Certified Fraud Examiner Certified Official Practice Test CFE-Financial-Transactions-and-Fraud-Schemes - Mar-2026
Ace ACFE CFE-Financial-Transactions-and-Fraud-Schemes Certification with Actual Questions Mar 18, 2026 Updated
The CFE-Financial-Transactions-and-Fraud-Schemes exam is a computer-based test that consists of multiple-choice questions. CFE-Financial-Transactions-and-Fraud-Schemes exam is divided into four sections, each of which covers a specific area of financial transactions and fraud schemes. The sections include Financial Transactions and Fraud Schemes, Fraud Prevention and Deterrence, Investigation, and Legal Elements of Fraud.
NEW QUESTION # 81
Which of the following is the MOST ACCURATE statement about the different types of malware?
- A. Spyware is a software program with instructions executed every time a computer is turned on.
- B. A Trojan horse is a hidden program that displays advertisements while the computer is operating.
- C. Ransomware is malicious software that locks the operating system and restricts access to data files.
- D. A computer worm is a program that appears useful but monitors and logs keystrokes.
Answer: B
NEW QUESTION # 82
A ___________ occurs when an employee, manager, or executive has an undisclosed economic or personal interest in a transaction that adversely affects the organization.
- A. Conflict of interest
- B. Illegal sale
- C. Unauthorized purchase
- D. Financial disclosure
Answer: A
Explanation:
Detailed Explanation:
* Rationale for Correct Answer:A conflict of interest occurs when an employee secretly has a personal or financial stake in a transaction, and that interest compromises their duty of loyalty to the employer.
This is one of the four categories of corruption under the ACFE Fraud Tree.
* Analysis of Incorrect Options:
* B. Illegal sale - Not a fraud classification.
* C. Unauthorized purchase - Could describe asset misuse, not corruption.
* D. Financial disclosure - Relates to reporting, not the fraud itself.
* Key Concept:Conflict of interest schemes as a category of corruption.
Reference:ACFE Fraud Examiners Manual (2020 International Edition), Corruption - Conflicts of Interest.
NEW QUESTION # 83
The act of an official or fiduciary person who unlawfully and wrongfully uses his station or character to procure some benefit, contrary to duty and rights of others is called:
- A. Bribery
- B. Overbilling
- C. Conflict of interest
- D. Corruption
Answer: D
NEW QUESTION # 84
A fraudster uses a victim's name, government identification number, and birthdate to impersonate the victim and open a credit card account in the victim's name. This scheme can BEST be described as:
- A. Traditional identity theft
- B. Synthetic identity theft
- C. Criminal identity theft
- D. New account identity theft
Answer: A
Explanation:
Explanation/Reference: https://www.acfe.com/selfstudy.aspx?zid=2c92a0fe6a07e3e5016a27279adf4045
NEW QUESTION # 85
Several people who work in real estate collude to obtain a loan for the construction of a residential building on a property that does not exist. The co-conspirators divide the proceeds among themselves and leave the lender with no collateral to seize when loan payments are not made. Which of the following BEST describes this scheme?
- A. Daisy chain
- B. Property flopping
- C. Air loan
- D. Phantom lien
Answer: C
Explanation:
Detailed Explanation:
* Rationale for Correct Answer: An air loan is a mortgage fraud scheme where the borrower and sometimes insiders create completely fictitious properties or borrowers. Here, the nonexistent property and loan proceeds being pocketed fits this definition.
* Analysis of Incorrect Options:
* A. Property flopping - Involves short sales and undervaluing distressed property.
* C. Phantom lien - False liens filed to collect fraudulent claims on real estate.
* D. Daisy chain - Involves multiple property transactions between conspirators to inflate value.
* Key Concept: Loan fraud schemes - fictitious property loans (air loans).
Reference: ACFE Manual, Financial Transactions - Mortgage and Loan Fraud.
NEW QUESTION # 86
Joe's automobile insurance policy expired in June. In August, Joe was involved in an automobile accident, and his vehicle was severely damaged. After the accident, Joe contacted his insurance company and reinstated the policy. In September, Joe then submitted a claim with a September accident date for the damages that occurred to his vehicle in August. Joe has engaged in which of the following insurance schemes?
- A. Staged accident
- B. Inflated damages
- C. Past posting
- D. Vehicle repair
Answer: C
Explanation:
Detailed Explanation:
* Rationale for Correct Answer: Past posting occurs when an insured reinstates or purchases insurance coverage after a loss has already occurred and then submits a false claim, backdating the loss to appear covered. Joe's scheme fits this exactly.
* Analysis of Incorrect Options:
* A. Staged accident - Fraudulent accidents deliberately caused, not applicable here.
* B. Inflated damages - Exaggerating actual losses, not retroactive coverage.
* D. Vehicle repair - General claim fraud, but not the scheme in question.
* Key Concept: Insurance fraud - past posting schemes.
Reference: ACFE Manual, Financial Transactions - Insurance Fraud Schemes.
NEW QUESTION # 87
Antonia, a Certified Fraud Examiner (CFE), discovers that a loan applicant misrepresented their creditworthiness and income to qualify for a mortgage on a new house. Which type of loan fraud BEST describes the scheme that Antonia uncovered?
