vtrash v (e.g., v via vdumpsters vand vother vtrash vreceptacles).
Shoulder vSurfing v- vcorrect vanswer.involves vobserving van vunsuspecting vtarget vfrom va
vnearby vlocation v while vthe vtarget venters va vusername vand vpassword v into va vsystem, vtalks
von vthe vphone, vfills vout vfinancial vforms, vor vperforms vsome vother vtask vfrom v which
v valuable vinformation vcan vbe vobtained.
Spoofing v- vcorrect vanswer.refers vto vthe vprocess vwhereby van vindividual vimpersonates va
vlegitimate vuser vto vobtain vaccess vto vthe vtarget's vnetwork.
Statement vof vCash vFlows v- vcorrect vanswer.reports va vcompany's vsources vand vuses vof
vcash vduring vthe vaccounting vperiod. vThis vstatement v is voften vused vby v potential vinvestors
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller RANKGRADES. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $14.99. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
79064 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now