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

Questions 4

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

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Questions 5

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

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Questions 6

According to Silk and Vogel’s research, which of the following is one of the ways that businesses rationalize illegal conduct?

Options:

A.

Government regulations are justified because the additional costs of regulations and bureaucratic procedures increase government profits.

B.

Violations are caused by innocent errors in judgment rather than economic necessity.

C.

Government regulation is unnecessary because the matters being regulated are unimportant.

D.

Corporate violations that involve large sums of money are often spread among so many organizations that each gains very little individually.

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Questions 7

In the context of a fraud examination, integrity requires which of the following?

Options:

A.

Prioritization of desires for personal gain over the interests of clients

B.

A well-developed sense of moral philosophy and the ability to distinguish right from wrong

C.

The ability to conceal errors to preserve the reliability of the work performed

D.

Avoidance of differences of opinion on all material matters

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Questions 8

During an external audit, the audit team identifies evidence that management has Intentionally manipulated the organization's reported revenue amount However, the amount of the resulting misstatement does not meet the quantitative materiality threshold for the audit. Which of the following is TRUE regarding this situation?

Options:

A.

The auditors should reconsider the reliability of the audit evidence they have previously obtained.

B.

The auditors should assume that all audit evidence collected previously is unreliable and withdraw from the audit engagement.

C.

The auditors should only consider the evidence if they can determine that the actions meet the legal definition of fraud.

D.

The auditors should regard the misstatement as immatenal to the audit because the omitted amount is less than the quantitative materiality threshold

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Questions 9

Baldwin, a Certified Fraud Examiner (CFE), has an ethical dilemma regarding his business contract with his professional partners. Which of the following scenarios demonstrates Baldwin consulting a source of guidance that would be considered the LOWEST level of reference to use for determining the most ethical action to take?

Options:

A.

Baldwin asking for guidance from his family and friends.

B.

Baldwin reviewing the ACFE Code of Professional Ethics.

C.

Baldwin contemplating philosophical principles related to ethics.

D.

Baldwin reading the applicable contract law.

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Questions 10

During the course of a fraud examination. While, an employee of the ABC Corp.. approaches Blue, a Certified Fraud Examiner (CFE), and tells Blue that she wishes to furnish information in confidence. Blue also is employed by the ABC Corp. Blue should:

Options:

A.

Tell White that she will try to keep the information as confidential as possible

B.

Agree that the information will be held in confidence, even though Blue knows it will not be

C.

Take White's request straight to ABC Corp.'s management

D.

Not agree to the request for confidentiality

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Questions 11

Which of the following is NOT an effective way to help prevent fraud through the organization's performance measurement and management programs?

Options:

A.

Including ethics-based metrics as a component of performance evaluations

B.

Providing regular training to ensure that all employees are sufficiently prepared to perform their tasks

C.

Establishing loosely defined job descriptions that allow employees flexibility in their roles

D.

Tying employee compensation to reasonable organizational performance goals

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Questions 12

Which of the following statements about the fraud risk assessment process Is MOST ACCURATE?

Options:

A.

The fraud risk assessment can be effectively conducted by people inside or outside of the organization.

B.

To ensure the independence of the team members, a fraud risk assessment must be conducted by a consultant or other external party.

C.

If the individuals conducting the fraud risk assessment truly believe that fraud could not happen at the organization, then the assessment process should reflect that belief.

D.

The fraud risk assessment is most effective when management's influence on the process is limited

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Questions 13

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

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Questions 14

Which of the following Is FALSE regarding a fraud risk assessment?

Options:

A.

The assessment team should consider how employees behave as part of Its assessment

B.

The assessment should be used to improve employee fraud awareness.

C.

The designation of an area as being high risk does not conclusively mean that fraud is occurring there.

D.

The objective of the assessment is to provide an estimate of the organization's fraud losses.

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Questions 15

According to ACFE research, the most common method for detecting occupational fraud is:

Options:

A.

Tips

B.

Internal audit

C.

External audit

D.

Management review

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Questions 16

Which of the following is TRUE regarding a background check policy for employees?

Options:

A.

When verifying past employment, management should only ask previous employers to verify the candidate's previous position and dates of employment.

B.

If a background check was conducted on an employee at the time of hire, then there is no need for management to conduct additional background checks on that employee during their employment.

C.

