CFE-Financial-Transactions-and-Fraud-Schemes Practice Exam Tests Latest Updated on Jan-2026
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The CFE-Financial-Transactions-and-Fraud-Schemes certification exam is open to professionals who have a minimum of two years of professional experience in a related field. Candidates must also hold a bachelor's degree or equivalent, and must have a clean criminal record. CFE-Financial-Transactions-and-Fraud-Schemes exam is a computer-based test that consists of 500 multiple-choice questions, and candidates are given four hours to complete the exam.
NEW QUESTION # 66
Which of the following would NOT be considered a conflict of interest?
- A. James works for the Muscle Factory Gym on weekdays and Earthworks Lawn Mowing on weekends, but he does not tell either employer about the other job.
- B. Jenny purchases materials from Great Oaks Lumber for her employer to use in projects; Jenny's husband works for Great Oaks Lumber, and she has not informed her employer of this.
- C. Jane hires her cousin, Rita, to provide shipping and packaging services for her company, but she does not disclose their relationship.
- D. Josh owns a significant amount of stock in a company he regularly buys office supplies from, and his employer is unaware of this fact.
Answer: A
NEW QUESTION # 67
__________ may be defined as the offering, giving, receiving or soliciting anything of value to influence an official act.
- A. Diverting business to vendors
- B. Lacking approval authority
- C. Corruption
- D. Bribery
Answer: D
NEW QUESTION # 68
Which of the following is the criterion for bid solicitation?
- A. To falsify the bid log
- B. Containing false statements
- C. To withdraw low bids
- D. Allowing the purchaser to discuss possible employment with the contractor
Answer: B
Explanation:
Detailed Explanation:
* Rationale for Correct Answer:Fraudulent bid solicitation practices include issuing requests for proposals or bid documents that contain false statements or misleading conditions to favor a particular vendor.
* Analysis of Incorrect Options:
* B. Employment discussions - A conflict of interest, not bid solicitation fraud.
* C. Withdraw low bids - A submission phase scheme.
* D. Falsify bid log - A separate manipulation method, not solicitation criterion.
* Key Concept:Fraudulent bid solicitation - using false or misleading statements to limit competition.
Reference:ACFE Fraud Examiners Manual (2020 International Edition), Corruption - Bid Solicitation Manipulation.
NEW QUESTION # 69
A tangible asset is one which is:
- A. Capable of being perceived
- B. Both A & B
- C. Capable of being appraised
- D. Neither A nor B
Answer: B
Explanation:
Detailed Explanation:
* Rationale for Correct Answer:Tangible assets are those that can be physically perceived (touched, seen, etc.) and appraised (assigned a measurable value). Examples include buildings, land, equipment, and inventory. Both characteristics are correct, making C the best choice.
* Analysis of Incorrect Options:
* A. Capable of being perceived - True, but incomplete.
* B. Capable of being appraised - True, but incomplete.
* D. Neither A nor B - Incorrect since both statements are accurate.
* Key Concept:Tangible Assets - physical and measurable property owned by a business.
Reference:ACFE Fraud Examiners Manual (2020 International Edition), Accounting Concepts - Asset Classifications.
NEW QUESTION # 70
A fraudster creates a fictitious identity by combining a person's real government identification number with a fabricated name and birthdate. This scheme can BEST be described as:
- A. Synthetic identity theft
- B. Simulated identity theft
- C. Traditional identity theft
- D. Criminal identity theft
Answer: A
Explanation:
Detailed Explanation:
* Rationale for Correct Answer: Synthetic identity theft occurs when fraudsters combine real identifiers (e.g., SSN, tax ID) with fictitious details to create a "new" identity. This differs from traditional identity theft, where a real person's identity is used in full.
* Analysis of Incorrect Options:
* B. Simulated identity theft - Not a standard fraud classification.
* C. Traditional identity theft - Uses a complete stolen identity, not a hybrid.