- A. Double-pledging collateral
- B. Residential loan fraud
- C. Credit data blocking
- D. Linked financing
Answer: B
Explanation:
Detailed Explanation:
* Rationale for Correct Answer: Misrepresenting income, employment, or creditworthiness on a mortgage application is a classic example of residential loan fraud. This type of fraud occurs when borrowers provide false information to qualify for loans they would not otherwise receive.
* Analysis of Incorrect Options:
* B. Credit data blocking - Refers to suppressing negative credit information with fraudulent disputes.
* C. Double-pledging collateral - Involves using the same collateral for multiple loans.
* D. Linked financing - Occurs when loans are structured with related transactions to disguise financial exposure.
* Key Concept: Loan and mortgage fraud - misrepresentation of borrower information.
Reference: ACFE Manual, Financial Transactions - Loan Fraud.
NEW QUESTION # 88
False billing scheme states that:
- A. employees do not cause their company to sale merchandise that the company does not need.
- B. employees cause their company to sale merchandise that the company does not need.
- C. employees do not cause their company to purchase merchandise that the company does not need.
- D. employees cause their company to purchase merchandise that the company does not need
Answer: D
NEW QUESTION # 89
Undisclosed payments made by vendors to employees of purchasing companies are referred to as:
- A. Kickbacks
- B. Bid-rigging
- C. Presolicitation
- D. None of the above
Answer: A
Explanation:
Detailed Explanation:
* Rationale for Correct Answer:Kickbacks are undisclosed payments made by vendors to employees of purchasing companies to secure favorable treatment. They are a classic form of bribery under the corruption classification of the Fraud Tree.
* Analysis of Incorrect Options:
* A. Bid-rigging - Involves collusion among bidders, not secret payments.
* C. Presolicitation - A phase in procurement fraud, not the scheme itself.
* D. None of the above - Incorrect, as kickbacks are the precise answer.
* Key Concept:Kickbacks - secret vendor payments for favorable purchasing treatment.
Reference:ACFE Fraud Examiners Manual (2020 International Edition), Corruption - Kickback Schemes.
NEW QUESTION # 90
Asset misappropriation schemes were the "middle children" of the study; they were more common than fraudulent statements and more costly than corruption.
- A. True
- B. False
Answer: B
NEW QUESTION # 91
Which of the following statements about skimming is CORRECT?
- A. Skimming schemes are generally less difficult to detect than cash larceny schemes.
- B. Skimming schemes involve stolen customer payments that were not recorded.
- C. Skimming schemes involve the theft of cash sales but not accounts receivable payments.
- D. Skimming schemes are considered on-book frauds because they leave an audit trail.
Answer: B
NEW QUESTION # 92
Skimming cases can more likely to be detected by:
- A. Internal controls
- B. Accidents
- C. occupational frauds
- D. Internal audits
Answer: B
NEW QUESTION # 93
In what type of fraud scheme does an employee steal cash after it has appeared on the company's books?
- A. Unrecorded sales (skimming) scheme
- B. Understated sales (skimming) scheme
- C. Cash larceny scheme
- D. Kickback scheme
Answer: C
NEW QUESTION # 94
Which of the following is a TRUE statement regarding check fraud?
- A. The equipment required to commit check fraud is relatively inexpensive.
- B. The penalties for committing check fraud are relatively severe.
- C. Most perpetrators of check fraud are caught and prosecuted.
- D. None of the above statements are true.
Answer: A
NEW QUESTION # 95
Which of the following statements regarding new account fraud is MOST ACCURATE?
- A. It is more likely that fraud will occur in established accounts than in accounts that are still considered to be new.
- B. New account fraud can be defined as any fraud that occurs on an account during the first six months that it is open.
- C. Automated teller machines (ATMs) are rarely targets of new account fraud because it is easier for criminals to commit fraud via face-to-face transactions.
- D. Mobile deposits are at high risk for new account fraud because fraudsters can easily make deposits using forged or counterfeit images.
Answer: B
NEW QUESTION # 96
Which of the following is a method that might be used to fraudulently overstate the inventory balance?
- A. Recording an allowance for sales returns
- B. Failing to write off obsolete inventory
- C. Applying the lower of cost or net realizable value
- D. Failing to record bad debt expense
Answer: B
NEW QUESTION # 97
Accounting records are designed to be kept on subjective rather than objective evidence.
- A. True
- B. False
Answer: B
NEW QUESTION # 98
A journal in which all sales made on credit or cash are listed is:
- A. General journal
- B. Accounts receivable journal
- C. Disbursement journal
- D. Accounts payable journal
Answer: B
NEW QUESTION # 99
People commit financial statement fraud to:
- A. Conceal false business performances
- B. Maintain personal income
- C. Stand outside the accounting system
- D. Preserve personal status/control
Answer: A
Explanation:
Reference:ACFE Fraud Examiners Manual (2020 International Edition), Financial Statement Fraud - Motivations and Incentives.
