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

Detailed Explanation:

Rationale for Correct Answer: A ghost employee scheme occurs when someone (real or fictitious) is added to payroll, and paychecks are diverted to the fraudster. The key requirement is that the “ghost” is listed on payroll records.

Analysis of Incorrect Options:

A – The ghost may be fictitious or a real former employee.

B – Employment classification is irrelevant.

C – A ghost could be a current, terminated, or entirely fictitious employee.

Key Concept: Payroll fraud – ghost employee schemes.

Detailed Explanation:

Rationale for Correct Answer: Being prompted to install unfamiliar software is a red flag for malware or unauthorized access, often indicating that attackers are attempting to establish persistence in the system. This is a classic indicator of a compromised network.

Analysis of Incorrect Options:

A – Standard security measure, not a red flag.

C – Data from supplier countries is normal if consistent with business operations.

D – Access denial to files outside a user’s role is a normal access control, not an intrusion sign.

Key Concept: Cyberfraud detection – identifying intrusion indicators.

Detailed Explanation:

Rationale for Correct Answer:New account fraud occurs when fraudsters open accounts with false or stolen identities to exploit financial institutions before controls detect suspicious activity. Mobile deposits are particularly vulnerable because criminals can use counterfeit or altered images to deposit fraudulent checks quickly. This aligns with the Fraud Examiners Manual (2020) discussion of high-risk delivery channels for new account fraud.

Analysis of Incorrect Options:

A. Established accounts – Incorrect; fraud risk is higher in new accounts due to limited history and weaker controls.

C. Six months definition – Not an ACFE standard; there is no fixed six-month definition.

D. ATMs rarely targeted – Incorrect; ATMs are frequently exploited in new account fraud schemes.

Key Concept: New account fraud in identity theft and corruption-related schemes.

Detailed Explanation:

Rationale for Correct Answer: Market division and allocation agreements are a classic bid-rigging scheme in which contractors collude to evade competition by assigning territories, customers, or project types among themselves. This undermines free and open competition.

Analysis of Incorrect Options:

B – Fake contracts are not a recognized collusion tactic in competitive bidding.

C – Publishing solicitations in different outlets does not evade competition.

D – Submitting false invoices is fraud, but it occurs after contract award, not during the bidding process.

Key Concept: Bid rigging and collusion in procurement fraud.