Certified Fraud Examiner Practice Exam 2026 – All-in-One Guide to Master Your Certification!

The method used to prove illicit income by comparing expenses against income is most appropriately associated with the Net Worth Method. This approach focuses on analyzing an individual's or entity's net worth over time, establishing the change in assets and liabilities, and assessing discrepancies that could indicate unreported income. By evaluating how much wealth a person has accumulated and the corresponding legitimate expenses, you can infer whether there are additional income sources that may not be reported.

In this context, the Net Worth Method directly correlates variations in financial status to possible unreported income, while monitoring whether such increases align with known income sources. Any unexplained growth in net worth, when compared against declared income, can provide evidence of illicit activities.

The other methods mentioned serve different purposes. Cash Flow Analysis looks at the flow of cash in and out of an individual’s finances, focusing on monitoring liquidity rather than net worth changes. Income Statement Reconciliation helps in verifying reported income against actual financial performance but is less focused on the relationship between expenses and illicit income. The Expense Verification Process could review expense claims for legitimacy but does not inherently compare these against income to reveal unreported funds.