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Free and Premium ACFE CFE-Fraud-Prevention-and-Deterrence Dumps Questions Answers

Certified Fraud Examiner - Fraud Prevention and Deterrence Exam Questions and Answers

Question 1

Which of the following is LEAST LIKELY to be a factor that directors and management should consider when developing a corporate governance framework for an organization?

Options:

A.

The organization's cultural environment

B.

The organization's legal and regulatory environment

C.

The organization's physical operating environment

D.

The organization's ethical environment

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Question 2

"Crimes of the Middle Classes" finds that all the following factors have contributed to the rising problem of economic crime EXCEPT:

Options:

A.

Media sources sending the message that no one has to settle for second best.

B.

Advancement of information technologies increasing the opportunity for misconduct.

C.

The increase in funds available from government assistance programs.

D.

The economy's decreased reliance on credit and a decline in personal debt.

Question 3

Gray, an independent Certified Fraud Examiner (CFE), was hired by Green, president of the ABC Corporation, to investigate allegations that one of ABC's employees is taking kickbacks. During the investigation. Gray teams that Green is involved in an unrelated fraud. Under the ACFE Code of Professional Ethics. Gray should:

Options:

A.

Not disclose the information about Green.

B.

Report Green to law enforcement

C.

Tell the company's board of directors about Green.

D.

Resign from the engagement

Question 4

Which of the following is among the board of directors' primary responsibilities related to fraud risk management?

Options:

A.

Overseeing the organization's fraud risk management activities

B.

Designing the fraud risk management program

C.

Punishing fraud perpetrators discovered through fraud risk management activities

D.

Implementing the fraud risk management program

Question 5

While, a Certified Fraud Examiner (CFE). was hired to conduct a fraud examination She did not find fraud, but. In White's opinion, there were several internal control deficiencies that, if not remediated, could facilitate the occurrence of fraud Under the ACFE Code of Professional Ethics. White may include her opinion on the controls in her report to management.

Options:

A.

True

B.

False

Question 6

Warren wants to decrease the amount of cash register discrepancies among the cashiers at his small business. According to behaviorist theories, which of the following options would be the MOST EFFECTIVE way for Warren to encourage the cashiers to reduce their discrepancies and keep their cash drawers balanced?

Options:

A.

Demote employees who continue to have reconciliation discrepancies.

B.

Publicly praise employees every time their cash drawers are balanced.

C.

Deduct an hour's worth of pay for anyone whose cash drawer is not perfectly reconciled each day.

D.

Take away an hour of paid time off from an employee each time their cash drawer is not balanced.

Question 7

According to ACFE research, which of the following is TRUE regarding prosecutions of white-collar criminals?

Options:

A.

The most common internal response to a substantiated fraud case is to terminate the employee.

B.

Only a small percentage of perpetrators are punished when an organization handles a fraud case internally.

C.

Most fraud cases are only handled internally and are not referred to law enforcement for prosecution.

D.

The primary reason that organizations decline to prosecute fraud cases is a lack of evidence.

Question 8

Which of the following is a TRUE statement regarding the role of a well-designed organizational structure within an anti-fraud program?

Options:

A.

Flowcharts displaying departmental structures can be a helpful tool in communicating the proper flow of information as part of fraud prevention efforts.

B.

Communicating the proper flow of information to everyone in the organization can increase the organization's vulnerability to fraud.

C.

It is best to avoid formally documenting organizational structures to limit fraudsters' ability to circumvent oversight controls.

D.

A confused organizational structure makes it harder for a fraudster to perpetrate and conceal their misdeeds.

Question 9

Adan, an internal auditor who works at BKY Co., is reviewing the auditing procedures for his company. He is specifically considering the ways BKY can proactively audit for fraud. Which of the following is TRUE regarding the use of proactive fraud auditing procedures at BKY?

Options:

A.

Analytical review of BKY's financial statements is the best way to uncover small frauds that might be missed by other detection methods.

B.

Fraud audit procedures should be designed to avoid an element of surprise.

C.

Auditors should avoid asking questions such as, "Has anyone ever asked you to do something unethical?" as part of their audits, as this can limit employees' willingness to communicate.

D.

