(Sep-2026) CFE-Fraud-Schemes-and-Financial-Crimes Exam Dumps Contains FREE Real Quesions from the Actual Exam
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NEW QUESTION # 39
A tangible asset is one which is:
- A. Both A & B
- B. Neither A nor B
- C. Capable of being appraised
- D. Capable of being perceived
Answer: A
Explanation:
Detailed Explanation:
* Rationale for Correct Answer: Tangible assets are those that can be physically perceived (touched, seen, etc.) and appraised (assigned a measurable value). Examples include buildings, land, equipment, and inventory. Both characteristics are correct, making C the best choice.
* Analysis of Incorrect Options:
* A. Capable of being perceived - True, but incomplete.
* B. Capable of being appraised - True, but incomplete.
* D. Neither A nor B - Incorrect since both statements are accurate.
* Key Concept: Tangible Assets - physical and measurable property owned by a business.
Reference: ACFE Fraud Examiners Manual (2020 International Edition) , Accounting Concepts - Asset Classifications .
NEW QUESTION # 40
The taxing authority in a country allows companies to subtract the cost of production from their gross sales to determine taxable income. A business owner operating in that country purchases materials from a local supplier and pays the supplier to alter the receipt to show a higher price than was paid. When the business owner submits the company's tax information to the taxing authority, they submit the altered receipt to reduce their tax burden. The business owner is MOST LIKELY committing which of the following schemes?
- A. A falsified tax deduction scheme
- B. A tax credit deferral scheme
- C. A failure to declare income scheme
- D. An excise tax evasion scheme
Answer: A
Explanation:
The correct answer is C. The business owner is committing a falsified tax deduction scheme by fraudulently inflating production costs to reduce taxable income. Deductions are legitimate only when they accurately reflect allowable expenses. Here, the owner paid the supplier to alter the receipt so that the company appears to have incurred a higher deductible cost than it actually did. This false documentation reduces reported taxable income and therefore lowers the tax liability improperly. Option A is incorrect because the facts do not involve excise taxes on a specific class of goods. Option B is incorrect because the owner is not omitting income; they are overstating expenses. Option D is not applicable because the scheme involves deductions, not tax credits.
NEW QUESTION # 41
One of the simplest ways to justify unacceptable conduct and avoid guilt feelings is to invent a good reason for ________.
Answer:
Explanation:
One's actions (i.e., Rationalization)
* Rationale for Correct Answer: Rationalization is the cognitive process by which fraud perpetrators justify their unethical conduct so they can commit fraud without feeling like criminals. A common way is to "invent a good reason" for their actions (e.g., "I deserve it," "I'll pay it back," "Everyone else is doing it"). Thus, the correct completion is "one's actions" or more precisely, Rationalization .
* Analysis of Incorrect Options: Since this is a fill-in-the-blank, the distractors are implied. The only correct concept here is rationalization of one's actions .
* Key Concept: Rationalization - one leg of the fraud triangle.
Reference: ACFE Fraud Examiners Manual (2020 International Edition) , Fraud Theory - Rationalization in Cressey's Fraud Triangle .
NEW QUESTION # 42
Which of the following is a common way that dishonest contractors collude to evade the competitive bidding process?
- A. Submitting invoices for work that was not performed on joint projects
- B. Arranging an agreement with competitors to divide and allocate markets
- C. Submitting bids on fake contracts to give the appearance of genuine competition
- D. Using different publications to publish their bid solicitations
Answer: B
Explanation:
Detailed Explanation:
* Rationale for Correct Answer: Market division and allocation agreements are a classic bid-rigging scheme in which contractors collude to evade competition by assigning territories, customers, or project types among themselves. This undermines free and open competition.
* Analysis of Incorrect Options:
* B - Fake contracts are not a recognized collusion tactic in competitive bidding.
* C - Publishing solicitations in different outlets does not evade competition.
