Fraud Detection Exam 1 Questions and Answers Fully Solved Latest Version 2025-2026
The following data can be used to perform benchmarking. - AnswersHistorical data,
Industry data,
Budget data
Match social security number to the employee name to see if there are multiple names under one social
security number. This is a _________. - AnswersDuplicate testing
Why do we need to identify the amounts just below the threshold? - AnswersFraudster try to avoid
internal control by using the number lower than threshold and maximize his/her benefit from fraud.
Why do we need to look into the round-dollar payment? - AnswersReal transactions do not occur in
simple round numbers.
Benford's law can be used to detect fraud because: - AnswersThe frequency of the nature numbers has
pattern.
Why do we need to understand how the data is generated when we perform the analysis? -
Answers(Garbage in, garbage out.) If the data is not generated or structured properly, the results are
meaningless.
Data analytics is the best way of detecting fraud or fraud prevention. T/F ? - AnswersFalse
Prevention is more important than detection. T/F ? - AnswersTrue
Which category of occupational fraud is the most common fraud? - AnswersAsset misappropriation
Which category of fraud is the costliest occupational fraud? - AnswersFinancial statement fraud
Please match the fraud detection method to active/passive method. - AnswersIT controls - Active
By police - Passive
Surveillance/Monitoring - Active
Confession - Passive
Management review - Active
A fraudulent disbursement scheme in which an employee causes his or her employer to issue a payment
by making false claims for compensation (e.g., employee claims overtime for hours not worked;
employee adds ghost employees to the payroll) - AnswersPayroll scheme
, A scheme in which an employee misuses his or her influence in a business transaction in a way that
violates his or her duty to the employer in order to gain a direct or indirect benefit (e.g., schemes
involving bribery or conflicts of interest) - AnswersCorruption
A fraudulent disbursement scheme in which an employee makes a claim for reimbursement of fictitious
or inflated business expenses (e.g., employee files fraudulent expense report, claiming personal travel,
nonexistent meals) - AnswersExpense reimbursements scheme
A scheme in which an incoming payment is stolen from an organization before it is recorded on the
organization's books and records (e.g., employee accepts payment from a customer but does not record
the sale and instead pockets the money) - AnswersSkimming
Which of the fraud is not a sub-schemes under asset misappropriation? - AnswersConflict of interest
The most common way of detection of occupational fraud initially is? - AnswersTips
What is the top one control weakness in nonprofit organizations? - Answerslack of internal controls
Created fraudulent physical documentation, altered physical documents, create fraudulent transactions
in the accounting system are common ways used to conceal the frauds. T/F ? - AnswersTrue
What type of organization is the most often victims of occupational fraud? - AnswersPrivate company
What level of authority committed the most occupational fraud? - AnswersEmployee
Most perpetrators have a degree of? - AnswersUniversity degree
More than half of frauds were committed by two or more fraudsters working in collusion. T/F ? -
AnswersTrue
Internal control weaknesses were responsible for nearly half of the frauds. T/F ? - AnswersTrue
Skimming that involves the theft of sales receipts, as opposed to payment on accounts receivable. Sales
skimming schemes leave the victim organization's books in balance, because neither the sales
transaction nor the stolen funds are ever recorded. - AnswersSales skimming
A fraud occurs outside the financial system and therefore has no direct audit trail. - AnswersOff-book
fraud
A variation of a sales skimming scheme in which only a portion of the cash received in a sales transaction
is stolen. This type of fraud is not off-book, because the transaction is posed to the victim organization's
book but for a lower amount than the perpetrator collected from the customer. - AnswersUnderstate
sales
Skimming that involves the theft of incoming payments on accounts receivable. This form of skimming is
more difficult to detect than sales skimming because the receivables are already recorded on the victim
organization's books. In other words, the incoming payments are expected by the victim organization.
The following data can be used to perform benchmarking. - AnswersHistorical data,
Industry data,
Budget data
Match social security number to the employee name to see if there are multiple names under one social
security number. This is a _________. - AnswersDuplicate testing
Why do we need to identify the amounts just below the threshold? - AnswersFraudster try to avoid
internal control by using the number lower than threshold and maximize his/her benefit from fraud.
Why do we need to look into the round-dollar payment? - AnswersReal transactions do not occur in
simple round numbers.
Benford's law can be used to detect fraud because: - AnswersThe frequency of the nature numbers has
pattern.
Why do we need to understand how the data is generated when we perform the analysis? -
Answers(Garbage in, garbage out.) If the data is not generated or structured properly, the results are
meaningless.
Data analytics is the best way of detecting fraud or fraud prevention. T/F ? - AnswersFalse
Prevention is more important than detection. T/F ? - AnswersTrue
Which category of occupational fraud is the most common fraud? - AnswersAsset misappropriation
Which category of fraud is the costliest occupational fraud? - AnswersFinancial statement fraud
Please match the fraud detection method to active/passive method. - AnswersIT controls - Active
By police - Passive
Surveillance/Monitoring - Active
Confession - Passive
Management review - Active
A fraudulent disbursement scheme in which an employee causes his or her employer to issue a payment
by making false claims for compensation (e.g., employee claims overtime for hours not worked;
employee adds ghost employees to the payroll) - AnswersPayroll scheme
, A scheme in which an employee misuses his or her influence in a business transaction in a way that
violates his or her duty to the employer in order to gain a direct or indirect benefit (e.g., schemes
involving bribery or conflicts of interest) - AnswersCorruption
A fraudulent disbursement scheme in which an employee makes a claim for reimbursement of fictitious
or inflated business expenses (e.g., employee files fraudulent expense report, claiming personal travel,
nonexistent meals) - AnswersExpense reimbursements scheme
A scheme in which an incoming payment is stolen from an organization before it is recorded on the
organization's books and records (e.g., employee accepts payment from a customer but does not record
the sale and instead pockets the money) - AnswersSkimming
Which of the fraud is not a sub-schemes under asset misappropriation? - AnswersConflict of interest
The most common way of detection of occupational fraud initially is? - AnswersTips
What is the top one control weakness in nonprofit organizations? - Answerslack of internal controls
Created fraudulent physical documentation, altered physical documents, create fraudulent transactions
in the accounting system are common ways used to conceal the frauds. T/F ? - AnswersTrue
What type of organization is the most often victims of occupational fraud? - AnswersPrivate company
What level of authority committed the most occupational fraud? - AnswersEmployee
Most perpetrators have a degree of? - AnswersUniversity degree
More than half of frauds were committed by two or more fraudsters working in collusion. T/F ? -
AnswersTrue
Internal control weaknesses were responsible for nearly half of the frauds. T/F ? - AnswersTrue
Skimming that involves the theft of sales receipts, as opposed to payment on accounts receivable. Sales
skimming schemes leave the victim organization's books in balance, because neither the sales
transaction nor the stolen funds are ever recorded. - AnswersSales skimming
A fraud occurs outside the financial system and therefore has no direct audit trail. - AnswersOff-book
fraud
A variation of a sales skimming scheme in which only a portion of the cash received in a sales transaction
is stolen. This type of fraud is not off-book, because the transaction is posed to the victim organization's
book but for a lower amount than the perpetrator collected from the customer. - AnswersUnderstate
sales
Skimming that involves the theft of incoming payments on accounts receivable. This form of skimming is
more difficult to detect than sales skimming because the receivables are already recorded on the victim
organization's books. In other words, the incoming payments are expected by the victim organization.