Fraud assessment questioning techniques are most effectively used as part of the normal audit process.

Question 10

XYZ. Inc. is a publicly traded, multi-national corporation. Which of the following statements is TRUE regarding the corporate governance requirements that XYZ is subject to?

Options:

A.

XYZ must comply with the various laws and regulations in the countries in which it operates

B.

XYZ is subject to the Universal Corporate Governance Act because it is a publicly traded corporation.

C.

XYZ is required to comply with G20'OECD Principles of Corporate Governance.

D.

XYZ is not required to comply with any corporate governance requirements because it operates in multiple jurisdictions

Question 11

Which of the following is TRUE regarding government auditors' responsibilities to report evidence of potential fraud uncovered during an audit of a public-sector organization's financial statements?

Options:

A.

All government auditors maintain the same requirements for reporting evidence of potential fraud uncovered during a public-sector financial statement audit.

B.

Government auditors are legally prohibited from reporting evidence of potential fraud to any parties outside the organization being audited.

C.

Government auditors' reporting requirements pertaining to fraud are substantially the same as those for external auditors in the private sector.

D.

The requirements for government auditors to report evidence of potential fraud depend on the jurisdiction and the specific audit mandate.

Question 12

According to criminologist Charles McCaghy, which of the following is the most compelling factor behind deviance by organizations?

Options:

A.

Executive failures

B.

Excessive regulatory requirements

C.

Profit pressure

D.

Unethical corporate culture

Question 13

In Ihe context of fraud examination, integrity requires all of the following EXCEPT:

Options:

A.

An ability to analyze situations where no professional rules are specifically applicable and determine right from wrong

B.

Subordination of desires for personal gain to the interests of clients, employers, and the public

C.

Independence of mental attitude

D.

Avoidance of differences of opinion

Question 14

Based on research regarding the criminogenic nature of organizations, employees with strong personal values and ethics will always disobey a superior's direct order to engage in fraudulent behavior, despite an inherent desire to obey authority figures.

Options:

A.

True

B.

Flase

Question 15

Which of the following is NOT a factor that directors and management should consider when developing a corporate governance framework for an organization?

Options:

A.

The legal and regulatory environment in which the organization operates

B.

The ability of the framework to remain static during changes in the corporate landscape

C.

The organization's ethical environment

D.

The organization's cultural environment

Question 16

Which of the following statements regarding the objectives of a fraud risk management program is TRUE?

Options:

A.

A fraud risk management program should only focus on addressing fraud after it occurs.

B.

A fraud risk management program should incorporate policies and procedures designed to both prevent and detect fraud but should not address fraud responses.

C.

A fraud risk management program should include the formal procedures that management takes in response to a fraud, such as rebuilding stakeholders' confidence in the organization.

D.

A fraud risk management program should prioritize activities that proactively identify and assess fraud risks over activities that detect fraud while it is occurring.

Question 17

Which of the following statements is FALSE regarding an organization's fraud risk management program?

Options:

A.

The program must include mechanisms to address breaches in compliance.

B.

The punishment for intentional noncompliance should be carried out in a consistent and firm manner.

C.

Formal sanctions for intentional noncompliance should be determined and enacted privately

D.

A specific individual or team should be designated as responsible for monitoring compliance with the program

Question 18

Josie is conducting an external audit of a company in a jurisdiction that is subject to International Standards on Auditing (ISAs). While conducting her audit procedures, she discovers evidence that Carissa, the company’s chief financial officer, has been fraudulently manipulating the financial statements. Which of the following is Josie’s BEST response to these findings?

Options:

A.

Josie should report her findings to those charged with governance of the organization.

B.

Josie should not disclose her findings to anyone until after she has conducted a full investigation.

C.

Josie should immediately report her findings to the local media.

D.

Josie should confront Carissa with her audit findings and try to get a confession.

Question 19

Which of the following is included in the G20/OECD Principles of Corporate Governance?

Options:

A.

A requirement for a corporate governance framework that protects the exercise of management’s rights.

B.

Support for the equal treatment of all members of an organization’s governing body.

C.

A request that governments implement effective internal controls to support good corporate governance practices.

D.

