CERTIFIED FORENSIC FRAUD EXAMINER (CFFE) MODULE ONE
FRAUD AND CORRUPTION SCHEMES
TUESDAY: 22 April 2025. Afternoon Paper. Time Allowed: 3 hours.
Answer ALL questions. This paper has two Sections. SECTION I consists of fifty (50) Multiple Choice Questions carrying fifty (50) marks. SECTION II has four (4) structured questions carrying fifty (50) marks. Marks allocated to each question are indicated at the end of the question.
1. Which one of the following statements BEST describes the effect of recording a fictitious receivable?
A. Expenses are understated and revenue is overstated
B. Revenue is overstated and receivables are overstated
C. Revenue is understated and receivables are overstated
D. Expenses are understated and liabilities are understated (1 mark)
2. Which one of the following statements is ACCURATE in regard to the effects of concealment of liabilities?
A. Expenses are understated and liabilities are understated
B. Expenses are overstated and liabilities are understated
C. Liabilities are overstated and expenses are understated
D. Liabilities are understated and receivables are overstated (1 mark)
3. Which one of the following terms BEST describes a fraud evidence that cannot be found in the books?
A. Fraudulent payments
B. Conflict of interest
C. Ghost employees
D. None of the above (1 mark)
4. Which one of the following statements is ACCURATE in regard to writing off bad debts?
A. Writing off bad debts can be a fraud scheme to cover fictitious receivables
B. Writing off bad debts is an improper asset valuation scheme
C. Writing off bad debts will fraudulently affect the profit
D. Writing off bad debts will overstate profit (1 mark)
5. Which one of the following interpretations BEST describes recognition of long-term contract revenue that has not been earned?
A. Overstated revenue
B. Fictitious revenues
C. Improper recognition of revenue
D. Recognition of revenue (1 mark)
6. Which one of the following methods is MOST effective in detecting fraudulent activities in an organisation?
A. Conducting Internal audit
B. Conducting special audit
C. Conducting employee’s fraud assessment questioning
D. Interviewing management (1 mark)
7. Which one of the following statements is NOT accurate in regard to the vendor’s collusion objectives in a competitive binding?
A. To inflate the prices of the bids
B. To support each other to win a bid
C. To manipulate the bids
D. None of the above (1 mark)
8. Which one of the following statements BEST describes failure to disclose reporting entities scheme?
A. Inadequate disclosure
B. Fraudulent related party’s transactions
C. Changes of accounting policies scheme
D. Improper asset valuation (1 mark)
9. Which one of the following types of security controls is NOT a technical security control?
A. Computer risk assessments
B. Training and awareness
C. Security audit test
D. Incident response plans (1 mark)
10. Which one of the following schemes is associated with understatement of expenses?
A. Recording direct expenses incurred to generate revenue
B. Recording prepaid expenses
C. Accrual of expenses
D. Capitalisation of expenses (1 mark)
11. Which one of the following statements is ACCURATE in regard to omission of expenses?
A. Omission of expenses would result to overstated expenses
B. Omission of expenses would result to overstated liabilities
C. Omission of expenses would result to understated liabilities
D. None of the above (1 mark)
12. Which one of the following situations is the effect on the company’s current ratio where an accountant fails to write down obsolete inventory to its current fair market value in a fraud scheme?
A. The current ratio will be artificially deflated
B. The current ratio will not be affected
C. It is impossible to determine
D. The current ratio will be artificially inflated (1 mark)
13. Which one of the following statement of profit or loss items is used to calculate the receivable turnover ratio?
A. Net sales
B. Total sales
C. Average receivables
D. Payables (1 mark)
14. Which one of the following statements BEST explains financial status where the current assets are 50% less than the current liabilities?
A. The organisation will be insolvent
B. The organisation will record losses
C. The organisation will record profits
D. The organisation’s current ratio will be inflated (1 mark)
15. Which one of the following actions BEST describes dishonest contractors bid rigging methods of submitting complementary bids?
A. Submitting token bids
B. Bidders rotate bids
C. Bidders withdraw bids the last minute
D. Competitive bidders refrain from bidding (1 mark)
16. Which one of the following financial analysis ratios can be used to compare financial statements of two organisations?
A. Ratio analysis
B. Relational comparison
C. Horizontal analysis
D. Vertical analysis (1 mark)
17. Which one of the following breaches is NOT a technical means of gaining unauthorised access to information?
A. Piggybacking
B. Wire tapping
C. Business email compromise
D. Electronic piggybacking (1 mark)
18. Which one of the following procurement fraud schemes is associated with frequent change orders after the award of the tender?
