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| Section | Objectives |
|---|---|
| Fraud Investigation and Analysis | - Evidence collection and documentation
|
| Financial Crimes | - Banking and Payment Fraud
|
| Fraud Schemes | - Financial Statement Fraud
|
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NEW QUESTION # 306
Which of the following scenarios BEST describes an electronic funds transfer (EFT) fraud scheme?
Answer: C
Explanation:
The correct answer is A. Electronic funds transfer fraud involves the misuse of electronic payment systems to move money improperly. A vendor submitting an electronic bill through a client's online payment system for services not provided is a fraudulent use of electronic bill presentment or payment processes. Option B is payroll fraud, specifically falsified hours or salary. Option C involves theft and misuse of prepaid cards, not EFT manipulation by the payee. Option D describes payment card skimming, where card information is captured for later unauthorized use. The ACFE materials discuss electronic funds transfers, wire transfer fraud, electronic bill presentment and payment, and detection of EFT fraud as part of payment fraud risk.
NEW QUESTION # 307
Which of the following is a red flag that might indicate that someone is attempting to commit insurance fraud?
Answer: B
Explanation:
Detailed Explanation:
* Rationale for Correct Answer: Filing a claim shortly after a policy begins is a classic red flag of potential insurance fraud, as it may indicate the loss occurred before coverage or is fabricated.
* Analysis of Incorrect Options:
* B. One prior claim in five years - Not unusual by itself.
* C. Small electronics/jewelry - Common theft items, not automatically suspicious.
* D. Recently purchased items with receipts - Strong documentation actually supports legitimacy.
* Key Concept: Insurance fraud red flags .
Reference: ACFE Fraud Examiners Manual (2020) , Insurance Fraud Indicators .
NEW QUESTION # 308
Bob, a purchasing agent for Gallenkamp, directed a portion of Gallenkamp's business to Oak Company. In exchange for receiving additional business, Oak Company's sales manager agreed to pay Bob a percentage of the extra profits. Which of the following BEST describes the type of corruption scheme in which Bob engaged?
Answer: A
Explanation:
The ACFE Fraud Examiners Manual includes Kickback Schemes in the corruption section and specifically identifies Diverting Business to Vendors as a type of kickback scheme.
This question states that Bob, a purchasing agent , directed business to Oak Company, and in return Oak's sales manager agreed to pay Bob a percentage of the extra profits . That is a classic kickback arrangement
: the employee steers company business to a favored vendor in exchange for a personal financial benefit. The Manual's examples of corruption also discuss a vendor bribing or paying a purchasing agent to receive more business.
Why the other options are incorrect
A). Economic extortion scheme
The Manual defines economic extortion as obtaining money, property, or services through coercion or threatened adverse action. That is not what happened here; Bob was paid for steering business, not coercing payment through threats.
C). Illegal gratuity scheme
The Manual explains that illegal gratuities are items of value given to reward a decision, often after the recipient has already made the decision, and this concept is primarily discussed in the public-sector context.
Here, the payment is part of an agreement to direct business and share in profits, which is more accurately a kickback .
D). Diversion scheme
The relevant Manual terminology is Diverting Business to Vendors , but that appears as a subtype under Kickback Schemes . Therefore, the best answer among the options is the broader and correct classification:
kickback scheme .
References
* ACFE Fraud Examiners Manual, 2020 International Edition
* Corruption - Kickback Schemes
* Corruption - Diverting Business to Vendors
* Example involving a purchasing agent receiving improper payments to steer business to a vendor
* Economic Extortion definition
* Illegal Gratuities definition
NEW QUESTION # 309
Black, an accounts receivable clerk, stole Customer A's monthly payment instead of posting it to A's account.
When Customer B's payment arrives a few days later, Black applies the payment to Customer A's account.
When Customer C's payment arrives a few days after that, Black applies it to Customer B's account. Black's method of crediting one account with money taken from another account is known as:
Answer: D
Explanation:
Detailed Explanation:
* Rationale for Correct Answer: The described scheme is lapping , a classic accounts receivable fraud.
It involves covering up stolen payments by applying subsequent receipts from other customers to hide the shortage.
* Analysis of Incorrect Options:
* A. Padding - Usually refers to overstating expense reimbursements, not AR fraud.
* C. Substitution - Refers to replacing missing assets with others, not AR manipulation.
* D. Daisy chain - Not a recognized fraud concealment method in this context.
* Key Concept: Skimming concealment techniques - lapping of receivables.
Reference: ACFE Manual, Cash Receipts - Lapping Schemes .
NEW QUESTION # 310
Malcolm is a manager at a financial institution. To safeguard the bank and its customers from electronic funds transfer (EFT) fraud, Malcolm is implementing preventive measures. What is one measure Malcolm can take to prevent EFT fraud?
Answer: D
Explanation:
The correct answer is C. Multifactor authentication is an effective preventive control for electronic funds transfer fraud because it requires users to verify their identity through more than one authentication factor before initiating or approving payments. This reduces the risk that stolen usernames, passwords, or account credentials alone will allow unauthorized transfers through EBPP or P2P systems. Option A is unsafe because sending PINs, usernames, and passwords together increases exposure if the communication is intercepted.
Option B is also poor practice because sensitive credentials should be encrypted. Option D weakens segregation of duties by allowing one employee to control both PIN issuance and access device information.
The ACFE materials emphasize authentication, access controls, and segregation of duties in preventing EFT fraud.
NEW QUESTION # 311
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