Questions and Answers of Fraud Examination

To work as an entry-level CI special agent,a. You must be a U.S. citizen.b. You must not be older than 37 years of age.c. You must have completed a four-year course of study or earned a bachelor’s
If an audit reveals that an individual has underpaid his or her taxes, the auditor:a. Can assess civil fines.b. Can assess penalties.c. Can refer the case to the CI Division.d. An auditor can do all
Which of the following is not an example of tax fraud?a. Using a false SSN.b. Keeping two sets of financial books.c. Reporting information regarding passive income.d. Claiming a blind spouse as a
The Criminal Investigation Division’s chief responsibility is to:a. Detect taxpayers who willfully and intentionally violate their known legal duty of voluntarily filing an income tax return.b.
Which of the following is not a way that individuals can commit tax fraud?a. Overstating the amount of deductions.b. Keeping two sets of books.c. Paying the least amount of taxes the individual
Which of the following is an indicator of possible hiding of assets in a divorce?a. Assets transferred to an off-site location.b. Changing the title to assets.c. Payments made to fictitious
Which of the following is not an indicator of a possible bust-out?a. An address that is a post office box.b. New ownership of a company.c. Slow buildup of inventory.d. Dramatic increase in the size
The retention of a fraud investigator in a bankruptcy proceeding must be approved by the bankruptcy judge unless:a. The debtor’s estate pays the investigator.b. The trustee pays the investigator.c.
The person appointed by a bankruptcy judge in a Chapter 11 proceeding who investigates allegations of fraud or misconduct by the debtor or its principals is a(n):a. Creditor.b. Adjuster.c. Auditor.d.
Which of the following investigative methods would most likely be used more in divorce cases than in bankruptcy cases?a. Surveillance.b. Public records searches.c. Subpoena of private records.d.
Which of the following is the major reason why there is so much divorce fraud?a. Assets are being taken away from one divorce partner and given to another.b. Divorce proceedings usually take a long
Which of the following is the least likely symptom of a bust-out?a. Company’s only listed address is a post office box.b. Dramatic increase in size of credit orders.c. Public notice of change in
Which of the following is not a characteristic of an affidavit of proposed investigator?a. Content and extent of detail required do not vary by jurisdiction.b. Is prepared when a fraud investigator
Bankruptcy courts do not have which of the following responsibilities?a. Appointing trustees, examiners, and committees.b. Supervising bankruptcy petitions.c. Approving reorganization plans.d.
Which of the following describes a Chapter 13 bankruptcy?a. All assets are liquidated and used to pay creditors.b. Reorganizations can be used by individuals with debts less than $1 million.c. The
Which of the following is not a type of tax fraud?a. Using a false SSN.b. Overstating income.c. Keeping two sets of financial books.d. Claiming a dependent when you do not have one.
To work as an entry-level CI special agent, you must be at least 29 years of age. (True/False)
Tax fraud can be committed against state, federal, or local governments. (True/False)
The U.S. Department of Treasury is a branch of the IRS. (True/False)
Americans should pay the least amount of taxes they legally owe. (True/False)
The U.S. tax system is based on voluntary compliance. (True/False)
The IRS can add a 20 percent penalty to your tax bill for a careless mistake and a 75 percent penalty for tax fraud. (True/False)
A “planned bankruptcy” is usually referred to as a bust-out. (True/False)
The retention of a fraud investigator in a bankruptcy case must always be approved by the bankruptcy court’s judge. (True/False)
The purpose of civil laws is to “right a wrong” or send someone to jail or have them pay fines, whereas the purpose of criminal laws is to seek monetary remedies or recover stolen funds.
Most divorce-related fraud cases are civil rather than criminal. (True/False)
A debtor is the person or entity who is subject to a bankruptcy filing. (True/False)
Chapter 11 bankruptcies represent complete liquidation or shutting down of a business. (True/False)
Debtors in bankruptcy cases have the power to sue investigators over false accusations. (True/False)
Concealment of assets typically occurs on a larger scale for individuals filing for bankruptcy protection than it does for businesses filing for protection. (True/False)
Bust-out schemes usually involve the concealment of assets, sales proceeds, and inventory. (True/False)
Fraudulent transfers can occur up to two years before the debtor files for bankruptcy. (True/False)
A person acting as an officer in a bankruptcy case is prohibited from purchasing any property of the debtor’s estate. (True/False)
Civil bankruptcy cases are usually investigated by the FBI and other law enforcement agencies. (True/False)
In 2003, the FTC conducted a survey on the frequency and types of identity thefts perpetrated in the United States. The survey’s results are available online at
Those most susceptible to consumer fraud are often:a. Uneducated or elderly.b. Wealthy and prominent.c. Troubled with credit card debt.d. Lonely and depressed.