An emphasis on the importance of timely, accurate and transparent disclosure mechanisms.

Question 20

Harry is an internal auditor with ABC Company. Harry's supervisor, the chief audit executive (CAE), is the fraud risk assessment sponsor and has tasked Harry with drafting an email communication regarding ABC's upcoming fraud risk assessment process. Which of the following is a best practice that Harry should implement?

Options:

A.

Harry should keep the communication private and only share it with executive management.

B.

Harry's communication should encourage employees to participate in the assessment process.

C.

Harry should find a generic template to use as the primary communication to the entire staff.

D.

Harry's communication should be sent to the entire staff from his own email address.

Question 21

_____________Is the criminological theory that presents crime as a conscious decision that can be deterred by reducing opportunities for criminal activity and increasing the personal risk to an Individual of being caught and punished.

Options:

A.

Differential association theory

B.

Routine activities theory

C.

Justification of action theory

D.

Rational choice theory

Question 22

Gregory, an internal auditor, and Brandon, the company's purchasing manager, have had several heated disagreements over purchasing procedures and policies. Gregory has just been told that he will be the lead on the company's fraud risk assessment. During the fraud risk assessment. Gregory should:

Options:

A.

Confront Brandon about the disagreements and discuss how they increase the organization's risk of fraud-

B.

Have someone else perform the fraud risk assessment work related to the purchasing function

C.

Include his disagreements with Brandon as a factor when assessing the risk of fraud in the purchasing function.

D.

Automatically designate the purchasing function as a high-risk area.

Question 23

Which of the following scenarios is LEAST LIKELY to be considered a conflict of interest that is prohibited under the ACFE Code of Professional Ethics?

Options:

A.

Lori accepts an assignment to infiltrate her employer and transmit inside information to a competitor.

B.

Ren undertakes an external engagement that requires him to work outside the normal work hours of his primary employer.

C.

DeVon undertakes engagements for both sides in a case of an alleged fraudulent warranty scheme.

D.

Karen accepts an assignment to search for fraud indicators at an organization in which she is an undisclosed partner.

Question 24

Which of the following is a best practice to ensure a successful fraud reporting program?

Options:

A.

The company should communicate that fraud, waste, and abuse are more likely to occur in large organizations than small ones.

B.

The company should require employees with information about potential fraud to report it directly and only to their immediate supervisor.

C.

Employees are held accountable for reporting tips that are not able to be substantiated

D.

Employees should be informed that, to the extent possible, their names will not be disclosed.

Question 25

According to Diane Vaughan. which of the following factors increases an organization's inherent inclination toward committing crime?

Options:

A.

Rewards are given to employees who challenge the status quo

B.

Management encourages employee loyalty through social functions

C.

Management separates employee performance goals from company performance goals

D.

All of the above

Question 26

At the end of an engagement, a Certified Fraud Examiner (CFE) might provide a report to their client about the information uncovered during the investigation. Which of the following statements is TRUE regarding the potential privilege that applies to this report?

Options:

A.

A fraud examiner's report is considered privileged information and is therefore protected from being legally demanded by outside parties.

B.

A fraud examiner's report may be privileged from disclosure in certain circumstances, but it does not have an absolute legal privilege.

C.

A fraud examiner's report is privileged from disclosure by anyone other than the client.

D.

A fraud examiner's report is only privileged from disclosure if the author is also a professional legal advisor.

Question 27

Which of the following is one of the components of the Committee of Sponsoring Organizations of the Treadway Commission's (COSO) Enterprise Risk Management—Integrating with Strategy and Performance?

Options:

A.

Event avoidance

B.

Risk tolerance

C.

Compliance

D.

Review and revision

Question 28

Which of the following is included in the G20/OECD Principles of Corporate Governance?

Options:

A.

Support for the equal treatment of all members of an organization's governing body.

B.

A requirement for a corporate governance framework that protects the exercise of management's rights.

C.

An emphasis on the importance of timely, accurate, and transparent disclosure mechanisms.

D.

A request that governments implement effective internal controls to support good corporate governance practices.

