Certified Fraud Examiner (CFE®) Exam Prep 2026 Latest
Comprehensive Study Guide with Practice Questions Fraud
Examination Review, Detailed Rationales, Verified Answers,
Success Workbook
Content Coverage by Section:
• Fraud Schemes and Financial Crimes: Accounting concepts, financial
statement fraud, asset misappropriation (cash receipts, fraudulent
disbursements, inventory/assets), corruption, and other fraud schemes
• Fraud Investigations and Legal Issues: Employee rights, evidence
collection and rules, data analysis, interviewing, report writing, and
navigating the legal system
• Fraud Prevention and Deterrence: Corporate governance, fraud risk
assessment, fraud prevention programs, management and auditor roles,
and ethical considerations
• Question Format: Multiple Choice & True/False
• Answer Key: The correct answer is bolded and highlighted in each
rationale.
• Tip: Cover the rationale and try to answer each question independently
first.
SECTION 1: FRAUD SCHEMES AND FINANCIAL CRIMES (Questions 1–50)
1. Which of the following is the MOST common type of occupational
fraud according to the ACFE's occupational fraud research?
A) Financial statement fraud
B) Corruption
C) Asset misappropriation
D) Cyber fraud
,Rationale:
• A is incorrect: Financial statement fraud, while significant in impact, is
the least common type of occupational fraud by frequency.
• B is incorrect: Corruption is the second most common category of
occupational fraud, but asset misappropriation occurs more frequently.
• C is correct: Asset misappropriation is the most common type of
occupational fraud, representing the vast majority of fraud cases
reported in the ACFE's occupational fraud research. It involves the theft
or misuse of an organization's assets.
• D is incorrect: Cyber fraud, while growing, is not the most common
type of occupational fraud overall.
2. An employee steals cash receipts from customers and conceals the
theft by creating fictitious credit memos. This scheme is an example of:
A) Skimming
B) Lapping
C) Shell company scheme
D) Check tampering
Rationale:
• A is correct: Skimming is the theft of cash before it is recorded in the
accounting system. Creating fictitious credit memos to conceal the theft
is a common skimming concealment method.
• B is incorrect: Lapping involves applying subsequent customer
payments to cover the theft of earlier payments—a different
concealment technique.
• C is incorrect: A shell company scheme involves creating a fictitious
vendor to generate fraudulent payments.
• D is incorrect: Check tampering involves the theft of cash by altering or
forging checks.
,3. A sales manager receives a kickback from a supplier in exchange for
awarding a contract to that supplier. This is an example of which fraud
category?
A) Asset misappropriation
B) Corruption
C) Financial statement fraud
D) Larceny
Rationale:
• A is incorrect: Asset misappropriation involves the theft of company
assets directly. While the kickback is a form of theft, it falls under
corruption.
• B is correct: Corruption includes schemes such as bribery, kickbacks,
and conflicts of interest. Accepting a kickback in exchange for
awarding a contract is a classic corruption scheme.
• C is incorrect: Financial statement fraud involves the intentional
misrepresentation of financial information.
• D is incorrect: Larceny involves the direct theft of assets without
concealment.
4. Which of the following concealment methods is MOST commonly used
to cover up asset misappropriation?
A) Creating fictitious journal entries
B) Destroying physical evidence
C) Confessing to the fraud
D) Repaying the stolen funds
Rationale:
• A is correct: Creating fictitious journal entries is one of the most
common concealment methods used by fraud perpetrators to hide the
theft of assets. These entries can artificially inflate assets or reduce
liabilities to balance the books.
, • B is incorrect: Destroying physical evidence may occur but is less
common than accounting concealment.
• C is incorrect: Confession is an outcome, not a concealment method.
• D is incorrect: Repayment may occur but is not a concealment method.
5. The fraud triangle consists of which three elements?
A) Opportunity, Pressure, and Rationalization
B) Opportunity, Collusion, and Concealment
C) Pressure, Greed, and Collusion
D) Rationalization, Concealment, and Conversion
Rationale:
• A is correct: The fraud triangle (developed by criminologist Donald
Cressey) identifies three conditions that are typically present when
fraud occurs: Opportunity (the ability to commit
fraud), Pressure (financial or other incentives),
and Rationalization (the mental justification for the fraudulent act).
• B is incorrect: Collusion and concealment are not elements of the fraud
triangle; they are methods used in fraud schemes.
• C is incorrect: Greed may be a motivating factor, but it is not one of the
three elements of the fraud triangle.
• D is incorrect: Concealment and conversion are part of the fraud act,
not the conditions that enable it.
6. The theft of trade secrets and proprietary information is classified
under which fraud category?