What is one way to determine if a Web site is secure or not?a. Look for the official logo of the company you want to deal with.b. Look for an “s” after the “http” in the URL of the Web
Which of the following institutions would not be very helpful to call in the event of identity theft?a. IRS.b. Social Security Administration.c. Local chamber of commerce.d. A credit reporting agency.
Which of the following is not listed in the chapter as a common characteristic of Nigerian scam letters?a. The promise of money to lure victims.b. Urgency to invest quickly.c. Picture of perpetrator
Which federal statute requires that credit reports can only be obtained for legitimate business needs?a. Title 15 U.S. Code § 1692.b. Final Rule—45 CFT Parts 160 and 165.c. Title 15 U.S. Code,
What does “https” stand for?a. Hypertext transfer protocol (secure).b. Hypertext transfer point (site).c. Hypertext transfer protocol (system).d. Hypertext transfer protocol (sign).
What is the best defense against consumer fraud?a. Signing up with the national do not call registry.b. Purchasing credit card insurance.c. Educating yourself about credit card risks.d. Calling the
Consumers should provide credit card numbers or bank account information over the telephone only when:a. They initiated the call and are purchasing a legitimate product.b. They are asked to give the
The major reason that elderly people are so susceptible to telemarketing fraud is that they:a. Are often financially in need.b. Have an excess amount of cash to invest.c. Are often lonely and enjoy
Which of the following is a common characteristic of fraudulent money offer letters?a. The letter will ask for help, convincing the victim that assistance is desperately needed.b. Through the letter,
If you become a victim of identity theft, you should first:a. Wait to see where the perpetrator is spending your money; then, using this information, plan an investigation with the local FBI
The Gramm-Leach-Bliley Act gives you the right to:a. Periodically change your Social Security number to avoid identity theft.b. Receive a yearly stipend to cover the losses incurred as a victim of
In order to protect yourself from identity theft, you should:a. Only give out your when purchasing a product online or over the telephone.b. Always shred receipts, credit card offers, doctor’s
Multilevel marketing companies:a. Are illegal.b. Increase their distribution process by recruiting additional company sales representatives.c. Can legally pay commission to representatives for simply
Phishing is the method of:a. Using e-mail or other Internet applications to deceive people into disclosing valuable personal information.b. Convincing a person to divulge personal information over
Since a Social Security card does not contain your photo, it is impossible to have your identity stolen by merely losing your Social Security card. (True/False)
A discarded tax return has enough information to steal someone’s identity. (True/False)
Because it is impossible to “market” at an assortment of levels, every multilevel marketing scheme is fraudulent. (True/False)
Only stupid people who are not careful are victims of consumer fraud. (True/False)
Consumer fraud only affects those who often use credit cards online. (True/False)
Congress outlawed pyramid organizations in the United States in 1934. (True/False)
Pyramid organizations eventually fail, causing all but a few investors to lose their investments. (True/False)
The National Processing Company was given authority by the FTC to pre-register consumers for the do not call registry. (True/False)
Once an identity theft victim has reported a fraud to the FTC, the FTC will help a victim contact the FBI, Secret Service, and local police to coordinate an investigation. (True/False)
By federal law, no organization or company can sell individuals’ personal information without their express written consent. (True/False)
The larger the amount requested by a fraudulent telemarketer, the easier it is for him or her to deceive victims. (True/False)
Elderly people are more susceptible to chain letter scams than any other type of fraud. (True/False)
Illegal multilevel marketing companies almost always focus their efforts on the recruiting of new members rather than on the selling of legitimate products. (True/False)
A fraud scam in which the perpetrator, falsely claiming to represent a foreign bank, tries to get victims to invest in nonexistent foreign venture capital companies for high returns is called a
The Gramm-Leach-Bliley Act states that it is illegal for organizations to share your personal information with any other party or individual. (True/False)
Keeping your wallet in your front pocket will help prevent it from being lost or stolen. (True/False)
The best way to prevent a fraudster from establishing a preapproved credit card in your name is to destroy all credit card applications as soon as you receive them. (True/False)
Identity theft can result in an individual’s loss of credit. (True/False)
One key element of skimming is that cash is taken:a. Directly from the cash register.b. When no one is watching.c. By someone who does not ordinarily have cash-handling responsibilities.d. Prior to
“Putting someone on the payroll who does not actually work for the victim company” is an example of a(n):a. Expense scheme.b. Payroll scheme.c. Register disbursement scheme.d. Commission scheme.