* D. Criminal identity theft - Involves using someone else's identity when charged with a crime.
* Key Concept: Synthetic identity theft as an evolving form of fraud.
Reference: ACFE Manual, Fraud Prevention and Deterrence - Identity Theft.
NEW QUESTION # 71
George, a 71-year-old man, receives a fraudulent message on his computer stating that his computer has been infected by a virus. When George calls the phone number listed on the message, he speaks with a fraudster who charges him for computer repair services that are unnecessary. George has MOST LIKELY been victimized by which of the following schemes?
- A. Pharming
- B. Smishing
- C. Bait and switch scheme
- D. Tech-support scheme
Answer: D
Explanation:
Detailed Explanation:
* Rationale for Correct Answer:This is a tech-support scam, in which fraudsters trick victims into believing their computers are infected and then charge fees for unnecessary or fake repairs. The scam often targets elderly victims.
* Analysis of Incorrect Options:
* A. Pharming - Redirects users to fake websites, not fake support calls.
* B. Bait and switch - Advertising deception, not fraudulent computer support.
* D. Smishing - Fraud via SMS text messages, not on-screen computer popups.
* Key Concept: Consumer fraud schemes - tech-support scams.
Reference: ACFE Fraud Examiners Manual (2020), Consumer Fraud Schemes.
NEW QUESTION # 72
Organizations can employ ___________ to provide protection for computing resources by increasing security policies and awareness, conducting security audits and tests, and developing an incident response plan.
- A. Administrative security controls
- B. Logical access controls
- C. Technical security controls
- D. Physical access controls
Answer: A
Explanation:
Explanation/Reference: https://purplesec.us/security-controls/#:~:text=Administrative%20security%20controls%20refer%20to,with%20the%20organization's%20security%20goals
NEW QUESTION # 73
Revenue is recognized when it is:
- A. Realized and Evidenced
- B. All of the above
- C. Realized and Earned
- D. Fictitious and Earned
Answer: C
NEW QUESTION # 74
When employee committing the fraud removes cash from the register and also the item allegedly being returned is debited back into the inventory, this refers to:
- A. Registry destroying records
- B. Concealing register disbursement
- C. Fraudulent register occurrences
- D. Register false voids
Answer: B
NEW QUESTION # 75
Which of the following statements describes a best practice for preventing contract and procurement fraud?
- A. Companies should permit the person who maintains the vendor master file to have the authority to approve invoices for payment.
- B. Companies should have vendor-monitoring procedures that are based on the red flags of the vendor schemes that pose the greatest risk.
- C. Companies should not conduct background checks on vendors until after they are added to the vendor master file.
- D. Companies should restrict the monitoring of their procurement activities to once a year to ensure comparability over time.
Answer: B
Explanation:
Explanation/Reference: https://www.fraudconference.com/31/post-cpf.aspx
NEW QUESTION # 76
One of the simplest ways to justify unacceptable conduct and avoid guilt feelings is to invent a good reason for ________.
Answer:
Explanation:
Embezzling
NEW QUESTION # 77
Which of the following is a common red flag of a bid tailoring scheme?
- A. The procuring entity rebids contracts because fewer than the minimum number of bids are received.
- B. The procuring entity's request for bid submissions provides clear bid submission information.
- C. Numerous bidders respond to the procuring entity's bid requests.
- D. There are unusually narrow specifications for the type of goods being procured.
Answer: D
Explanation:
Detailed Explanation:
* Rationale for Correct Answer:Bid tailoring occurs when procurement officials structure contract requirements to unfairly favor a particular vendor. A hallmark red flag is unusually narrow specifications, which restrict competition.
* Analysis of Incorrect Options:
* A. Clear submission information - Standard and appropriate, not a red flag.
* C. Rebid contracts - Could indicate limited interest, but not tailoring.
* D. Numerous bidders - Indicates competition, opposite of bid tailoring.