A. Bid tailoring
B. Bid splitting
C. Narrow specifications
D. Bid specification scheme (1 mark)
19. Which one of the following fraud schemes is associated with withdrawal of bids in a competitive procurement process?
A. Market division
B. Bid rotation
C. Bid suppression
D. Bid manipulation (1 mark)
20. Which one of the following statements regarding new account fraud is NOT accurate?
A. New account fraud can be defined as any fraud that occurs on an account within the first ninety days that it is open
B. Fraud is more likely to occur in accounts that have been newly opened than in established accounts
C. Automated teller machines (ATMs) are often enticing targets for new account fraud because they do not require in-person transactions with bank tellers
D. None of the above (1 mark)
21. Which one of the following specifications is NOT a pre-solicitation procurement fraud scheme?
A. Too broad specifications
B. Broad specification
C. Narrow specification
D. None of the above (1 mark)
22. Which one of the following is NOT a bid rigging scheme?
A. Market division
B. Withdrawal of bids
C. Bid manipulation
D. None of the above (1 mark)
23. Which one of the following BEST describes the ratio of measuring relationship between financial items in the same financial statement?
A. Statement comparison
B. Relational comparison
C. Horizontal analysis
D. None of the above (1 mark)
24. Which one of the following actions is NOT a red flag of bid rigging scheme?
A. Dividing the market among bidders
B. Alternating business among bidders
C. Refraining from submitting bids
D. Bidders competing against each other (1 mark)
25. Which one of the following is NOT a procurement bid manipulation scheme?
A. Leaking of bids information
B. Extending bid opening dates
C. Early opening of bids on the scheduled
D. Tailoring of bids (1 mark)
26. Which one of the following statements BEST describes logical access?
A. The process which users are allowed to access and use physical objects
B. The process which computer systems’ contents are encrypted
C. The process which users can bypass application security over the software and libraries
D. The process which users are allowed to use computer systems and networks (1 mark)
27. Which one of the following statements is NOT accurate in regard to computer security risk assessment?
A. Identifying the risks and threats of each asset and calculating the probability of each risk materialising, is the third step of a risk assessment
B. Determining the value of each asset of a risk assessment related to computers and computer systems is the second step
C. Recommending the counter-measures and other remedial activities is the fifth step of a risk assessment related to computers and computer systems
D. None of the above (1 mark)
28. Which one of the following is NOT a fraud scheme used to conceal embezzlement of inventory?
A. Writing off stolen inventory as scrap
B. Increasing the perpetual inventory
C. Reducing perpetual inventory records
D. None of the above (1 mark)
29. Which one of the following is NOT a data manipulation scheme?
A. Disclosure of confidential information
B. Privilege escalation
C. Buffer overflow exploits
D. None of the above (1 mark)
30. Which one of the following statements BEST describes a type of cybercrime?
A. Entering an altered or falsified data in the computer an authorised employee
B. Modification of data an authorised employee
C. Unauthorised disclosure of data to an external party using the internet
D. Computer forgery an authorised employee (1 mark)
31. Which one of the following types of unauthorised access is associated with system programmers?
A. Malware software
B. Back door
C. Trap door
D. Electronic piggybacking (1 mark)
32. Which one of the following financial reporting schemes would lead to a misrepresentation of an organisation’s financial position and performance?
A. Fictitious revenue
B. Capitalisation of expenses
C. Overstated revenue
D. Improper valuation of receivables (1 mark)
33. Which one of the following types of bribery BEST describes public bribery?
A. Kickbacks
B. Commercial Bribery
C. Official bribery
D. Illegal rewards (1 mark)
34. Which one of the following terms BEST describes the bid rigging scheme where the lowest bid is very high in comparison to the market price?