NEW QUESTION # 100
Jones is an accounts payable clerk at Smith Company. He intentionally sent the wrong vendor a check for some supplies. He then called the vendor, explained his "mistake", and requested that the vendor mail back the check. Jones then intercepted the returned check and deposited it in his own account. What type of scheme did he commit?
- A. A shell company scheme
- B. An altered payee scheme
- C. A pay and return scheme
- D. A pass-through scheme
Answer: C
Explanation:
Explanation/Reference: https://www.gma-cpa.com/blog/billing-schemes-3-ways-fraudsters-can-cash-in-on-your-nonprofit#:~:text=Also%20known%20as%20a%20%E2%80%9Cpay,doesn't%20know%20it's%20occurring
NEW QUESTION # 101
Which of the following is an example of a cash larceny scheme?
- A. Michael is a cashier at a clothing store. He rings up a fictitious return of a $50 sweater and takes $50 from the cash register.
- B. Anne buys a $500 table from a resale shop. Olive, the cashier, rings up a $400 sale on the register and steals the excess $100.
- C. Laura pretends to ring up a sale when Amy makes a purchase, but instead she pockets Amy's cash and gives her the merchandise without recording the sale.
- D. Scott rings a "no sale" transaction at his cash register, opens the drawer, and takes a $100 bill.
Answer: A
Explanation:
Explanation/Reference: https://www.agacgfm.org/Intergovernmental-Toolbox/Fraud-Prevention/Tools-by-Fraud-Type/Cash-Larceny.aspx#:~:text=Among%20the%20five%20most%20prevalent,Stealing%20cash%20from%20the%
20register
NEW QUESTION # 102
Which of the following is an example of a cash larceny scheme?
- A. Sarah returned a $250 mirror to the store. Jenna, the cashier, recorded a $350 return on the cash register and kept the remaining $100.
- B. Mark, a cashier, knew the access code for Joe's cash register. He logged in as Joe and processed transactions as usual. He then took $50 from the register at the end of his shift.
- C. Emily is an accounts receivable clerk. She stole Customer A's monthly payment. When Customer B's payment arrived, she applied it to Customer A's account. When Customer C's payment arrived, she applied it to Customer B's account.
- D. Paul sold insurance policies to individuals but never filed the policies with the insurance company. He then stole the customers' payments, which he was able to do because the insurance company did not know the policies existed.
Answer: B
NEW QUESTION # 103
Which of the following is FALSE regarding electronic payment tampering?
- A. ACH blocks allow account holders to notify their banks that ACH debits should not be allowed on specific accounts.
- B. The lack of physical evidence makes electronic payment tampering more difficult to detect than traditional check tampering.
- C. Positive pay is recommended for ACH transactions to ensure their legitimacy.
- D. The individual who makes electronic payments on behalf of the company should also set ACH filters to ensure that only designated individuals are paid.
Answer: D
NEW QUESTION # 104
Black, an accounts receivable clerk, stole Customer A's monthly payment instead of posting it to A's account.
When Customer B's payment arrives a few days later, Black applies the payment to Customer A's account.
When Customer C's payment arrives a few days after that, Black applies it to Customer B's account. Black's method of crediting one account with money taken from another account is known as:
- A. Lapping
- B. Daisy chain
- C. Padding
- D. Substitution
Answer: A
NEW QUESTION # 105
Which of the following is FALSE concerning methods that corporate spies generally use to steal information from other organizations?
- A. Spies often gain direct access to a target company by obtaining employment as a security officer or a member of the maintenance staff.
- B. Spies often create counterfeit employee badges to gain entry into a target company.
- C. Spies use technical surveillance to obtain nondocumentary information about target companies that cannot be found through open sources.
- D. Spies primarily use social engineering to search for confidential information on employee desks or workstations at the target company.
Answer: D
Explanation:
Detailed Explanation:
* Rationale for Correct Answer: Corporate spies do use social engineering, but their primary methods include surveillance, infiltration (e.g., posing as employees), and technical monitoring. The statement in option C is false because searching desks/workstations is a tactic, but it is not the primary method.
* Analysis of Incorrect Options:
* A - True; fake badges are a common infiltration tactic.
* B - True; low-level jobs provide physical access.
* D - True; technical surveillance is a recognized method.
* Key Concept: Methods of corporate espionage.
Reference: ACFE Manual, Fraud Prevention and Deterrence - Competitive Intelligence and Espionage.
NEW QUESTION # 106
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The Certified Fraud Examiner - Financial Transactions and Fraud Schemes (CFE-Financial-Transactions-and-Fraud-Schemes) certification exam is a globally recognized credential in the field of fraud prevention and detection. Certified Fraud Examiner - Financial Transactions and Fraud Schemes Exam certification is offered by the Association of Certified Fraud Examiners (ACFE), the world's largest anti-fraud organization with over 85,000 members in 160 countries.
The CFE-Financial-Transactions-and-Fraud-Schemes exam covers a wide range of topics related to financial transactions and fraud schemes, including money laundering, financial statement fraud, and asset misappropriation. It also covers the legal and regulatory environment surrounding fraud investigations, as well as tools and techniques used in fraud detection and prevention.
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