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| Section | Weight | Objectives |
|---|---|---|
| Topic 1: Asset Misappropriation – Cash Receipts | 5–10% | - Cash larceny schemes - Cash skimming schemes - Prevention and detection methods |
| Topic 2: Asset Misappropriation – Cash Disbursements | 10–15% | - Check and payment tampering - Billing schemes - Expense reimbursement schemes - Payroll schemes |
| Topic 3: Corruption Schemes | 5–10% | - Illegal gratuities and extortion - Bribery and kickbacks - Conflicts of interest |
| Topic 4: Asset Misappropriation – Non-Cash Assets | 5–10% | - Misuse of assets - Inventory and equipment theft - Concealment techniques |
| Topic 5: Identity Theft | 1–5% | - Prevention and detection - Types and techniques |
| Topic 6: Theft of Data and Intellectual Property | 5–10% | - Corporate espionage - Data and IP theft methods - Safeguarding proprietary information |
| Topic 7: Industry-Specific Financial Crimes | 15–25% | - Real estate and securities fraud - Cyber-enabled and cryptocurrency fraud - Healthcare fraud - Insurance fraud - Financial institution fraud |
| Topic 8: Accounting Concepts | 5–10% | - Basic accounting principles - Financial statements structure - Internal control fundamentals - Recording and summarizing transactions |
| Topic 9: Financial Statement Fraud | 10–15% | - Detection and red flags - Revenue and asset overstatements - Timing and disclosure manipulations - Expense and liability understatements |
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NEW QUESTION # 21
Which of the following is a method that might be used to fraudulently overstate the inventory balance?
Answer: A
Explanation:
Detailed Explanation:
* Rationale for Correct Answer: Failing to write off obsolete inventory inflates reported inventory, overstating assets and potentially net income. Fraudsters may leave unusable goods on the books to make financial statements appear stronger.
* Analysis of Incorrect Options:
* A - An allowance for sales returns relates to revenue recognition, not inventory overstatement.
* B - Relates to accounts receivable, not inventory.
* C - Applying lower of cost or NRV reduces inventory to fair value, not overstates it.
* Key Concept: Overstating assets through improper inventory valuation.
Reference: ACFE Manual, Financial Statement Fraud - Inventory Manipulation .
NEW QUESTION # 22
Physical assets including _________ and ________ are the most commonly misappropriated noncash assets in our study.
Answer: B
Explanation:
Detailed Explanation:
* Rationale for Correct Answer: Studies by the ACFE consistently show that inventory and equipment are the most commonly misappropriated noncash assets. They are highly liquid, valuable, and often difficult to monitor without strong controls.
* Analysis of Incorrect Options:
* A. Interest & Collusion - Not physical assets.
* C. Inventory & Purchase - Purchase is a process, not a physical asset.
* D. Sales & Equipment - Sales are transactions, not assets.
* Key Concept: Noncash asset misappropriation - inventory and equipment are the primary targets.
Reference: ACFE Fraud Examiners Manual (2020 International Edition) , Inventory and Other Assets - Common Targets of Misappropriation .
NEW QUESTION # 23
When a victim company purchases unnecessary goods or services from a supplier at the direction of the corrupt employee, this results in:
Answer: C
Explanation:
Detailed Explanation:
* Rationale for Correct Answer: A need recognition scheme occurs when an employee uses their influence to convince their employer to purchase unnecessary goods or services. This benefits the supplier (often paying kickbacks) but harms the employer.
* Analysis of Incorrect Options:
* A. Presolicitation scheme - General stage of procurement, not specific.
* C. False sole-source scheme - Involves eliminating competition by claiming only one vendor can supply the good/service.
* D. Submission scheme - Related to bid-rigging, not need recognition.
* Key Concept: Need recognition schemes - corruption through unnecessary purchases.
Reference: ACFE Fraud Examiners Manual (2020 International Edition) , Corruption - Need Recognition Schemes .
NEW QUESTION # 24
Which of the following statements about change order abuse is MOST ACCURATE?
Answer: C
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 # 25
Which of the following would NOT be helpful in preventing expense reimbursement schemes?
Answer: A
Explanation:
The ACFE Fraud Examiners Manual addresses Expense Reimbursement Schemes under Asset Misappropriation: Fraudulent Disbursements and separates the discussion into:
* Detection of Expense Reimbursement Schemes
* Prevention of Expense Reimbursement Schemes
The Manual specifically identifies "Detailed Expense Reports: Submission and Review" as the prevention approach for expense reimbursement fraud.
Why A is correct
Requiring all employees to submit receipts electronically is not, by itself, a preventive control recognized by the Manual. The ACFE's prevention focus is on requiring detailed expense reports , adequate supporting documentation, and careful review-not merely changing the format of submission from paper to electronic.
In fact, because expense reimbursement fraud often involves altered receipts , fictitious receipts , and other manipulated support, simply requiring electronic submission does not meaningfully prevent the scheme. The Manual lists schemes such as altered receipts and producing fictitious receipts , showing that the problem is the authenticity and review of documentation, not whether the receipt is submitted electronically.
Why the other options are helpful
B). Comparing current expenses to budgeted expense amounts
This is helpful because the Manual includes review and analysis of expense accounts as part of detecting these schemes. Comparing reported expenses to expected or budgeted levels can reveal unusual spikes or anomalies that may indicate fraud.
C). Requiring employees to explain the specific business purpose of each expense This is clearly helpful and consistent with the Manual's prevention emphasis on detailed expense reports and proper documentation. Requiring a specific business purpose makes it harder to submit personal, inflated, or fictitious expenses.
D). Comparing current expenses to historical expenditure amounts
This is also helpful because the Manual's review and analysis of expense accounts supports analytical comparisons to identify irregularities, trends, or unexplained increases in reimbursements. Historical comparison is a classic way to spot padded or abnormal expense claims.
Conclusion
Under the ACFE Manual, prevention of expense reimbursement schemes depends on detailed reporting, documentation, and review . Merely requiring receipts to be submitted electronically does not address whether the receipts are false, altered, duplicated, or unsupported. Therefore, the choice that would NOT be helpful in preventing expense reimbursement schemes is:
A). Requiring all employees to submit receipts electronically
References
* ACFE Fraud Examiners Manual, 2020 International Edition
* Expense Reimbursement Schemes
* Detection of Expense Reimbursement Schemes / Review and Analysis of Expense Accounts
* Prevention of Expense Reimbursement Schemes / Detailed Expense Reports: Submission and Review
* Altered Receipts / Producing Fictitious Receipts
NEW QUESTION # 26
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