Selected CFE- Fraud-Schemes-and-Financial-Crimes Certified Fraud Examiner Questions Answers

Detailed Explanation:

Rationale for Correct Answer: Properly shredded documents using a cross-cut shredder are very difficult to reconstruct, making them not a common medium for information leaks. By contrast, shareholder reports, executive speeches, and workstation displays often contain sensitive data that can be exploited by competitors or fraudsters.

Analysis of Incorrect Options:

A – Shareholder reports can reveal strategy and financial vulnerabilities.

C – Executive speeches sometimes unintentionally disclose sensitive plans.

D – Information left visible at workstations is a known security risk.

Key Concept: Protection of proprietary information against espionage and fraud.

The correct answer is D. Front businesses are attractive for money laundering because they allow illegal proceeds to be mixed with legitimate revenue, especially where cash sales are common and expenses are variable. Bars, restaurants, nightclubs, and similar businesses can make it difficult to reconcile actual customer activity with reported revenue and operating costs. This makes it easier to overstate revenues, inflate expenses, or insert illicit funds into the business records. Option A is inaccurate because money launderers might pay taxes on falsely reported income to make the funds appear legitimate. Option B is incorrect because a front may show high income despite low visible customer activity. Option C is too narrow and inaccurate because these businesses often involve variable purchases and pricing.

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The correct answer is C. Multifactor authentication is an effective preventive control for electronic funds transfer fraud because it requires users to verify their identity through more than one authentication factor before initiating or approving payments. This reduces the risk that stolen usernames, passwords, or account credentials alone will allow unauthorized transfers through EBPP or P2P systems. Option A is unsafe because sending PINs, usernames, and passwords together increases exposure if the communication is intercepted. Option B is also poor practice because sensitive credentials should be encrypted. Option D weakens segregation of duties by allowing one employee to control both PIN issuance and access device information. The ACFE materials emphasize authentication, access controls, and segregation of duties in preventing EFT fraud.

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The correct answer is B. Register disbursement schemes usually involve false refunds or false voids that cause cash to be removed from the register while the records appear to justify the disbursement. An unusually high number of refunds on the register log is a red flag because it might indicate that employees are creating fictitious refund transactions to conceal cash theft. Option A is not suspicious by itself because no gaps in transaction numbers suggests record continuity. Option C is less suspicious because supervisory approval exists, although approvals should still be reviewed. Option D is generally a positive control because supporting documents should exist for voided transactions. The ACFE materials identify refund and void activity as key areas for detecting register disbursement schemes.

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