* D - Submitting false invoices is fraud, but it occurs after contract award , not during the bidding process.
* Key Concept: Bid rigging and collusion in procurement fraud.
Reference: ACFE Manual, Corruption - Procurement and Bid-Rigging Schemes .
NEW QUESTION # 43
An organization that plans to continue as a going concern files for bankruptcy. In accordance with the World Bank Principles for Effective Insolvency and Creditor/Debtor Regimes, which of the following approaches is MOST APPROPRIATE regarding governance and management of the bankruptcy proceedings?
- A. An independent insolvency representative may supervise existing corporate management.
- B. The organization's creditors may elect a representative responsible for managing the organization.
- C. The entity's management must share control of governance responsibilities with its creditors.
- D. Exclusive control of the bankruptcy proceedings should be entrusted to the entity's secured creditors.
Answer: A
Explanation:
The correct answer is B. When a debtor organization intends to continue as a going concern, effective insolvency practice may permit existing management to remain involved, subject to oversight by an independent insolvency representative. This approach balances operational continuity with creditor protection, transparency, and accountability. Exclusive control by secured creditors is inappropriate because insolvency proceedings must consider the legal framework and the rights of all affected parties. Creditors may have participation rights, but they do not automatically manage the organization. Mandatory shared governance between management and creditors is also not the best statement of the World Bank Principles.
Professionally, the independent representative's role is to supervise, preserve value, investigate improper transactions, and protect the integrity of the process.
NEW QUESTION # 44
Aleksander, a Certified Fraud Examiner (CFE), is attempting to identify potential indicators of intrusion into his organization's computer network. Which of the following signs might indicate that an intrusion has occurred?
- A. Members of leadership receive a reminder to change their login passwords before they expire.
- B. Network users receive data from a country where one of the organization's clients is located.
- C. Users are denied access to network files they typically use in their organizational role.
- D. Updates are automatically installed to the operating systems of computers on the network.
Answer: C
Explanation:
The correct answer is D. Users being denied access to files they normally use is a significant indicator of possible network intrusion. Such denial might result from unauthorized permission changes, malware, ransomware encryption, account compromise, or malicious alteration of access controls. In a professional fraud examination context, this condition should trigger immediate incident-response procedures, including review of system logs, firewall records, router logs, and affected files. Options A and C describe routine security and system maintenance activities. Option B is not inherently suspicious because the country has a legitimate client connection. The ACFE computer and internet fraud materials emphasize that compromised systems should be treated as suspect and reviewed for irregularities and abnormal activity.
NEW QUESTION # 45
Which of the following fraud schemes is MOST LIKELY to target members of a religious community?
- A. Advance-fee scheme
- B. Social control fraud
- C. Bait and switch scheme
- D. Affinity fraud
Answer: D
Explanation:
Detailed Explanation:
* Rationale for Correct Answer: Affinity fraud occurs when fraudsters exploit trust within identifiable groups-such as religious, ethnic, or professional communities-making members more susceptible to deception.
* Analysis of Incorrect Options:
* B - Social control fraud relates to control fraud by institutions, not religious targeting.
* C - Bait and switch is a deceptive sales tactic, not specific to religious groups.
* D - Advance-fee scams may target anyone, not specifically religious communities.
* Key Concept: Affinity fraud as a corruption/exploitation scheme.
Reference: ACFE Manual, Corruption - Affinity Fraud .
NEW QUESTION # 46
Which of the following is NOT a measure that is commonly taken by fraudsters during account takeover schemes?
- A. Using log-in credentials that have been stolen from one account to attempt to gain access to other payment accounts
- B. Obtaining email addresses and other account log-in information by sending phishing emails
- C. Placing orders for products or transferring funds from the overtaken accounts
- D. Ensuring that the contact information for the overtaken account remains the same to avoid alerting the true account holder
Answer: D
Explanation:
Detailed Explanation:
* Rationale for Correct Answer: Fraudsters typically change the contact information (e.g., phone number, email) to prevent the true account holder from receiving alerts about suspicious activity.
