ACFE Updated CFE-Financial-Transactions-and-Fraud-Schemes Exam Questions and Answers by nyra

Detailed Explanation:

Rationale for Correct Answer:Upcoding occurs when a provider bills for a higher level of service than what was actually provided. Billing a 15-minute visit as a 60-minute visit is a classic upcoding scheme.

Analysis of Incorrect Options:

A. Name brand prescription – Not upcoding; this is prescribing choice, not billing fraud.

B. Multiple codes instead of one – This is unbundling, not upcoding.

D. Changing service date – This is falsifying service dates, not upcoding.

Key Concept: Health care billing fraud — upcoding vs. unbundling.

Detailed Explanation:

Rationale for Correct Answer:This is a Pass-through scheme, a type of Conflict of Interest under the corruption category. In this scheme, the employee sets up a shell company to act as a vendor. The shell purchases goods from legitimate suppliers and resells them to the employer at inflated prices. Pilar’s actions align perfectly with this definition.

Analysis of Incorrect Options:

A. Need recognition scheme – Involves manipulating an employer’s need to justify a purchase, not reselling via a shell.

B. Pay and return scheme – A fraudulent disbursement scheme where overpayments are made and refunds diverted. Not applicable here.

D. Cash larceny scheme – Involves theft of incoming cash, unrelated to vendor fraud.

Key Concept: Pass-through scheme (Conflict of Interest within Corruption).

Detailed Explanation:

Rationale for Correct Answer: A draw request is used by construction developers to obtain loan funds for work completed. If lien releases are missing, it suggests subcontractors may not have been paid, and the developer might be misrepresenting completed work—an indicator of loan fraud.

Analysis of Incorrect Options:

A – Omission of personal account statements isn’t unusual for a draw request.

B – Change orders are common in construction projects.

D – Multiple inspection reports support validity, not fraud.

Key Concept: Loan fraud detection through supporting documentation review.

Rationale for Correct Answer:Fraud investigations can be highly costly to organizations. The process often involves external forensic examiners, legal proceedings, employee time, and disruption of operations. While necessary, investigations represent a significant resource commitment in terms of both time and financial cost.

Key Concept:Fraud Investigation Costs — deterrence vs. response strategies.