Question 29

Patrick is conducting an external audit of a company in a jurisdiction that is subject to International Standards on Auditing (ISAs). While undertaking his audit procedures, he discovers evidence that senior management has been fraudulently manipulating the financial statements. Which of the following is Patrick's BEST response to these findings?

Options:

A.

Patrick should confront management with his audit findings and try to get a confession.

B.

Patrick should immediately report his findings to local law enforcement authorities.

C.

Patrick should not disclose his findings to any other parties due to client confidentiality

D.

Patrick should report his findings to those charged with governance of the organization.

Question 30

Which of the following is FALSE regarding an organization's anti-fraud policy?

Options:

A.

A detailed anti-fraud policy can make it easier to investigate and punish employees who commit fraud and other dishonest acts.

B.

To avoid legal problems in discharging employees, the anti-fraud policy should not include any specific examples of frau and misconduct.

C.

In developing the anti-fraud policy, management should check with legal counsel regarding any legal considerations with respect to the policy.

D.

One of the most important considerations in developing the anti-fraud policy is to ensure every allegation is handled in a uniform manner.

Question 31

Which of the following is an example of organizational crime?

Options:

A.

A sales manager using a corporate credit card for personal expenses

B.

Management of several pharmaceutical companies engaging in a price fixing scheme

C.

An insurance claims agent conspiring with customers to file false insurance claims and share the proceeds

D.

An HR employee adding a ghost employee to the payroll and misappropriating the paychecks

Question 32

Which of the following is TRUE regarding an organization's ethics program?

Options:

A.

An ethics program should avoid addressing rewards for ethical behavior and sanctions for unethical behavior

B.

In designing the ethics program, management should consider how stakeholders throughout the organization define success

C.

To be most effective, access to the organization’s ethics policy should be restricted to external parties such as vendors and customers

D.

Having a written ethics policy is sufficient to communicate management’s ethical philosophy and serve as a comprehensive ethics program

Question 33

Which of the following would MOST LIKELY be a violation of the ACFE Code of Professional Ethics?

Options:

A.

Green a CFE, uncovered several material internal control deficiencies unrelated to the financial statement fraud he was investigating. In his final report to management. Green included information about the deficiencies even though they were unrelated to the situation he was hired to investigate.

B.

Stephanie, a CFE, accepted a fraud examination assignment and then instructed a lower-level employee to assess the company's cash records for signs of fraud. She took his word when he said there was no evidence of wrongdoing and ended up failing to uncover a very costly fraud scheme.

C.

Susan, a CFE, was hired by a client to conduct a fraud examination but found nothing amiss A year later, she received a legal order from the local prosecutor's office to provide the client's file. Susan complied with the court order, even though she did not have the client's authorization to do so.

D.

All of the above are violations

Question 34

Which of the following is NOT one of the three general approaches used to control corporate crime?

Options:

A.

Strong intervention of the government

B.

Voluntary changes in corporate attitudes and structure

C.

Consumer action to force change

D.

Media blacklisting of the organization

Question 35

Stevens, a Certified Fraud Examiner (CFE), was hired to conduct a fraud examination at ABC Company. His examination did not reveal any conclusive evidence that fraud had occurred or was occurring. Consequently, ABC's management asked Stevens to state in his official examination report that the organization is free of fraud as a means of assuring the board of directors that the company's anti-fraud controls were effective. Under the ACFE Code of Professional Ethics. Stevens is permitted to comply with management's request based on the findings of his examination.

Options:

A.

True

B.

False

Question 36

Which of the following is an example of organizational crime?

Options:

A.

A salesman offering bribes to secure a contract

B.

An accounting clerk forging company checks to herself

C.

A doctor conspiring with patients to Tile false health care insurance claims

D.

Management of several construction companies engaging In bid rigging

Question 37

Which of the following statements is TRUE regarding how fraud examiners should exercise professional skepticism during a fraud examination engagement?

Options:

A.

Professional skepticism means beginning all assignments with the belief that something is amiss.

B.

Professional skepticism involves maintaining a mindset that no fraud has occurred

C.

Fraud examiners should form the engagement hypothesis without regard to the available preliminary information.

D.

Fraud examiners should not relax their skeptical attitudes under any circumstances.

Question 38

Employee anti-fraud education should:

Options:

A.