Leaving the contact information unchanged would risk detection. Thus, option B is NOT a common fraudster tactic.
* Analysis of Incorrect Options:
* A - True; fraudsters steal funds or make purchases.
* C - True; known as "credential stuffing" or account chaining.
* D - True; phishing is a primary way to obtain credentials.
* Key Concept: Cyber-enabled fraud - account takeover schemes.
Reference: ACFE Manual, Fraud Prevention and Deterrence - Account Takeover Fraud .
NEW QUESTION # 47
Oona goes to an expensive restaurant for lunch while on a business trip and pays for the meal with a company credit card. She later submits an expense reimbursement claim for several expenses she paid for using a personal credit card while on the trip and includes the receipt from the lunch. Oona's scheme can BEST be characterized as:
- A. An overstated expense reimbursement scheme
- B. A multiple expense reimbursement scheme
- C. A fictitious expense reimbursement scheme
- D. A mischaracterized expense reimbursement scheme
Answer: B
Explanation:
The correct answer is A. Oona's conduct is a multiple expense reimbursement scheme because she is attempting to obtain reimbursement for an expense that the company has already paid through the company credit card. In expense reimbursement fraud, multiple reimbursement schemes occur when an employee submits the same expense more than once, or submits an expense paid through one channel as though it was paid personally. This differs from a mischaracterized expense, where a personal cost is falsely described as business-related. It also differs from an overstated expense, where the amount is inflated, and from a fictitious expense, where no expense occurred. The key issue is duplicate recovery of the same lunch expense.
NEW QUESTION # 48
Which of the following scenarios is an example of upcoding?
- A. Dr. Catz spends 15 minutes with a patient. She later submits a bill to the patient's insurance company using a code that corresponds to an office visit lasting 60 minutes.
- B. Steven receives medical services prior to his new insurance going into effect. Before submitting the claim, he changes the service date on his bill so that it will be covered by insurance.
- C. Hope is diagnosed with an ear infection. Hope's doctor writes her a prescription for a name brand medication instead of prescribing a less expensive generic medication.
- D. Dr. Smith performed a hysterectomy on Roberta. Dr. Smith submits an insurance claim using three procedure codes instead of the single code normally used for a hysterectomy.
Answer: A
Explanation:
Detailed Explanation:
* Rationale for Correct Answer: Upcoding occurs when a provider bills for a higher level of service than what was actually provided. Billing a 15-minute visit as a 60-minute visit is a classic upcoding scheme.
* Analysis of Incorrect Options:
* A. Name brand prescription - Not upcoding; this is prescribing choice, not billing fraud.
* B. Multiple codes instead of one - This is unbundling , not upcoding.
* D. Changing service date - This is falsifying service dates , not upcoding.
* Key Concept: Health care billing fraud - upcoding vs. unbundling.
Reference: ACFE Fraud Examiners Manual (2020) , Fraudulent Disbursements: Health Care Fraud .
NEW QUESTION # 49
Which of the following is an example of a cash larceny scheme?
- A. Paul sold insurance policies to individuals but never filed the policies with the insurance company. He then stole the customers' payments, which he was able to do because the insurance company did not know the policies existed.
- B. Sarah returned a $250 mirror to the store. Jenna, the cashier, recorded a $350 return on the cash register and kept the remaining $100.
- C. Mark, a cashier, knew the access code for Joe's cash register. He logged in as Joe and processed transactions as usual. He then took $50 from the register at the end of his shift.
- D. Emily is an accounts receivable clerk. She stole Customer A's monthly payment. When Customer B's payment arrived, she applied it to Customer A's account. When Customer C's payment arrived, she applied it to Customer B's account.
Answer: C
Explanation:
Detailed Explanation:
* Rationale for Correct Answer: Cash larceny involves stealing cash after it has been recorded .