As part of the screening process, management should contact the personal and professional references provided by the job candidate only if they are unsure whether the candidate is being honest.

D.

Management should perform a background check on any candidate who will have access to cash, checks, credit card numbers, or other items that are easily stolen.

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Questions 17

Which of the following is one of the assertions or principles of the theory of differential association?

Options:

A.

Criminal behavior is learned using the same mechanisms as other learning.

B.

Criminal behavior is learned through a process that is the same as imitation.

C.

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

D.

Criminal behavior is acquired through casual interactions in large groups.

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Questions 18

Management at Alpha Company is developing a corporate compliance program. To ensure that the program will be effective, management should both incentivize employees for their compliance and discipline them for any violations.

Options:

A.

True

B.

False

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Questions 19

Hart, Inc. hired Kathleen, a risk management expert, to design a risk management program for the organization. Kathleen should focus on balancing which of the following two factors when creating the program?

Options:

A.

Management's risk appetite and the organization's ability to meet its objectives.

B.

The organization's internal controls and its financial reporting model.

C.

Management's risk appetite and relevant regulatory requirements.

D.

The organization's objectives and available resources.

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Questions 20

Armando has been tasked with developing policies to help prevent crime by using the threat of criminal sanctions to control the immediate behavior of individuals. Which of the following strategies to control crime is Armando using?

Options:

A.

Deterrence

B.

Enforcement

C.

Prevention

D.

Compliance

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Questions 21

Which of the following principles of corporate governance pertains to the duty of the organization to act in the best interest of society?

Options:

A.

Transparency

B.

Responsibility

C.

Fairness

D.

Accountability

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Questions 22

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

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Questions 23

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

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Questions 24

According to the authors of Crimes of the Middle Classes, all of the following factors have contributed to the rising problem of economic crime EXCEPT:

Options:

A.

The continued pressures of a culture that rewards affluence and success

B.

The economy's increased reliance on credit

C.

The increased constraints of the regulatory environment for businesses

D.

The increased opportunity for wrongdoing as a result of advancing information technologies

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Questions 25

XYZ, Inc. Is a specialty retailer of high-end ergonomic office furniture. The company receives a very large order from ABC Company, a new customer in a different country that wants to pay on credit. Which of the following is MOST ACCURATE regarding the due diligence procedures XYZ should perform on ABC before proceeding with this transaction?

Options:

A.

XYZ only needs to undertake due diligence procedures if ABC conducts business in countries with known corruption risks.

B.

XYZ does not need to take any specific procedures to verify ABC's identity before accepting the transaction

C.

XYZ should examine ABC's net worth as part of deciding whether to allow the purchase on credit.

D.

XYZ should perform the same level of due diligence as it would for any other customer to avoid claims of discrimination

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Questions 26

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

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Questions 27

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

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Questions 28

Which of the following is FALSE regarding the fraud risk assessment learn?

Options:

A.

The team members should have experience in gathering and eliciting information

B.

The team members might include both internal and external sources.

C.

The team size should be limited to a maximum of three individuals

D.

The team should consist of individuals with diverse knowledge, skills, and perspectives

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Questions 29

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

Options:

A.

Collusion between contractors

B.

Adding ghost employees to payroll

C.

Reporting revenue in the wrong period

D.

Embezzling incoming customer payments

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Questions 30

According to Silk and Vogel's research, business leaders rationalize legal violations by asserting that compliance with government regulations is too costly and cuts too heavily into company profits.

Options:

A.

True

B.

False

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Questions 31

"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.

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Questions 32

Which of the following is NOT explicitly prohibited by the ACFE Code of Professional Ethics?

Options:

A.

Acting in a way that could be deemed unethical by the industry

B.

Drawing conclusions based upon evidence

C.

Participating in an activity where there is an undisclosed conflict of interest

D.

Engaging in behavior that is against the law

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Questions 33

Charles, the chief executive officer (CEO) of the Baking & Things Corporation, hired Daniela, a Certified Fraud Examiner (CFE), to investigate an embezzlement case. During the investigation, Daniela learns that Charles is involved in an unrelated fraud. What action should Daniela take based on the ACFE Code of Professional Ethics?

Options:

A.

Daniela should immediately resign from the engagement.

B.

Daniela should report Charles to law enforcement.

C.

Daniela should contact the media to report what she found.

D.

Daniela should tell the company's board of directors about Charles.

