New Release CFE-Fraud-Prevention-and-Deterrence Certified Fraud Examiner Questions

COSO Definition of Internal Control:

COSO defines internal control as a process enacted by an entity's board, management, and personnel to provide reasonable assurance regarding objectives in operations, reporting, and compliance.

Analysis of Options:

A. Operational risk assessment: A component of internal control, not the overall process.

C. Fraud risk management: Focuses specifically on fraud risks, a subset of internal control.

D. Financial reporting: A specific objective addressed by internal control.

Conclusion:The correct answer is internal control, as defined by COSO.

References:COSO Internal Control—Integrated Framework​​.

Integration of Fraud Risk Assessment in Audits:

The fraud risk assessment provides valuable input but does not replace the auditor’s independent responsibility to identify and assess fraud risks.

Why B is Correct:

Professional auditing standards require auditors to perform their own risk assessments, and the fraud risk assessment is only a tool to enhance this process.

Why Other Options are Correct:

A, C, and D reflect appropriate uses of fraud risk assessments in the audit process, such as increasing awareness and designing effective audit tests​​.

References for All Questions:

ACFE Code of Professional Ethics and Fraud Examination Guide​​.

COSO frameworks for corporate governance and fraud risk management​​.

Standards for incorporating fraud risk assessments into the audit process​​.

 Internal Auditors' Role in Fraud Risk Management:

Internal auditors evaluate management’s commitment to overseeing and addressing fraud risks as part of their assurance role.

 Why A is Correct:

Oversight of fraud risk management is a management responsibility, and internal auditors assess whether this responsibility is effectively retained and executed.

 Why Other Options are Incorrect:

B: Reporting to regulators is not a core responsibility of internal auditors.

C: Internal auditors provide evaluation, not direct oversight.

D: Attesting financial statement accuracy is the responsibility of external auditors, not internal auditors​​.

Risk assessment is a core component of the COSO Framework and focuses on identifying, analyzing, and evaluating risks that could affect the organization's objectives. Andrew's initiative to evaluate threats aligns with this component, as it involves understanding the potential risks and their impact on achieving the organization's goals.

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