Mark stole $50 directly from the register after recording sales, which is a cash larceny scheme.
* Analysis of Incorrect Options:
* A. Paul's scheme - This is skimming (off-book theft), not larceny.
* B. Emily's scheme - This is a lapping scheme (concealing theft of receivables), not pure larceny.
* C. Sarah/Jenna - This is an overstated refund scheme (fraudulent disbursement), not larceny.
* Key Concept: Cash larceny vs. skimming vs. fraudulent disbursements.
Reference: ACFE Fraud Examiners Manual (2020) , Cash Receipts: Larceny Schemes .
NEW QUESTION # 50
Which of the following is the MOST APPROPRIATE technique for detecting a cost mischarging scheme?
- A. Examining any change orders submitted by a contractor that add new items
- B. Reviewing the inspection and testing reports of questioned goods or materials
- C. Comparing the direct and indirect labor account totals from the prior year to the current year
- D. Inspecting questioned goods or materials by examining packaging, appearance, and description
Answer: C
Explanation:
Detailed Explanation:
* Rationale for Correct Answer: Cost mischarging occurs when costs are charged to improper accounts or contracts. The best way to detect it is through analytical review -comparing direct vs.
indirect labor account totals across periods to identify unusual shifts or spikes.
* Analysis of Incorrect Options:
* A. Reviewing inspection/testing reports - Effective for detecting defective/substituted goods, not mischarging.
* C. Inspecting packaging - Identifies product substitution, not accounting mischarges.
* D. Examining change orders - Useful for contract fraud, but not direct mischarging.
* Key Concept: Cost mischarging detection through analytical procedures .
Reference: ACFE Fraud Examiners Manual (2020) , Fraudulent Disbursements: Contract and Procurement Fraud .
NEW QUESTION # 51
Skimming is:
- A. The addition of cash from a victim entity prior to its entry in an accounting system.
- B. None of above
- C. The removal of cash from a victim entity after its entry in an accounting system.
- D. The removal of cash from a victim entity prior to its entry in an accounting system.
Answer: D
Explanation:
Detailed Explanation:
* Rationale for Correct Answer: Skimming is defined as the theft of cash before it is recorded in the books . Because the stolen funds are never entered into the accounting system, this is often referred to as an "off-book" fraud. It is distinct from cash larceny , which occurs after cash has been recorded.
* Analysis of Incorrect Options:
* B. The addition of cash - Incorrect; skimming involves removal, not addition.
* C. Removal after entry - This describes cash larceny, not skimming.
* D. None of above - Incorrect since option A is correct.
* Key Concept: Skimming schemes - off-book cash theft.
Reference: ACFE Fraud Examiners Manual (2020 International Edition) , Cash Receipts - Skimming Schemes .
NEW QUESTION # 52
People commit financial statement fraud to:
- A. Stand outside the accounting system
- B. Maintain personal income
- C. Preserve personal status/control
- D. Conceal false business performances
Answer: D
Explanation:
Reference: ACFE Fraud Examiners Manual (2020 International Edition) , Financial Statement Fraud - Motivations and Incentives .
NEW QUESTION # 53
Placing any restriction in the solicitation documents that tend to restrict competition is called prebid solicitation.
- A. True
- B. False
Answer: B
Explanation:
Detailed Explanation:
* Rationale for Correct Answer: This is False . Placing restrictions in solicitation documents that limit competition is a solicitation phase corruption scheme , not "prebid solicitation." The correct terminology is restrictive specifications or fraudulent solicitation practices .
* Analysis of Incorrect Options:
* A. True - Incorrect, as "prebid solicitation" is not the proper term.
* Key Concept: Restrictive solicitation practices limit competition unfairly.
Reference: ACFE Fraud Examiners Manual (2020 International Edition) , Corruption - Solicitation Phase Schemes .
NEW QUESTION # 54
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