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Questions 34

Which of the following is TRUE regarding the communication of the fraud risk assessment process?

Options:

A.

The more personalized the communication, the more effective it will be in encouraging employees to participate

B.

The communication should be made in a format mat is most appropriate for the culture of the organization

C.

The communication should be visibly disseminated throughout the business

D.

All of the above

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Questions 35

Which of the following is a responsibility of an organization's board of directors?

Options:

A.

Serving as the intermediary between staff-level employees and management.

B.

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

C.

Electing the company shareholders and supervising their decisions and actions.

D.

Directing employees to organize and execute business activities.

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Questions 36

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

Options:

A.

Give shareholders oversight of hotline reporting programs

B.

Have adequate compensation committee resources and authority

C.

Develop a written charter for management

D.

Have a mandatory independent audit committee

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Questions 37

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

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Questions 38

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.

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Questions 39

Employee support programs are a fraud prevention mechanism that addresses which leg of the Fraud Triangle

Options:

A.

Rationalization

B.

Lack of integrity

C.

Opportunity

D.

Pressure

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Questions 40

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

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Questions 41

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.

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Questions 42

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.

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Questions 43

Which of the following is NOT a purpose served by a professional organization's code of conduct?

Options:

A.

It replaces the need for individuals to consult their own conscience.

B.

It facilitates practical enforcement and profession-wide Internal discipline.

C.

It serves as a reference and benchmark for ethical guidance

D.

It provides more direct solutions to professional ethical dilemmas than might exist under general ethical principles

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Questions 44

According to the Fraud Risk Management Guide, a joint publication by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) and the ACFE, under which principle should an organization communicate the expectations of those overseeing the fraud risk management program?

Options:

A.

Fraud risk governance

B.

Fraud control activities

C.

Fraud risk management monitoring activities

D.

Fraud investigation and corrective action

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Questions 45

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.

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Questions 46

Rhys, a Certified Fraud Examiner (CFE), was hired to conduct a fraud examination at Marvel Company. His examination did not reveal any conclusive evidence that fraud had occurred or was occurring. Consequently, Marvel's management asked Rhys to state in his 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. Which of the following is TRUE regarding the ACFE Code of Professional Ethics in this situation?

Options:

A.

The ACFE Code of Professional Ethics allows Rhys to comply with management's request without limitations.

B.

The ACFE Code of Professional Ethics allows Rhys to comply with management's request only if he can find another CFE to co-sign his report.

C.

The ACFE Code of Professional Ethics allows Rhys to comply with management's request only if the company has liability insurance to cover an incorrect assertion.

D.

The ACFE Code of Professional Ethics absolutely prohibits Rhys from complying with management's request.

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Questions 47

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.

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Questions 48

Who is ultimately responsible lor ensuring the effectiveness of the organization's anti-fraud program?

Options:

A.

Internal auditors

B.

The compliance function

C.

Management

D.

External auditors

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Questions 49

According to behaviorists such as B. F. Skinner, which of the following scenarios is MOST LIKELY to occur when an undesired behavior is punished?

Options:

A.

The behavior will return when punishment ceases

B.

The behavior will be permanently suppressed

C.

The behavior will occur more frequently.

D.

The behavior will not be affected by the punishment

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Questions 50

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.

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Questions 51

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.

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Questions 52

According to International Organization for Standardization (ISO) 31000:2018, an effective and efficient risk management program contains all of the following principles EXCEPT:

Options:

A.

The program takes human and cultural factors into account.

B.

The program is static and consistent, even during times of organizational change.

C.

The program facilitates continuous improvement.

D.

The program is customized and proportionate to the organization's operations and objectives.

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Questions 53

Gian is a manager at Ram Co. and is tasked with building the company's fraud risk management program. As a starting point, Gian wants to formally define the program's objectives. Which of the following is TRUE regarding the process of defining the objectives of the fraud risk management program?

Options:

A.

Gian must ensure that the company's investment in the fraud risk management program outweighs the benefit of those controls.

B.

When expressing the organization's risk appetite, Gian should do so without regard to the company's culture or operations.

C.

Gian must assign both a quantitative and qualitative measure to the company's risk appetite to accurately measure the program's effectiveness.

D.

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

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Questions 54

For Its compliance program to be effective, an organization must perform procedures to ensure management hires only ethical Individuals who exercise a substantial measure of discretion In acting on the organization's behalf

Options:

A.

