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Nov 9Roger Kohl

What’s Your Fraud IQ?

Nov 9Roger Kohl

The Association of Certified Fraud Examiners (ACFE), indicates the average U.S. business loses 5% of revenue to fraud and abuse each year.  In a recent study of 1,100+ fraud cases nearly one in four was $1 million or more.

5% of Revenue – On Average – Per Year.  That’s a startling fact!

In the current issue of Journal of Accountancy they’ve published the below 10 questions “What’s Your Fraud IQ?

Much attention is given to safeguarding financial and physical assets from fraud, but proprietary information can also be a target for theft. How much do you know about protecting personal and corporate information from would-be fraudsters? Take this Fraud IQ quiz to find out.

1. Ferdinand’s personal financial information recently was compromised. As a result, he is considering freezing his credit report to protect his credit from potential misuse. A freeze on Ferdinand’s consumer credit report would result in which of the following?

a. Ferdinand would have difficulty obtaining instant credit.
b. Prospective credit card issuers and lenders would be blocked from issuing new credit in Ferdinand’s name without his specific approval.
c. Access to Ferdinand’s credit report and score would be blocked.
d. All of the above

2. Which of the following is the LEAST likely to result in a data breach?

a. Compromised passwords
b. Thefts of encrypted laptops
c. Unsecured wireless networks
d. Outdated network security systems

3. Anastasia, the bookkeeper at a local law firm, received a voice mail, purportedly from the law firm’s bank, requesting that she call back to address an important matter. Anastasia returned the call but hung up immediately upon receiving an automated prompt to provide the law firm’s account number and PIN. Anastasia might have suspected which of the following types of schemes?

a. Vishing
b. Skimming
c. Phishing
d. Pharming

4. The Fair and Accurate Credit Transactions Act (FACTA) of 2003 attempts to reduce opportunities for identity theft through:

a. Requiring free credit reports for consumers annually from each of the three major credit reporting agencies
b. Requiring that third-party preparers of consumer reports, such as credit reports and employee background checks, dispose of such documents by burning, pulverizing or shredding them
c. Providing victims of identity theft or other fraud or crimes with the right to have fraud alerts placed on their accounts by the three major credit reporting agencies
d. All of the above

5. As a frequent business traveler, Horace spends much time in airports working on his laptop, which contains large amounts of confidential client data. The airports he frequents are public wireless hotspots. Although Horace appreciates the convenience of these hotspots, he has concerns about their security. Which of the following is NOT a step Horace should take to minimize his exposure to the dangers of public wireless networks?

a. Avoid connecting to an unknown public wireless network
b. Disable his laptop’s wireless network capabilities when he is not using them
c. Allow his computer to automatically select the wireless network to which to connect
d. Ensure that his anti-spyware software is up to date

6. Which of the following statements about pharming is false?

a. Pharming is used by hackers to redirect a legitimate website’s traffic to a phony site they control.
b. Pharming relies on social engineering to trick the victim into clicking on a link to a spoofed site.
c. Pharming directly attacks and alters domain name servers.
d. Pharming can be difficult to detect because the victim’s browser will show he or she is at the correct site.

7. A fraudster recently stole Griselda’s personal identifying information and used this information to seek medical treatment under Griselda’s health insurance policy. Which of the following is NOT a risk faced by Griselda as a result of the fraud?

a. Damage to her credit rating
b. Threats to her health
c. Difficulty accessing her medical records through the U.S. Central Source for Medical Records
d. Increases in her health insurance premium

8. Humphrey is interested in obtaining a new Social Security number because his original one was stolen and used to perpetrate identity fraud. Which of the following statements regarding obtaining a new Social Security number is false?

a. If Humphrey obtains a new Social Security number, he would still be able to use his old number.
b. To obtain a new Social Security number, Humphrey would need to prove that he is currently being disadvantaged by the misuse of his number.
c. Humphrey might have a difficult time obtaining credit under his new Social Security number.
d. Humphrey likely would not be able to obtain a new Social Security number unless the use of his stolen number was so extensive that there is little chance of repairing his credit history.

9. Which of the following is NOT a common network security feature?

a. A maximum number of logon attempts
b. Restriction of users to specific terminals
c. Logical security
d. Automatic logoff of inactive terminals

10. Which of the following devices is the most effective for controlling physical access to restricted areas?

a. Biometric locks
b. Key locks
c. Cipher locks
d. Access cards


If you answered seven questions correctly, congratulations. Your arsenal of antifraud knowledge is well armed and ready to aid in the fight against fraudulent conduct. Keep up the good work.

If you answered five or six questions correctly, you’re on the right track. Use the resources on the previous page to continue to build on your knowledge of fraud detection and investigation.

If you answered fewer than five questions correctly, you might want to brush up on your antifraud knowledge. Enhancing your understanding of fraud prevention, detection and investigation concepts will help ensure that you have what it takes to keep fraud from slipping by on your watch.


Fraud is a lot more common than many think.  You may click on “Fraud” under “Tags” to the right for a bit more on the subject.

How did you do on the test?


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