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Fraud Principles

Total questions: 10

Worksheet time: 5mins

Name
Class
Date
1.

Which statement best describes occupational fraud?

a)

Legal exploitation of tax allowances for corporate advantage

b)

Reporting a loss due to market forces beyond management control

c)

Making any error in financial reporting without intent or benefit

d)

Using one’s position for personal enrichment by misusing employer resources

2.

Which belief most aligns with a fraud auditor’s perspective?

a)

Red flags are invisible without whistleblower allegations

b)

Only lower-level employees commit fraud in organizations

c)

Fraud is impossible when auditors reconcile all bank accounts

d)

Fraud can occur even where controls seem tight and complete

3.

Which element of Cressey’s Fraud Triangle addresses a stressful personal need that motivates a person to commit fraud?

a)

Deterrence reduces likelihood of theft

b)

Rationalization forms ethical justifications

c)

Pressure creates a personal financial strain

d)

Opportunity provides weak internal controls

4.

An employee with no criminal record convinces herself that taking funds is acceptable under her circumstances. Which Fraud Triangle elements best describe this situation?

a)

Pressure with abundant external monitoring

b)

Opportunity with strict oversight present

c)

Rationalization with a clean personal record

d)

Rationalization with prior illegal history

5.

Which pairing best illustrates insider fraud against a company?

a)

Employee lapping of receivables and fake credit memos

b)

Vendor short-shipping and double billing

c)

Collusive price fixing with competitors

d)

Customer bribing employees to leak pricing

6.

A supplier substitutes inferior materials and bills the company at full price. This scheme is best classified as which category?

a)

Insider fraud against the company

b)

Outsider fraud against the company

c)

Frauds for the company

d)

Consumer and investor frauds

7.

Which set correctly lists the three main categories in the ACFE Fraud Tree?

a)

Fraudulent statements, asset misappropriation, corruption

b)

Insider fraud, outsider fraud, management fraud

c)

Consumer fraud, vendor fraud, investment scams

d)

Cash diversions, check kiting, receivable lapping

8.

Which step typically occurs before a formal fraud investigation can begin?

a)

Predication is determined by a fraud professional

b)

The suspect confesses during interrogation

c)

Losses are reimbursed by the insurer

d)

A trial date is scheduled by the court

9.

A company notices missing data, unusual increases, and unfavorable variances. What are these most accurately considered?

a)

Proof of embezzlement beyond reasonable doubt

b)

Behavioral red flags suggesting possible fraud

c)

Normal fluctuations explained by seasonality

d)

Internal audit conclusions closing the case

10.

What is the top list of 5 scandalous fraud in 2025?

a)

phantom urinary catheters

b)

China cyber scam kingpins

c)

the 'tuna bond' case

d)

AI-driven fraud crypto ring