Certified Fraud Examiner Changed CFE-Financial-Transactions-and-Fraud-Schemes Questions

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.

Comprehensive and Detailed Explanation From the ACFE Financial Transactions and Fraud Schemes Manual

The ACFE Fraud Examiners Manual (2020 International Edition), under the section on Information Security in Electronic Commerce Systems, describes the three primary security goals that must be achieved to protect users and account holders:

Confidentiality

Integrity

Availability

These three goals form the cornerstone of information system protection and are often referred to as the CIA triad.

1. Confidentiality

Confidentiality ensures that sensitive information is accessible only to authorized individuals. The Manual highlights that e-commerce systems must protect customers’ personal and financial data from unauthorized access.

2. Integrity

Integrity requires that the information in the system is accurate and has not been improperly altered. This prevents fraudulent manipulation of records, transactions, and account balances.

3. Availability

Availability ensures that systems and data are accessible to authorized users when needed. This includes preventing disruptions caused by system failures, denial-of-service attacks, or internal sabotage.

These three goals are explicitly documented in the ACFE Manual as essential security requirements for safeguarding electronic financial systems.

Why Option C is the Correct Answer

“Penetrability of data” is NOT an information security goal.

In fact, it is the opposite of what an information security framework seeks to achieve. No section of the ACFE Manual identifies "penetrability" as a required or legitimate objective. Instead, systems should be resistant to penetration attempts.

Thus, Option C does not belong to the CIA model or any ACFE-described security framework.

ACFE Manual Reference

These concepts are covered in the Financial Transactions and Fraud Schemes section discussing information security objectives for e-commerce environments, which identifies confidentiality, integrity, and availability as the foundational goals of secure systems.

Detailed Explanation:

Rationale for Correct Answer:The ACFE describes occupational fraud and abuse as an expense of doing business because organizations inevitably face losses from it, just as they incur other operating costs. This framing emphasizes the importance of prevention and detection to minimize this “expense.”

Analysis of Incorrect Options:

A. Equity – Residual ownership interest, not relevant here.

B. Balance sheet – A report, not a cost.

D. Financial record – Too vague.

Key Concept:Occupational Fraud as a Cost of Business.

Detailed Explanation:

Rationale for Correct Answer:When a tangible asset is stolen (removed from the books), a debit entry would be missing its corresponding credit, leaving the books out-of-balance. Fraudsters often conceal this imbalance by falsifying entries (e.g., creating fictitious expenses or adjusting asset accounts).

Analysis of Incorrect Options:

A. Journal Entries – Too general; not the condition of the books.

C. False debits – A concealment method, but not the direct result.

D. None of all – Incorrect because “out-of-balance” is accurate.

Key Concept:Concealment of asset theft and impact on accounting records.