A. Bid manipulation
B. Bid suppression
C. Bid rotation
D. Complementary bidding (1 mark)
35. Which one of the following statements is ACCURATE in regard to the liquidity ratio of an organisation?
A. Capitalisation of expenses will inflate the liquidity ratio
B. Capitalisation of expenses will not affect the liquidity ratio
C. Capitalisation of expenses will understate the liquidity ratio
D. None of the above (1 mark)
36. Which one of the following terms BEST describes the common construction loan fraud schemes?
A. Draw requests
B. Fraudulent appraisals
C. Flopping schemes
D. Flipping schemes (1 mark)
37. Which one of the following steps is NOT a part of the process of responding to a cybersecurity incident?
A. Detection and analysis
B. Containment and eradication
C. Preparation
D. None of the above (1 mark)
38. Which one of the following fraudulent disbursements are considered off-book?
A. Disbursements to shell companies
B. Disbursement to non-prequalified vendors
C. Personal payments billing schemes
D. Multiple disbursement of expenses (1 mark)
39. Which one of the following basis of accounting ensures that all incurred expenses are recorded?
A. Proper expenditure recognition basis
B. Accrual basis
C. Cash basis
D. Double entry (1 mark)
40. Which one of the following statements is NOT accurate in regard to recording of expenses in the financial statements?
A. Capitalising expenses would result to concealment of liabilities
B. Capitalising expenses would not result to concealment of liabilities
C. Recording fictitious expenses would not result to concealment of liabilities
D. Recording incurred expenses would not result to overstatement of expenses (1 mark)
41. Which one of the following statements BEST describes the fraudulent transaction of recognising revenue that has not been earned?
A. Crediting revenue and debiting receivables
B. Crediting revenue and debiting cash/bank
C. Crediting revenue and debiting liabilities account
D. Crediting revenue credit and debiting unearned revenue account (1 mark)
42. Which one the following statements is ACCURATE in regard to disclosures in financial statements?
A. Disclosures are financial statement amounts and must be disclosed in financial statements
B. Failure to include disclosures would result to misrepresentation of the financial performance of the organisation
C. Failure to include disclosures would result to misrepresentation of the financial position of the organisation
D. None of the above (1 mark)
43. Which one of the following asset misappropriation fraud schemes is an off-book fraud?
A. Bribery
B. Conflict of interest
C. Mischaracterised expenses
D. Ghost employees (1 mark)
44. Which one of the following tests and techniques would be INEFFECTIVE in detecting fund skimming?
A. Examining journals receivables write-offs
B. Examining credits entries in inventory account
C. Confirming customers’ unpaid account balances
D. Examining debit entries in inventory account (1 mark)
45. Which one of the following is NOT a method of paying bribes through loan transactions?
A. A legitimate loan in which a third party makes the loan payments
B. An outright payment falsely described as an innocent loan
C. A loan made at market rates
D. A legitimate loan made on favorable terms (1 mark)
46. Which one of the following statements is NOT accurate in regard to capitation method of payment for health care services?
A. Capitation is method of making payments to health care providers
B. Capitation payment method can reduce unnecessary services
C. Capitation payment method can increase unnecessary services
D. Capitation payment method can prevent fictitious patients scheme (1 mark)
47. Which one of the following statements is NOT an objective of a computer security risk assessment?
A. Detect the risks that make an organisation vulnerable
B. Identify where fraud is most likely to occur
C. Quantify the economic impact that would result if the risk materialised
D. Provide an economic balance between the economic impact and the cost of prevention (1 mark)
48. Which one of the following measures is NOT a type of proactive detective computer security measure?
A. Log management analysis
B. Data security
C. Security auditing
D. Security risk training and awareness (1 mark)
49. Which one of the following results is NOT a red flag of fraudulent investment opportunity?
A. Promises of low risk
B. Promises of high rewards
C. Pressure to reinvest
D. None of the above (1 mark)
50. Which one of the following statements BEST illustrates theft of intellectual property through human intelligence?
A. A corporate spy installs software on the computer of an employee from a competing company to monitor that employee’s communications
B. A corporate spy creates a deceptive website that tricks employees from a competing company into divulging confidential information
C. A corporate spy breaks into a competing company’s office and steals sensitive information while employees are attending an off-site event
D. A corporate spy poses as a customer of a competing company to elicit information from the competitor’s salespeople (1 mark)
SECTION B (50 MARKS)
51. (i) Explain FOUR bid rigging schemes in relation to public procurement. (8 marks)
(ii) Describe SIX red flags associated with the four bid rigging schemes mentioned in 51 (i) above.
(12 marks)
(Total: 20 marks)
52. Discuss FIVE types of corruption schemes that might be found in an organisation. (Total: 15 marks)
53. Analyse FIVE fraudulent transactions that would cause misrepresentation of both the financial position and financial performance of an organisation. (Total: 10 marks)
54. Identify FIVE health care provider schemes. (Total: 5 marks)
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