Forensic Accounting: Financial-Statement Fraud, AML and Litigation Support

This test probes advanced competencies in forensic accounting across three interlocking domains. Candidates must apply analytical judgment to financial-statement fraud schemes, including improper revenue recognition, channel stuffing, and bill-and-hold arrangements that inflate reported earnings. The money-laundering section covers the classic three-stage model, typologies identified by the Financial Action Task Force, and the design of effective AML controls such as transaction monitoring, customer due diligence, and suspicious-activity reporting. The asset-tracing and economic-damages sections examine the methodologies forensic accountants use in litigation support: net-worth analysis, source-and-application-of-funds tracing, the lost-profits models recognised by courts, and the standards governing expert-witness reports under frameworks such as the US Federal Rules of Evidence and IESBA guidance. Questions are set at analysis level, requiring candidates to distinguish closely related methods, identify the deficiency in a described procedure, or apply a principle to a realistic fact pattern drawn from international practice.