Important ACFE CFE-Fraud-Schemes-and-Financial-Crimes Exam Questions

Answer: C

Explanation:

The correct answer is C. A nonconforming goods or services scheme occurs when a contractor delivers goods or services that do not meet contract specifications while representing them as compliant. Using refurbished materials when the contract requires new materials is a classic example because the contractor provides inferior or substituted materials but seeks payment as if the required materials were supplied. Option A describes change order abuse, where a low bid is later increased through contract modifications. Option B describes cost mischarging because the contractor bills for costs not incurred or improperly allocated. Option D describes a need recognition or collusive procurement scheme involving unnecessary goods or services. The key professional distinction is whether the deliverable itself fails to conform to contract requirements.

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Answer: C

Explanation:

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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Answer: C

Explanation:

Rationale for Correct Answer:

Bid pooling occurs when vendors collude to divide contracts among themselves. They agree in advance who will submit the lowest bid for certain contracts, ensuring each participant gets a share of the business.

Analysis of Incorrect Options:

A . Bid opening -- The formal process of opening bids, not fraud.

B . Fictitious bidding -- Not a standard fraud term.

D . Bid log -- A record of submitted bids, not a scheme.

Key Concept:

Bid pooling --- collusion among vendors in bid-rigging schemes.

ACFE Fraud Examiners Manual (2020 International Edition), Corruption --- Bid-Rigging and Vendor Collusion.

Answer: A

Explanation:

Rationale for Correct Answer:

Conflict of interest cases are difficult to detect because the transactions often appear legitimate on their face. However, they can be prevented more effectively through proactive controls such as disclosure requirements, vendor vetting, and employee training. The Fraud Examiners Manual (2020) emphasizes that prevention mechanisms are more effective than detection when it comes to conflicts of interest.

Analysis of Incorrect Options:

B . False -- Incorrect because detection is challenging; prevention is comparatively easier.

Key Concept: Prevention vs. detection in Conflict of Interest schemes.

Answer: C

Explanation:

The correct answer is C. Collectibles fraud often involves misrepresenting authenticity, rarity, condition, provenance, or value of items such as rare books, art, coins, stamps, or memorabilia. A professional appraisal before purchase is the strongest option because it provides independent evaluation of authenticity and value. A dealer's social media presence does not prove legitimacy. A list of prior sales might be fabricated or unverifiable. A dealer's description of condition is useful but still comes from the seller and might be biased or false. The ACFE consumer fraud materials identify art and rare-item schemes as consumer fraud risks, and independent verification is an important safeguard before paying for expensive collectibles.

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