Include descriptions of the procedures that management uses to detect fraud.

B.

Include examples of prior employee misconduct and how those situations were handled.

C.

Be restricted to formal educational mechanisms to reinforce the importance of the message.

D.

Be presented by organizational executives or anti-fraud professionals only.

Question 39

Management at ABC Company wants to transfer one of the risks identified during the company's fraud risk assessment process. Which of the following actions would be MOST APPROPRIATE to support this response?

Options:

A.

Implementing additional preventive and detective controls

B.

Discontinuing the underlying activity completely

C.

Deciding not to implement any responsive measures

D.

Purchasing fidelity insurance to protect against the associated risk of loss

Question 40

The theory of differential association is used frequently lo explain white-collar criminality. Which of the following is NOT one of the assertions or principles of differential association?

Options:

A.

Criminal behavior is explained by an individual's general needs and values.

B.

Criminal behavior is acquired through participation with intimate personal groups.

C.

Criminal behavior is learned from other people in a process of communication.

D.

Criminal behavior is learned using the same mechanisms as other learning

Question 41

Jane, a Certified Fraud Examiner (CFE), was hired lo conduct a fraud examination at XYZ Company Her examination did not reveal any conclusive evidence that fraud had occurred or was occurring Consequently. XYZ's management asked Jane to state in her official examination report that the company is free of fraud as a means of assuring the board of directors that the company's anti-fraud controls were effective. The ACFE Code of Professional Ethics prohibits Jane from complying with management's request.

Options:

A.

True

B.

False

Question 42

Luis, the internal audit manager for Oak Corporation, is working to formally incorporate the company's fraud risk assessment into its audit process. Which of the following is NOT a way that Oak's audit team should use the fraud risk assessment process and results as part of their audits?

Options:

A.

To inform the development of audit programs for areas that have been identified as having a high risk of fraud.

B.

To confirm whether there is conclusive evidence that fraud is occurring within the company.

C.

To validate whether the organization is appropriately managing moderate-to-high fraud risks.

D.

To design audit tests to evaluate whether fraud risk controls are operating effectively.

Question 43

Which of the following is a best practice when assembling a fraud risk assessment team?

Options:

A.

Team members should all have similar skills and perspectives.

B.

The size of the team should be limited to four individuals.

C.

The team should include only external sources.

D.

Team members should have experience in eliciting information.

Question 44

According to the results of behavioral studies, such as those conducted by B. F. Skinner, application of punishment to undesired behavior typically results in which of the following?

Options:

A.

increase in the occurrence of the undesired behavior

B.

No effect on the occurrence of the undesired behavior

C.

Temporary suppression of the undesired behavior

D.

Permanent suppression of the undesired behavior

Question 45

Which of the following is a TRUE statement regarding fraud risks?

Options:

A.

Inherent risks are risks that remain after efforts are made to mitigate fraud risk.

B.

The objective of anti-fraud controls is to completely eliminate the inherent fraud risk.

C.

The objective of anti-fraud controls is to reduce the residual fraud risk to a level that is significantly lower than the inherent fraud risk.

D.

Residual risks are risks that are present before the effect of internal controls.

Question 46

Which of the following is TRUE regarding prosecutions of white-collar criminals?

Options:

A.

Only a small percentage of perpetrators are punished when an organization deals with a fraud case internally.

B.

Most fraud cases are only handled internally and are not referred to law enforcement for prosecution

C.

The primary reason organizations decline to prosecute fraud cases is a belief that their internal discipline methods are sufficient

D.

When fraud cases are handled internally, an employee is more likely to be suspended or put on probation than to be terminated for their crime.

Question 47

During an external audit of an organization's financial statements. Peter, the external auditor, uncovers significant internal control deficiencies at the audit client's organization. He believes these deficiencies could result in a material misstatement of the financial statements. Which of the following should Peter do with regard to these findings?

Options:

A.

Peter should make a public announcement that he is withdrawing from the audit engagement.

B.

Peter should provide a written communication about the findings to those charged with governance.

C.

Peter should report the findings in writing directly to the appropriate regulatory agencies

D.

Peter should discreetly work with senior management to correct the underlying internal control deficiencies.

