ACFE CFE - Financial Transactions and Fraud Schemes Exam Practice Questions (P. 1)
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Question #1
Which of the following is a red flag that might indicate the existence of a need recognition scheme?
- AThe purchasing entity’s materials are being ordered at the optimal reorder point.
- BThe purchasing entity has a large list of backup suppliers.
- CThe purchasing entity has unusually high requirements for stock and inventory levels.
- DThe purchasing entity has few surplus items written off as scrap.
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Question #2
Which of the following is NOT a distinguishing feature of a Ponzi scheme?
- AParticipants attempt to recruit as many new members as possible.
- BPrevious investors are paid with money from new members.
- CParticipants believe that they are making a legitimate investment.
- DPromoters of Ponzi schemes engage in little or no valid commerce or investments.
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Question #3
Geoffrey, a homeowner, has decided to add a patio to the back of his house. Geoffrey hires a contractor who insists on receiving payment up front so that he can pay for the materials required to complete the construction. The following week, Geoffrey is surprised to learn that the contractor has not arrived and is not answering his phone calls. Geoffrey has MOST LIKELY been victimized by which of the following frauds?
- ADeposit scheme
- BScavenger scheme
- CBlock hustle scheme
- DAdvance-fee scheme
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Question #4
Neil, a Certified Fraud Examiner (CFE), discovers that a borrower used the same property as a security, or guarantee, to obtain multiple loans from different financial institutions before they were recorded on his credit report. Which type of loan fraud BEST describes the scheme Neil uncovered?
- ASingle-family housing loan fraud
- BLinked financing
- CDouble-pledging collateral
- DReciprocal loan arrangements
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Question #5
Which of the following is a common red flag of a bid tailoring scheme?
- AChanges in contract specifications from previous proposals are explained in detail.
- BThe procuring entity rebids contracts because fewer than the minimum number of bids are received.
- CNumerous bidders respond to the procuring entity’s bid requests.
- DThere are unusually broad specifications for the type of goods being procured.
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