Question 1

Identify the unlawful trading schemes engaged in through mutual funds.

Accepted Answer

A)  Leveraging and layering 
B)  Commission fraud and speculative trading 
C)  Market timing and late trading 
D)  Circular trading and NAV manipulation

Question 2

What has been verified as the most significant impact for companies who have antifraud controls in place?

Accepted Answer

A)  More employee fraud is prevented. 
B)  Victim organizations have lower losses. 
C)  More management fraud is prevented. 
D)  Consumer loyalty is increased.

Question 3

Which of the following is NOT an example of a commission-based payroll fraud?

Accepted Answer

A)  Creating fictitious sales 
B)  Manipulating the number of hours worked and the rate of pay 
C)  Falsifying the value of sales made by altering prices listed on sales documents 
D)  Overstating sales by claiming sales made by another employee or in another period

Question 4

What is known as dilution?

Accepted Answer

A)  The artificial difference between the net asset value (NAV) and the fair value of the securities 
B)  An investment technique that involves short-term "in-and-out" trading of mutual fund shares 
C)  The loss resulting from "forward pricing" requirements 
D)  The harm caused by the transfer of wealth from long-term investors to market timers

Question 5

The most common occupational frauds in small businesses involve employees doing all of the following EXCEPT:

Accepted Answer

A)  skimming revenues. 
B)  fraudulently writing company checks. 
C)  processing fraudulent invoices. 
D)  altering financial statements.

Question 6

Orders placed for buying shares of a mutual fund any time up to 4:00 p.m. are priced at that day's net asset value (NAV), and orders placed after 4:01 p.m. are priced at the next day's NAV. What is this practice known as?

Accepted Answer

A)  Forward pricing 
B)  Late trading 
C)  Price arbitrage 
D)  Price dealing

Question 7

Which of the following occurs when an employee demands a payment from a vendor in order to make a decision in that vendor's favor?

Accepted Answer

A)  Bribery 
B)  Larceny 
C)  Economic extortion 
D)  Illegal gratuity

Question 8

Which of the payroll fraud schemes listed below tends to generate the largest losses?

Accepted Answer

A)  Commission 
B)  Falsified hours and salary 
C)  Ghost employee 
D)  False worker compensation

Exam 14: Fraud Against Organizations