CFE-FINANCIAL-TRANSACTIONS-FRAUD-SCHEMES practice question 10 of 25

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:

Full set: 184 questions
Answer options
A: Conflict of interest
B: Corruption Correct answer
C: Bribery
D: Overbilling
Correct Answer:
B. Corruption
Explanation

The provided definition accurately describes corruption. Corruption is broadly defined as the abuse of an entrusted position or power for private gain. This encompasses any act where an official or fiduciary, who has a duty to act in the best interest of others (e.g., the public or an employer), wrongfully uses their influence or station to obtain a personal benefit. This act is inherently contrary to their duty and the rights of those they are supposed to serve. The other options represent more specific concepts that fall under or are related to this broader category.

Why Incorrect

A. Conflict of interest: This is a situation where an individual's personal interests could compromise their professional judgment, not necessarily the act of abuse itself.
C. Bribery: This is a specific type of corruption involving the offering or accepting of something of value to influence an official act, making it too narrow for the general definition.
D. Overbilling: This is a specific asset misappropriation scheme related to fraudulent disbursements, not a general abuse of an official or fiduciary position.

References

1. Association of Certified Fraud Examiners (ACFE). (2023). Fraud Examiners Manual, International Edition. Section 2: Financial Transactions and Fraud Schemes, Part II: The Fraud Tree, Chapter 5: Corruption. The manual defines corruption as "the wrongful use of influence to procure a benefit for the actor or another person, contrary to the duty or the rights of others." This definition is a direct match for the scenario described in the question.

2. Wells, J. T. (2011). Corporate Fraud Handbook: Prevention and Detection. John Wiley & Sons. Chapter 6, "Corruption," defines corruption schemes as those in which an employee misuses his or her influence in a business transaction in a way that violates his or her duty to the employer in order to gain a direct or indirect benefit.

3. Golden, T. W., Skalak, S. L., & Clayton, M. M. (2006). A Guide to Forensic Accounting Investigation. John Wiley & Sons. Chapter 10, "Corruption," discusses how corruption includes the wrongful use of influence in a business transaction to procure some benefit for oneself or another person, contrary to the individual's duty to their employer or the rights of another.

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