CMA Final · Cost and Management Audit · Forensic Audit
Which of the following is an example of 'corruption' as a category in the fraud tree classification used by the Association of Certified Fraud Examiners?
Accepting kickbacks from a supplier for awarding contracts is corruption. In the fraud tree classification, corruption covers bribery, kickbacks, conflicts of interest and similar schemes, whereas inventory overstatement is financial statement fraud and cash theft or cheque alteration is asset misappropriation.
- AA purchasing officer accepting kickbacks from a supplier for awarding contractsCorrect
- BOverstating closing inventory to inflate profit
- CStealing cash received from customers before it is recorded
- DAltering a cheque payable to the company
Explanation
The fraud tree has three branches: asset misappropriation, corruption and financial statement fraud. Kickbacks and bribery are corruption. Inventory overstatement is financial statement fraud, while cash theft and cheque tampering are asset misappropriation.
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