A) Asset misappropriation - inventory
B) Corruption and bribery
C) Other fraud schemes
D) Financial statement fraud
Rationale:
Comprehensive Study Guide with Practice Questions Fraud
Examination Review, Detailed Rationales, Verified Answers,
Success Workbook
Content Coverage by Section:
• Fraud Schemes and Financial Crimes: Accounting concepts, financial
statement fraud, asset misappropriation (cash receipts, fraudulent
disbursements, inventory/assets), corruption, and other fraud schemes
• Fraud Investigations and Legal Issues: Employee rights, evidence
collection and rules, data analysis, interviewing, report writing, and
navigating the legal system
• Fraud Prevention and Deterrence: Corporate governance, fraud risk
assessment, fraud prevention programs, management and auditor roles,
and ethical considerations
• Question Format: Multiple Choice & True/False
• Answer Key: The correct answer is bolded and highlighted in each
rationale.
• Tip: Cover the rationale and try to answer each question independently
first.
SECTION 1: FRAUD SCHEMES AND FINANCIAL CRIMES (Questions 1–50)
1. Which of the following is the MOST common type of occupational
fraud according to the ACFE's occupational fraud research?
A) Financial statement fraud
B) Corruption
C) Asset misappropriation
D) Cyber fraud
,Rationale:
• A is incorrect: Financial statement fraud, while significant in impact, is
the least common type of occupational fraud by frequency.
• B is incorrect: Corruption is the second most common category of
occupational fraud, but asset misappropriation occurs more frequently.
• C is correct: Asset misappropriation is the most common type of
occupational fraud, representing the vast majority of fraud cases
reported in the ACFE's occupational fraud research. It involves the theft
or misuse of an organization's assets.
• D is incorrect: Cyber fraud, while growing, is not the most common
type of occupational fraud overall.
2. An employee steals cash receipts from customers and conceals the
theft by creating fictitious credit memos. This scheme is an example of:
A) Skimming
B) Lapping
C) Shell company scheme
D) Check tampering
Rationale:
• A is correct: Skimming is the theft of cash before it is recorded in the
accounting system. Creating fictitious credit memos to conceal the theft
is a common skimming concealment method.
• B is incorrect: Lapping involves applying subsequent customer
payments to cover the theft of earlier payments—a different
concealment technique.
• C is incorrect: A shell company scheme involves creating a fictitious
vendor to generate fraudulent payments.
• D is incorrect: Check tampering involves the theft of cash by altering or
forging checks.
,3. A sales manager receives a kickback from a supplier in exchange for
awarding a contract to that supplier. This is an example of which fraud
category?
A) Asset misappropriation
B) Corruption
C) Financial statement fraud
D) Larceny
Rationale:
• A is incorrect: Asset misappropriation involves the theft of company
assets directly. While the kickback is a form of theft, it falls under
corruption.
• B is correct: Corruption includes schemes such as bribery, kickbacks,
and conflicts of interest. Accepting a kickback in exchange for
awarding a contract is a classic corruption scheme.
• C is incorrect: Financial statement fraud involves the intentional
misrepresentation of financial information.
• D is incorrect: Larceny involves the direct theft of assets without
concealment.
4. Which of the following concealment methods is MOST commonly used
to cover up asset misappropriation?
A) Creating fictitious journal entries
B) Destroying physical evidence
C) Confessing to the fraud
D) Repaying the stolen funds
Rationale:
• A is correct: Creating fictitious journal entries is one of the most
common concealment methods used by fraud perpetrators to hide the
theft of assets. These entries can artificially inflate assets or reduce
liabilities to balance the books.
, • B is incorrect: Destroying physical evidence may occur but is less
common than accounting concealment.
• C is incorrect: Confession is an outcome, not a concealment method.
• D is incorrect: Repayment may occur but is not a concealment method.
5. The fraud triangle consists of which three elements?
A) Opportunity, Pressure, and Rationalization
B) Opportunity, Collusion, and Concealment
C) Pressure, Greed, and Collusion
D) Rationalization, Concealment, and Conversion
Rationale:
• A is correct: The fraud triangle (developed by criminologist Donald
Cressey) identifies three conditions that are typically present when
fraud occurs: Opportunity (the ability to commit
fraud), Pressure (financial or other incentives),
and Rationalization (the mental justification for the fraudulent act).
• B is incorrect: Collusion and concealment are not elements of the fraud
triangle; they are methods used in fraud schemes.
• C is incorrect: Greed may be a motivating factor, but it is not one of the
three elements of the fraud triangle.
• D is incorrect: Concealment and conversion are part of the fraud act,
not the conditions that enable it.
6. The theft of trade secrets and proprietary information is classified
under which fraud category?
A) Asset misappropriation - inventory
B) Corruption and bribery
C) Other fraud schemes
D) Financial statement fraud
Rationale:
