CFE – Investigation — Question 88

Which of the following is NOT true with regard to tracing the disposition of loan proceeds?

Answer options

• A. Tracing loan proceeds can identify the presence of internal control weaknesses.
• B. Tracing loan proceeds can uncover previously hidden assets.
• C. Tracing loan proceeds can determine if the proceeds were deposited into hidden accounts.
• D. Tracing loan proceeds can determine if hidden accounts were used for loan payments.

Correct answer: C

Explanation

Option C is correct because tracing loan proceeds does not specifically determine if the funds were deposited into hidden accounts; it primarily focuses on the flow and use of the funds. The other options accurately describe the benefits of tracing loan proceeds, such as revealing internal control weaknesses, uncovering hidden assets, and identifying the use of hidden accounts for loan payments.