Question 48

In response to an employee's failure to meet performance expectations, a manager demotes the employee to a junior-level position. This is an example of what type of behavioral response?

Options:

A.

Positive reinforcement

B.

Negative reinforcement

C.

Punishment

D.

None of the above

Question 49

Which of the following is BEST classified as a type of external fraud risk?

Options:

A.

Adding ghost employees to payroll.

B.

Embezzling incoming customer payments.

C.

Collusion between contractors.

D.

Reporting revenue in the wrong period.

Question 50

Rosie, a Certified Fraud Examiner (CFE), conducted a fraud examination for her company that led to a confession of guilt from Dean. Which of the following statements in Rosie's verbal report to management would violate the ACFE Code of Professional Ethics?

Options:

A.

"The evidence does not support Dean's confession."

B.

"Dean is guilty of embezzlement."

C.

"Dean's confession is supported by the evidence."

D.

"Dean confessed to embezzlement."

Question 51

Who is ultimately responsible for responding appropriately to instances of fraud within an organization?

Options:

A.

Internal auditors

B.

The audit committee

C.

General counsel

D.

Management

Question 52

Timothy, a new Certified Fraud Examiner (CFE), has been tasked with his first fraud examination engagement. To exercise appropriate professional skepticism as he conducts the engagement, Timothy should:

Options:

A.

Begin the engagement with the belief that no fraud has occurred.

B.

Maintain a skeptical attitude throughout the entire engagement even if the evidence shows no signs of fraudulent activity.

C.

Maintain professional skepticism that can only be dispelled by evidence.

D.

Form the engagement hypothesis without consideration for the nature of the assignment.

Question 53

Which of the following is FALSE regarding the process of defining the objective of the fraud risk management program?

Options:

A.

Management should examine previous fraud occurrences to determine how the ideal fraud risk management program would have prevented tnem.

B.

Management must balance the investment in anti-fraud controls with the benefit of those controls and the amount of risk it is willing to accept.

C.

Management must assign a quantitative measure to its risk appetite so that it can accurately measure the fraud risk management program’s effectiveness.

D.

Management should tailor the detailed objectives of the fraud risk management program to the organization's specific needs and goals.

Question 54

Management at ABC Corp. is assessing the company's ethical tone and how it affects the organization's fraud risk. To MOST EFFECTIVELY reinforce an anti-fraud culture, management should:

Options:

A.

Use a checklist of initiatives to make sure all the elements of a strong tone at the lop are in place

B.

Create an environment in which employees are dissuaded from challenging management's decisions

C.

Visibly adhere to the same set of ethics policies that is required of all employees

D.

All of the above

Question 55

Risk management is focused on balancing the organization's___________with Its____________.

Options:

A.

Internal controls; financial reporting model

B.

Regulatory requirements, risk appetite

C.

Objectives; resources

D.

Risk appetite, ability to meet its objectives

Question 56

Po, a Certified Fraud Examiner (CFE), was hired to conduct a fraud examination. She did not find fraud, but in Po's opinion, there were several internal control deficiencies that, if not corrected, could facilitate the occurrence of fraud. Under the ACFE Code of Professional Ethics, which of the following is TRUE?

Options:

A.

Po may include her opinion on the internal controls in her report to management only if management agrees to compensate her for the addition.

B.

Po may include her opinion on the internal controls in her report to management because it is a technical matter.

C.

Po may include her opinion on the internal controls in her report to management only if she amends her contract.

D.

Po may not include her opinion on the internal controls in her report to management because that is not what she was hired to assess.

Question 57

Which of the following is NOT one of the three general approaches used to control corporate crime?

Options:

A.

Withdrawal of financial institution funding

B.

Strong intervention of the government

C.

Consumer action to force change

D.

Voluntary changes in corporate attitudes and structure

Question 58

Which of the following statements is MOST ACCURATE regarding an organization's fraud risk management program?

Options:

A.

Formal sanctions for intentional noncompliance should be kept private and only shared if a party absolutely needs to know.

B.

All employees at the organization should be responsible for monitoring compliance with the program.

C.

Punishment for intentional noncompliance should be individualized based on the offender's personal circumstances.

