CFE-Financial-Transactions-and-Fraud-Schemes Exam Dumps - Certified Fraud Examiner - Financial Transactions and Fraud Schemes Exam

Detailed Explanation:

Rationale for Correct Answer: This is third-party fraud, where someone uses another person’s identity (often a relative or acquaintance) to obtain services or benefits they are not entitled to, such as medical treatment under another’s insurance.

Analysis of Incorrect Options:

A. Misrepresentations fraud – Usually involves false information by a legitimate patient or provider.

B. Fictitious claims fraud – Involves billing for services that never occurred.

D. Multiple claims fraud – Involves submitting duplicate claims for the same service.

Key Concept: Health care fraud typologies – patient third-party impersonation.

Detailed Explanation:

Rationale for Correct Answer: In a need recognition scheme, an employee creates or exaggerates a need for goods or services to benefit a favored supplier. One red flag is that materials are ordered prematurely or not at the optimal reorder point, suggesting that purchases are being manipulated to benefit a corrupt vendor rather than based on actual business needs.

Analysis of Incorrect Options:

A – A large list of suppliers suggests competition, not fraud.

C – A need met by various suppliers does not indicate fraud.

D – Low requirements for stock may reflect lean inventory management, not fraud.

Key Concept: Corruption – need recognition schemes and red flags.

Comprehensive and Detailed Explanation From the ACFE Financial Transactions and Fraud Schemes Manual

The ACFE Fraud Examiners Manual (2020 International Edition), under the section on Information Security in Electronic Commerce Systems, describes the three primary security goals that must be achieved to protect users and account holders:

Confidentiality

Integrity

Availability

These three goals form the cornerstone of information system protection and are often referred to as the CIA triad.

1. Confidentiality

Confidentiality ensures that sensitive information is accessible only to authorized individuals. The Manual highlights that e-commerce systems must protect customers’ personal and financial data from unauthorized access.

2. Integrity

Integrity requires that the information in the system is accurate and has not been improperly altered. This prevents fraudulent manipulation of records, transactions, and account balances.

3. Availability

Availability ensures that systems and data are accessible to authorized users when needed. This includes preventing disruptions caused by system failures, denial-of-service attacks, or internal sabotage.

These three goals are explicitly documented in the ACFE Manual as essential security requirements for safeguarding electronic financial systems.

Why Option C is the Correct Answer

“Penetrability of data” is NOT an information security goal.

In fact, it is the opposite of what an information security framework seeks to achieve. No section of the ACFE Manual identifies "penetrability" as a required or legitimate objective. Instead, systems should be resistant to penetration attempts.

Thus, Option C does not belong to the CIA model or any ACFE-described security framework.

ACFE Manual Reference

These concepts are covered in the Financial Transactions and Fraud Schemes section discussing information security objectives for e-commerce environments, which identifies confidentiality, integrity, and availability as the foundational goals of secure systems.

Detailed Explanation:

Rationale for Correct Answer: Affinity fraud occurs when fraudsters exploit trust within identifiable groups—such as religious, ethnic, or professional communities—making members more susceptible to deception.

Analysis of Incorrect Options:

B – Social control fraud relates to control fraud by institutions, not religious targeting.

C – Bait and switch is a deceptive sales tactic, not specific to religious groups.

D – Advance-fee scams may target anyone, not specifically religious communities.

Key Concept: Affinity fraud as a corruption/exploitation scheme.

Detailed Explanation:

Rationale for Correct Answer:Weak or poor collection and recording procedures create opportunities for employees to skim. Without strong controls over cash receipts and documentation, employees can divert funds without detection.

Analysis of Incorrect Options:

A. Revenue sources and recording procedures – Too general; it is weak procedures that matter.

C. Internal audits and recording procedures – Audits help detect fraud, not enable it.

D. Register manipulations and recording procedures – Describes concealment, not the root cause.

Key Concept:Control weaknesses enable skimming.