Helping Hand Questions for CFE-Financial-Transactions-and-Fraud-Schemes

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.

Detailed Explanation:

Rationale for Correct Answer:The word delude means to mislead the mind or judgment so completely that the truth is obscured. In fraud examination, this aligns with the ACFE definition of fraud as a “deliberate misrepresentation that causes another to act to their detriment.” Fraud is not merely a false statement; it involves concealment or suppression of the truth with the intent to induce reliance. Thus, delude most accurately represents the deeper essence of fraud.

Analysis of Incorrect Options (Distractors):

A. Deceive: While fraud does involve deception, this word does not fully convey the thoroughness of obscuring the truth that fraud entails.

C. Mislead: This implies causing error or leading astray but lacks the complete concealment aspect central to fraud.

D. Beguile: Often connotes charm or trickery rather than the intentional concealment that characterizes fraud.

Key Concept:This question tests the definition and essence of fraud — specifically that fraud is not only about deceiving but about deluding, or thoroughly misleading, in a way that obscures the truth.

Detailed Explanation:

Rationale for Correct Answer:Employees involved in bribery or corruption schemes often exhibit lifestyle red flags such as gambling habits, drug/alcohol addiction, or extravagant spending. These behaviors create financial pressures that may motivate or result from corrupt activity.

Analysis of Incorrect Options:

A, B, C individually – Each is a red flag, but the most accurate answer is all of the above.

Key Concept:Behavioral red flags in corruption cases.

Detailed Explanation:

Rationale for Correct Answer:In a legitimate competitive bidding process, all bidders must be treated equally, with the same access to information, terms, and conditions. This ensures fairness and prevents procurement fraud.

Analysis of Incorrect Options:

A. Bid-rigging – The manipulation of competitive bidding, not the fair process.

B. Kickbacks – Involve secret payments, not equal bidding.

D. Bid solicitation – The stage of inviting bids, not the equal treatment requirement.

Key Concept:Competitive bidding — foundation of fairness in procurement.