* Key Concept: Procurement fraud - bid tailoring.
Reference: ACFE Fraud Examiners Manual (2020), Corruption: Procurement Schemes.
NEW QUESTION # 78
To detect fraud committed by a health care provider, a fraud examiner should look for which of the following red flags?
- A. The details in the provider's supporting documentation match the health care claim.
- B. The number of claims made by the provider for reimbursement are lower than average.
- C. There is a high percentage of coding outliers in the provider's documentation.
- D. The provider has unusually low profits compared to similar businesses in the same region.
Answer: C
Explanation:
Detailed Explanation:
* Rationale for Correct Answer: A high percentage of coding outliers (e.g., using higher-paying diagnosis or procedure codes more often than peers) is a red flag of upcoding or fraudulent billing. This signals possible abuse of reimbursement systems.
* Analysis of Incorrect Options:
* A - Fewer claims would not suggest fraud.
* C - Matching documentation is expected, not suspicious.
* D - Low profits may indicate inefficiency, not fraud.
* Key Concept: Health care fraud detection through data analytics and coding anomalies.
Reference: ACFE Manual, Financial Transactions - Health Care Fraud.
NEW QUESTION # 79
A running count that records how much inventory should be on hand is referred to:
- A. Perpetual inventory
- B. Fictitious inventory
- C. Shrinking inventory
- D. Altered inventory
Answer: A
Explanation:
Detailed Explanation:
* Rationale for Correct Answer:Perpetual inventory systems maintain a continuous, running balance of inventory on hand. They are updated with each purchase and sale, providing a theoretical count at all times. Discrepancies between perpetual and physical counts may indicate theft, errors, or fraud.
* Analysis of Incorrect Options:
* A. Altered inventory - Fraudulent manipulation, not a system.
* C. Shrinking inventory - Refers to shrinkage, not the system.
* D. Fictitious inventory - Fraudulent reporting, not a legitimate system.
* Key Concept:Perpetual inventory systems as internal controls.
Reference:ACFE Fraud Examiners Manual (2020 International Edition), Inventory and Other Assets - Inventory Systems.
NEW QUESTION # 80
Warner is part of management at ABC Corporation. He has been asked to implement measures to help prevent fraudulent billing schemes. Which of the following measures would likely be MOST EFFECTIVE?
- A. Enforcing competitive bidding from potential vendors
- B. Combining the purchasing and payment functions within a single department
- C. Using an external vendor to negotiate procurement contracts
- D. Requiring all fraud tips to be reported to employees' direct supervisors
Answer: A
Explanation:
Detailed Explanation:
* Rationale for Correct Answer: One of the strongest internal controls against fraudulent billing schemes (such as shell companies, inflated invoices, and kickbacks) is to require competitive bidding.
This ensures transparency, reduces favoritism, and makes it harder for employees and vendors to collude.
* Analysis of Incorrect Options:
* A - Fraud tips are valuable, but routing them only through supervisors may suppress reporting; hotlines are more effective.
* B - Combining purchasing and payment increases fraud risk by reducing segregation of duties.
* D - Outsourcing negotiations does not directly prevent billing fraud.
* Key Concept: Internal controls and segregation of duties in preventing billing schemes.
Reference: ACFE Manual, Fraudulent Disbursements - Billing Schemes.
NEW QUESTION # 81
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The CFE-Financial Transactions-and-Fraud-Schemes Certification Exam covers a range of topics related to financial transactions and fraud schemes. These include financial statement fraud, asset misappropriation, corruption, money laundering, and data analysis. CFE-Financial-Transactions-and-Fraud-Schemes exam is designed to test a candidate's knowledge of these topics and their ability to apply this knowledge to real-world situations.
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CFE-Financial-Transactions-and-Fraud-Schemes Dumps Full Questions - Exam Study Guide: https://drive.google.com/open?id=1cJ1MUMY1Mp7KvxyvHnMeLfbEkY49TsWJ