D.

Systems to monitor and identify breaches in compliance must be included in the fraud risk management program.

Question 59

As part of its anti-fraud program, Oak Company is outlining the responsibilities of different stakeholders. Who is ultimately responsible for setting the organization’s ethical tone?

Options:

A.

General counsel

B.

Human resources

C.

Management

D.

Fraud examiners

Question 60

Which of the following is TRUE regarding the internal audit function's reporting responsibilities pertaining to fraud?

Options:

A.

The internal audit function should discuss how and when to report fraud-related issues with senior management and the board of directors before such issues arise.

B.

The internal audit function is permitted, but not required, to periodically report about the organization's fraud risks to senior management and the board of directors.

C.

The internal audit function should not disclose the results of its fraud audits to senior management or the board of directors in order to maintain independence.

D.

The internal audit function is not permitted to communicate with the board of directors about fraud, as that is the responsibility of external auditors.

Question 61

Which of the following is one of the three general methods used to control corporate crime?

Options:

A.

Pressure from changes in the competitive environment

B.

Lowered regulatory enforcement by the government

C.

Loss of funding from financial institutions

D.

Demands from consumers to change

Question 62

The objectives of a fraud risk management program include:

Options:

A.

Proactively identifying fraud risks

B.

Limiting the damage caused by fraud occurrences

C.

Punishing fraud perpetrators

D.

All of the above

Question 63

Which of the following Is one of the components of the Committee of Sponsoring Organizations of the Treadway Commission's (COSO) Enterprise Risk Management—Integrating with Strategy and Performance?

Options:

A.

Independent monitoring

B.

Operating environment

C.

Risk tolerance

D.

Governance and culture

Question 64

During a fraud risk assessment, a focus group would be MOST HELPFUL in which of the following situations?

Options:

A.

The assessment team would like to provide a means for anonymous employee suggestions or responses to questions posed.

B.

The assessment team would like to observe the interactions of several employees discussing the organization's current fraud awareness training.

C.

The assessment team would like to obtain individuals' responses through a formal electronic questionnaire.

D.

The assessment team would like to get candid one-on-one feedback from employees in a private setting.

Question 65

Which of the following statements regarding best practices that organizations can take to protect and support whistleblowers is MOST ACCURATE?

Options:

A.

Organizations should emphasize that rules regarding whistleblower protections are only intended for lower level employees who might be more vulnerable to retaliation.

B.

Organizations should implement a clear whistleblower policy that lists out every type of misconduct that has ever been reported at the company.

C.

Organizations should publicize their whistleblower procedures internally but should avoid communicating any procedural information to parties outside of the organization.

D.

Organizations should establish formal consequences that are to be imposed upon employees at the company who retaliate against a whistleblower.

Question 66

An effective system of anti-fraud controls

Options:

A.

Fully eliminates the risk of fraud

B.

Focuses more on detective controls than preventive controls

C.

Focuses more on preventive controls than detective controls

D.

Increases the perception that fraud will be detected

Question 67

Reporting known incidents of fraud to law enforcement can be an effective fraud prevention mechanism.

Options:

A.

True

B.

False

Question 68

Willow, Inc. has a complex organizational structure with many specialized departments. The structure of Willow, Inc. increases the likelihood that fraud will go undetected within the organization.

Options:

A.

True

B.

False

Question 69

Which of the following is one of the four recommendations made by the National Commission on Fraudulent Financial Reporting (the Treadway Commission) to reduce the probability of fraud in financial reports?

Options:

A.

Assign oversight of the hotline reporting program to company shareholders

B.

Have a mandatory independent finance committee

C.

Provide adequate resources and authority to the internal audit function

D.

Develop a written charter for the audit committee

Question 70

Which of the following is NOT a responsibility of the organization's board of directors?

Options:

A.

Serving as the intermediaries between shareholders and management

B.

Acting as guardians of the organization's resources and assets

C.

Directing employees to execute business activities

D.

Assessing the strategy and underlying purpose of management's decisions and actions

Exam Detail
Vendor: ACFE
Last Update: Apr 26, 2025
CFE-Fraud-Prevention-and-Deterrence Question Answers