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

Security audits and tests, incident response plans, and separation of duties are best classified as administrative security controls because they involve policies, procedures, monitoring, governance, and assignment of responsibilities. Administrative controls are designed to manage human behavior and organizational processes that support cybersecurity. The ACFE material discusses computer security controls, including separation of duties, security audits and tests, and incident response planning, as part of a broader control environment for preventing and detecting cyberfraud. Logical access controls focus on system permissions and authentication. Physical access controls protect facilities and hardware. Technical controls are automated or technology-based safeguards. Since the listed items mainly involve procedures, oversight, and response planning, administrative security controls is the best answer.

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Rationale for Correct Answer: Social engineering involves manipulating or deceiving

Analysis of Incorrect Options:

A . IP spoofing -- Forging an IP address to disguise origin.

B . Electronic piggybacking -- Unauthorized use of someone else's access connection.

C . Packet sniffing -- Monitoring data traffic across a network.

Key Concept: Cyberfraud techniques -- social engineering.

Rationale for Correct Answer:

By double-entry accounting rules, every accounting entry affects at least two accounts (debit and credit). Fraudulent entries must also follow this rule, meaning manipulation will show up in at least two categories on the financial statements.

Analysis of Incorrect Options:

A . One -- Impossible in double-entry accounting.

C . More than two -- Possible, but not always; the minimum is two.

D . None of above -- Incorrect since ''at least two'' is correct.

Key Concept:

Double-entry accounting ensures at least two accounts are affected in every transaction, including fraudulent ones.

ACFE Fraud Examiners Manual (2020 International Edition), Accounting Concepts --- Double-entry Accounting and Fraudulent Entries.

Rationale for Correct Answer:

Forced reconciliation occurs when fraudsters alter the perpetual inventory records to conceal shrinkage. By adjusting the records, they make the books appear consistent with the physical count, hiding theft or loss.

Analysis of Incorrect Options:

A -- Too vague; does not specify perpetual records.

B -- Incorrect; inventory is concealed, not shrinkage records.

D -- Write-offs are a different concealment method.

Key Concept:

Forced reconciliations as a concealment method in inventory fraud.

ACFE Fraud Examiners Manual (2020 International Edition), Inventory and Other Assets --- Concealment of Shrinkage.

The correct answer is D. Procurement fraud prevention requires ongoing vendor monitoring based on the organization's highest-risk vendor schemes. Monitoring should focus on practical red flags, such as unusual pricing, duplicate vendors, related-party indicators, excessive change orders, suspicious payment patterns, or vendors lacking proper support. Option A violates segregation of duties because the person maintaining the vendor master file should not also approve invoice payments. Option B is weak because vendor background checks should occur before vendors are added to the master file, not after. Option C is incorrect because procurement monitoring should be ongoing and risk-based, not restricted to annual reviews. The ACFE material emphasizes vendor management, vendor master file controls, and monitoring based on relevant red flags.

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