Which of the following is not one of the ACFE’s types of fraudulent disbursement?a. Check-tampering schemes.b. Skimming disbursement schemes.c. Expense schemes.d. Register disbursement schemes.
Which of the following is not true of billing schemes?a. The perpetrator takes physical possession of his or her employer’s cash.b. The perpetrator often sets up a “dummy” company.c. It is one
Which of the following is not considered a misappropriation of assets?a. Payroll disbursement schemes.b. Kickbacks.c. Expense schemes.d. Skimming.
Which of the following results in the highest loss per case?a. Expense tampering.b. Payroll schemes.c. Register disbursement schemes.d. Billing schemes.
Which of the following types of disbursement fraud occurs least frequently?a. Expense tampering.b. Payroll schemes.c. Register disbursement schemes.d. Billing schemes.
Which of the following is a major difference between larceny and skimming?a. Larceny is committed before the cash is entered into the accounting system, while skimming is committed after the cash is
The most affected party in a workers’ compensation fraud case is which of the following?a. Employer.b. Employer’s insurance carrier.c. Other employees.d. Government.
Which of the following is not one of the most common billing schemes?a. Setting up dummy companies to submit invoices to the victim organization.b. Changing the quantity or price on an invoice to
Out of all the types of frauds discussed in this chapter, which type is perpetrated least often?a. Skimming schemes.b. Larceny.c. Check schemes.d. Payroll.
What are the three major classes of asset misappropriation?a. Stealing receipts, purchasing fraud, and disbursement fraud.b. Stealing receipts, stealing money as it comes into a company, and
Most frauds against organizations are perpetrated by:a. Employees.b. Owners.c. Vendors.d. A collusion of two of the above.
The false refund fraud scheme involves any refund given in cash for an item that was originally stolen from the store. (True/False)
Bid rigging involves establishing a predetermined amount of money that bidders will have to exceed in order to win a bid. (True/False)
Of all the different kinds of corruption, bribery schemes have the greatest median loss of fraud schemes committed against an organization. (True/False)
Illegal gratuities are made before deals are approved but after payment has been accepted. (True/False)
Compared to bribery and conflicts of interest, economic extortion fraud schemes occur relatively infrequently. (True/False)
Kickbacks are undisclosed payments made by employees of purchasing companies to vendors. (True/False)
Identity theft is the largest type of consumer fraud. (True/False)
Corruption is divided into four fraud scheme types: (1) bribery, (2) conflict of interest, (3) economic extortion, and (4) illegal services. (True/False)
Ghost employee schemes usually generate the largest losses among the payroll disbursement fraud schemes. (True/False)
The two basic fraudulent register disbursement schemes are false refunds and false voids. (True/False)
Understating sales and stealing cash are examples of skimming. (True/False)
Larceny is the stealing of cash by employees before the cash has been recorded in the company’s accounting system. (True/False)
Asset misappropriations are divided into two categories: theft of cash and theft of inventory. (True/False)
Failure to account for missing inventory that was supposed to have been returned is a problem found in voided sales frauds. (True/False)
Commercial bribery is different from traditional bribery in that the offer made in commercial bribery is to influence an official act of government and traditional briberies never involve government
Bribery is one of the four types of corruption. (True/False)
Kickback schemes always involve the purchasing function of the victim company. (True/False)
Billing schemes have by far the highest median costs per incident of all frauds. (True/False)
Skimming schemes are far less common than larceny schemes. (True/False)

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