The Fraud Examiners Manual states:

“The expenditures method works best when the subject spends illicit income on consumables (e.g., travel and entertainment), because when the subject spends the illicit income, it will not cause an increase in net worth.”

CFE Prep confirms:

“The expenditures method … is best used when the subject spends illicit income on consumables (such as travel and entertainment) that would not cause an increase in net worth.”

Thus, the correct answer is A.

The Fraud Examiners Manual warns against phrasing admissions as direct questions using emotive terms:

“The admission-seeking interview begins with a direct accusation… The accusation should be phrased as though the accused’s guilt has already been established. Emotive words such as steal, fraud, and crime should be avoided… Wrong: ‘Did you do this?’”.

Thus, phrasing the question as “Did you steal the money?” is least effective.

According to CFE Prep – Investigations:

“In most jurisdictions, income tax records are not public records and cannot be accessed for pre-employment purposes”.

Common public sources include court, property, licensing, and utility records.Thus, searching income tax filings is not a common use of public sources.

Explanation with Extracts = Predication requires sufficient circumstances to suggest fraud. The CFE Prep Guide explains:

“Fraud examiners should not investigate beyond the available predication… There is insufficient predication to confront Wallace or to make any direct allegations about fraud, but Carter does have adequate predication to make discreet inquiries”.Similarly, Arnold may discreetly inquire but not accuse or search property without further evidence.

The Fraud Examiners Manual defines:

“Testimonial evidence is that evidence which is presented in the form of witness statements, whether oral or written, offered in response to questions” (Fraud Examiners Manual – Evidence section).The colleague’s statement overhearing a conversation is testimonial evidence.

Nonverbal deception cues include feigned unconcern, slouching, chewing objects, and manipulating clothing. Michelle’s conduct (chewing pen cap, picking at fabric, appearing unconcerned) matches these signs of deception.

The organizational filings with the government of the jurisdiction in which the company is incorporated

Organizational filings (e.g., articles of incorporation) are generally public records and include ownership information, initial shareholders, and the location of the principal office.

The Fraud Examiners Manual clearly states:

“Accessing information set to private could result in claims under privacy laws. Thus, information on social media sites that is restricted by privacy settings could result in liability for fraud examiners due to violation of users’ privacy rights.”

Therefore, D is correct

The Fraud Examiners Manual explains:

“Each transaction on a blockchain ledger is recorded with a cryptographic address… by analyzing these addresses, fraud examiners can sometimes establish patterns and connections that identify users or link them to criminal activity”.

When introducing themselves, fraud examiners should avoid titles like investigator or Certified Fraud Examiner that might raise suspicion or defensiveness. The Manual recommends using neutral titles such as auditor because it is less threatening and more acceptable in an organizational setting.