CFE – Financial Transactions and Fraud Schemes — Question 93

Which of the following is the MOST APPROPRIATE technique for detecting a cost mischarging scheme?

Answer options

• A. Comparing the direct and indirect labor account totals from the prior year to the current year
• B. Reviewing the inspection and testing reports of questioned goods or materials
• C. Examining any change orders submitted by a contractor that add new items
• D. Inspecting questioned goods or materials by examining packaging, appearance, and description

Correct answer: A

Explanation

The correct answer is A because comparing direct and indirect labor account totals over time can reveal discrepancies that indicate cost mischarging. The other options, while relevant to quality assurance and change management, do not specifically target the identification of cost mischarging schemes.