FRAUD EXAMINATION SCRIPT
COMPREHENSIVE STUDY GUIDE
QUESTIONS ANSWERS
◉ Financial statement fraud often occurs in companies that are
experiencing net losses or have profits much less than expected:
Answer: True
◉ Employee Embezzlement Answer: Employees deceive their
employers by taking company assets
-Most common type of fraud
◉ Vendor Fraud Answer: Results in either an overcharge for
purchased goods, the shipment of inferior goods, or the
nonshipment of goods even though payment is made
◉ Customer Fraud Answer: Customers don't pay, pay too little, or get
too much from the organization through deception
◉ Management Fraud Answer: Management manipulates the
financial statements to make the company look better (or worse in
the case of tax fraud) than it is.
-This is the most expensive type of fraud
,victim: shareholders or debt-holders
◉ Investment scams and other consumer frauds Answer: Are
committed on the internet or in person and obtain the confidence of
individuals to get them to invest money in a worthless scheme
◉ Other (miscellaneous) types of fraud Answer: Anytime anyone
takes advantage of the confidence of another person to deceive him
or her
◉ Most common consumer fraud schemes: Answer: - Ponzi scheme
(lure investment funds from victims and then pay those victims a
premium or interest from money that is paid by subsequent
investors)
-Telemarketing fraud
-Nigerian letter or money scams
-Identity theft
-Advance fee scams
-Redemption/strawman/bond fraud
-Letter of credit fraud
-Internet fraud
◉ Legal definition of fraud with 7 elements: Answer: 1. A
representation
, 2. About a material point
3. which is false
4. and intentionally or recklessly so
5.which is believed
6. and acted upon by the victim
7. to the victims damage
◉ What was the intended lesson of the Obvious Fraud interview
scenario? (Where Hannah and Hanna approached him) Answer: The
intention was to show us that sometimes its not best to immediately
approach a fraudster. Waiting and gathering more evidence and start
an investigation is best.
◉ 4 Phases of Fraud Examination Answer: 1. Prevention (best to
spend the most time and money here)
2. Detection: awareness that something is going wrong
-an audit & accidential findings
3. Investigation: building a case that could possibly go to court or
calling an outside party in to help
4. Resolution: the outcome, what is the company going to do about
it?
◉ Four parts of the CFE Examination Answer: 1. Law (part attorney)
2. Accounting (part accountant)
COMPREHENSIVE STUDY GUIDE
QUESTIONS ANSWERS
◉ Financial statement fraud often occurs in companies that are
experiencing net losses or have profits much less than expected:
Answer: True
◉ Employee Embezzlement Answer: Employees deceive their
employers by taking company assets
-Most common type of fraud
◉ Vendor Fraud Answer: Results in either an overcharge for
purchased goods, the shipment of inferior goods, or the
nonshipment of goods even though payment is made
◉ Customer Fraud Answer: Customers don't pay, pay too little, or get
too much from the organization through deception
◉ Management Fraud Answer: Management manipulates the
financial statements to make the company look better (or worse in
the case of tax fraud) than it is.
-This is the most expensive type of fraud
,victim: shareholders or debt-holders
◉ Investment scams and other consumer frauds Answer: Are
committed on the internet or in person and obtain the confidence of
individuals to get them to invest money in a worthless scheme
◉ Other (miscellaneous) types of fraud Answer: Anytime anyone
takes advantage of the confidence of another person to deceive him
or her
◉ Most common consumer fraud schemes: Answer: - Ponzi scheme
(lure investment funds from victims and then pay those victims a
premium or interest from money that is paid by subsequent
investors)
-Telemarketing fraud
-Nigerian letter or money scams
-Identity theft
-Advance fee scams
-Redemption/strawman/bond fraud
-Letter of credit fraud
-Internet fraud
◉ Legal definition of fraud with 7 elements: Answer: 1. A
representation
, 2. About a material point
3. which is false
4. and intentionally or recklessly so
5.which is believed
6. and acted upon by the victim
7. to the victims damage
◉ What was the intended lesson of the Obvious Fraud interview
scenario? (Where Hannah and Hanna approached him) Answer: The
intention was to show us that sometimes its not best to immediately
approach a fraudster. Waiting and gathering more evidence and start
an investigation is best.
◉ 4 Phases of Fraud Examination Answer: 1. Prevention (best to
spend the most time and money here)
2. Detection: awareness that something is going wrong
-an audit & accidential findings
3. Investigation: building a case that could possibly go to court or
calling an outside party in to help
4. Resolution: the outcome, what is the company going to do about
it?
◉ Four parts of the CFE Examination Answer: 1. Law (part attorney)
2. Accounting (part accountant)