True

B.

False

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Questions 55

Andrew, an internal auditor, is formalizing a process to identify and evaluate threats to his company’s ability to achieve its objectives. Andrew's initiative BEST pertains to which component of the Committee of Sponsoring Organizations of the Treadway Commission's (COSO) Internal Control—Integrated Framework?

Options:

A.

Monitoring

B.

Control environment

C.

Risk assessment

D.

Control activities

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Questions 56

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

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Questions 57

Which of the following Is NOT Included In Ihe five fraud risk management principles described In Fraud Risk Management Guide, a joint publication by COSO and the ACFE?

Options:

A.

Communicating the expectations of those governing the fraud risk management program

B.

Performing comprehensive fraud risk assessments to identify specific fraud schemes

C.

Deploying preventive and detective fraud control activities to mitigate fraud risk

D.

Developing one-time evaluations for each fraud risk management principle

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Questions 58

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.

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Questions 59

According to the 2020 Report to the Nations.___________schemes ate the MOST COMMON form of occupational fraud,

while_________schemes are the MOST COSTLY form of occupational fraud.

Options:

A.

Asset misappropriation; corruption

B.

Corruption, asset misappropriation

C.

Financial statement fraud: corruption

D.

Asset misappropriation: financial statement fraud

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Questions 60

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.

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Questions 61

According to Silk and Vogel's research, which of the following is one of the ways that businesses rationalize illegal conduct?

Options:

A.

Corporate violations that involve large sums of money are often spread among so many organizations that each gains very little individually.

B.

Violations are caused by innocent errors in judgment rather than economic necessity.

C.

Government regulations are justified because the additional costs of regulations and bureaucratic procedures increase government profits.

D.

Government regulation is unnecessary because the matters being regulated are unimportant.

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Questions 62

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.

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Questions 63

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.

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Questions 64

Pieter, a manager at Solox Corp., oversees the fraud training for the organization's employees. He is reviewing the training for the coming year. Which of the following actions should Pieter take to ensure that Solox's employee anti-fraud education program is effective?

Options:

A.

Include detailed descriptions of the organization's anti-fraud controls.

B.

Include common characteristics that lead individuals to commit fraud.

C.

Restrict training to formal live, in-person sessions required of all full-time, lower-level employees.

D.

Require the training to only be presented by organizational executives or anti-fraud professionals.

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Questions 65

Which of the following is NOT included in G20/OECD Principles of Corporate Governance (the Principles)?

Options:

A.

Guidance regarding appropriate board structures, responsibilities, and procedures

B.

Support for establishing stronger protection for foreign shareholders than for domestic shareholders

C.

A request that governments have in place an appropriate framework to support good corporate governance practices

D.

Recognition of the importance of the role of stakeholders in corporate governance

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Questions 66

A government auditor is conducting a financial statement audit of a public-sector entity in accordance with the International Standards of Supreme Audit Institutions (ISSAI). Which of the following is TRUE regarding the auditor's consideration of fraud during this engagement?

Options:

A.

In addition to fraud, the auditor should remain alert to potential occurrences of abuse during the audit.

B.

The auditor has the automatic ability to withdraw from the audit engagement if fraud is found.

C.

The requirements found in International Standard on Auditing (ISA) 240 do not apply to the engagement

D.

The objectives of the audit are likely narrower than those of a private-sector financial statement audit.

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Questions 67

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

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Questions 68

Which of the following scenarios is the MOST ACCURATE representation of organizational crime?

Options:

A.

A retail clerk colluding with a friend to commit a scheme involving fraudulent returns.

B.

An inventory manager taking home the company's product to sell privately.

C.

An agreement between all the local floral companies to unnecessarily raise prices.

D.

An accountant uses company funds to pay personal credit card charges.

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Questions 69

The Committee of Sponsoring Organizations of the Treadway Commission's (COSO) Enterprise Risk Management—Integrating with Strategy and Performance defines what as ‘the continual iterative process of obtaining information and sharing it throughout the entity’?

Options:

A.

Performance

B.

Strategy and objective-setting

C.

Governance and culture

D.

Information, communication, and reporting

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Questions 70

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.

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Exam Name: Certified Fraud Examiner - Fraud Prevention and Deterrence Exam
Last Update: Apr 21, 2025
Questions: 234

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