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©BRAINBARTER 2024/2025 CFE Exam Questions With 100% Verified Answers Falsified Hours & Salary Schemes - answerThe most common method of misappropriating funds from the payroll is the overpayment of wages. For hourly employees, the size of a paycheck is based on two factors: the number of hour...

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CFE Exam Questions With 100% Verified
Answers




Falsified Hours & Salary Schemes - answer✔The most common method of misappropriating

funds from the payroll is the overpayment of wages. For hourly employees, the size of a

paycheck is based on two factors: the number of hours worked and the rate of pay. Therefore, for

hourly employees to fraudulently increase the size of their paycheck, they must either falsify the

number of hours they have worked or change their wage rate.


Common ways to commit a falsified hours and salary scheme - answer✔1) Inflating the number

of hours worked

2) Inflating the rate of pay

3) Forging a supervisor's signature

4) Collusion with a supervisor

5) Implementing poor custody procedures

6) Altering a timesheet after it has been approved


Fictitious Provider Scheme - answer✔Corrupt providers or other criminals fraudulently obtain

and use another provider's identification information and steal or purchase lists of patients'

, ©BRAINBARTER 2024/2025


identifying information. Thereafter, the perpetrator submits bills using the fictitious provider's

information to the insurance provider or government health care program for medical services,

although no services are performed.


Address Similarity Reports - answer✔electronically compare multiple payments going to the

same address. These reports are extremely useful because they might show a payment

defalcation or funds going to another insurance company, broker, or fictitious payee.


Bad Debt Expense - answer✔Managers can overstate their company's accounts receivable

balance by failing to record bad debt expense. Bad debt expense is recorded to account for any

uncollectible accounts receivable. The debit side of the entry increases bad debt expense, and the

credit side of the entry increases the allowance (or provision) for doubtful accounts, which is a

contra account that is recorded against accounts receivable. Therefore, if the controller fails to

record bad debt expense, the allowance (or provision) for doubtful accounts will be understated.


Systems for safeguarding sensitive and proprietary information should include: - answer✔* Task

force

* Security risk assessments

* Security policies and procedures

* Awareness training

* Nondisclosure agreements

* Noncompetition agreements

, ©BRAINBARTER 2024/2025


* Data classification

* Data retention and destruction policies

* Data minimization

* Security controls

* Measures to guard manual file systems

* Monitoring of visitor access

* Quiet room

* Incident response plan

The failure to include any of these measures is a poor information security practice that can

contribute to the loss of proprietary information.

To prevent the loss or misuse of sensitive data or proprietary information, organizations should .

. . - answer✔develop and implement risk-based information-security systems designed to detect

and prevent unauthorized access to sensitive information. An information security system

requires controls that are designed to ensure that data are used as intended, and such controls will

depend on the combination and coordination of people, processes, technologies, and other

resources.


Off-book fraud - answer✔A fraud that occurs outside the financial system and therefore has no

direct audit trail. There are several kinds of off-book frauds that will be discussed in this book.

Skimming is the most common off-book fraud.

, ©BRAINBARTER 2024/2025


Skimming - answer✔The removal of cash from a victim entity prior to its entry in an accounting

system. Employees who skim from their companies steal sales or receivables before they are

recorded in the company books. Because of this aspect of their nature, skimming schemes are

known as off-book frauds; they leave no direct audit trail


DRG creep - answer✔occurs when a hospital or other medical institution deliberately and

systematically manipulates diagnostic and procedural codes to increase reimbursement amounts

or other forms of funding. In other words, DRG creep is an intentional pattern of upcoding by a

hospital or other medical institution.


smartcard - answer✔a plastic card, the size of a credit or debit card, embedded with a microchip.

A key advantage of smart cards is that, unlike regular magnetic stripe credit and debit cards, they

cannot be easily replicated. Similarly, smart cards cannot be easily counterfeited, which greatly

reduces the potential for fraud with in-person transactions. Smart cards include a wide variety of

hardware and software features capable of detecting and reacting to tampering attempts and

countering possible attacks. If someone tries to tamper with a chip on a smart card, the card

detects the intrusion and shuts itself down, rendering the card useless.

Steps individuals can take to protect their personal information and prevent identity theft -

answer✔* Do not give out government identification numbers unless absolutely necessary.


* Do not carry government identification cards (or numbers) in purses or wallets.

* Create complex passwords or passphrases that are at least eight characters in length and

contain upper- and lowercase letters, numbers, and symbols.

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