ACFE CFE-Fraud-Prevention-and-Deterrence Exam With Confidence Using Practice Dumps

 Definition of Professional Skepticism:

Professional skepticism requires maintaining a questioning mindset and critically assessing evidence throughout the fraud examination process.

 Why D is Correct:

Professional skepticism ensures that fraud examiners remain vigilant and rely on evidence to conclude whether fraud has occurred or not. It is dispelled only when sufficient evidence supports a clear conclusion.

 Why Other Options are Incorrect:

A: While skepticism is critical, it does not mean refusing to acknowledge credible evidence.

B: Assuming no fraud occurred contradicts the principle of skepticism.

C: Hypotheses should consider the nature of the assignment and available information​​.

 Treadway Commission Recommendations:

The National Commission on Fraudulent Financial Reporting (Treadway Commission) issued guidelines to strengthen financial reporting integrity and reduce fraud risks.

One key recommendation was to ensure that the audit committee is well-resourced and has sufficient authority to oversee financial reporting processes effectively.

 Audit Committee Role:

An adequately empowered audit committee improves oversight, supports the internal audit function, and ensures proper implementation of controls to prevent and detect fraud.

 Why D is Correct:

This recommendation directly addresses the reduction of fraud probability by enhancing oversight capabilities​​.

 Fraud Risk Reduction Objectives:

Inherent fraud risk: The risk present before any controls are applied.

Residual fraud risk: The remaining risk after controls have been implemented.

 Why D is Correct:

The goal of anti-fraud controls is to minimize residual risk to acceptable levels, recognizing that complete elimination of risk is unattainable.

 Why Other Options are Incorrect:

A and C: It is impractical to completely eliminate inherent or residual fraud risks.

B: Residual risk should be lower than inherent risk, but controls aim for significant reduction​