ACFE Certified Fraud Examiner CFE-FRAUD-PREVENTION-AND-DETERRENCE Questions & Answers

• Question 21:

  The objective of anti-fraud controls is to:

  A. Completely eliminate residual fraud risk

  B. Reduce the residual fraud risk to a level that is significantly smaller than the inherent fraud risk

  C. Reduce the inherent fraud risk to a level that is significantly smaller than the residual fraud risk.

  D. Completely eliminate inherent fraud risk

  Correct Answer: A

• Question 22:

  Which of the following is FALSE regarding fraud examiners responsibilities under the ACFE Code of Professional Ethics?

  A. Confidential information provided to fraud examiners by their clients is considered privileged and therefore legally exempt from disclosure in all circumstances

  B. In determining what information to include in a fraud examination report, fraud examiners should try to decide what users will consider important and material

  C. If fraud examiners become aware of a situation that might appear to others as though they have a conflict of interest they should immediately disclose the situation to company management

  D. Fraud examiners must obtain and document evidence in a manner that ensures that the chain of custody is preserved

  Correct Answer: B

• Question 23:

  Consistently punishing perpetrators can be an effective fraud prevention mechanism.

  A. True

  B. False

  Correct Answer: B

• Question 24:

  The Institute of Internal Auditors' (IIA) International Standards for the Professional Practice of Internal Auditing states that

  A. The internal auditor must apply the skill and care of an expert whose primary responsibility is investigating fraud

  B. The internal auditor must apply the skill and care of an expert whose primary responsibility is detecting fraud.

  C. The internal auditor must apply the skill and care of an unbiased, infallible audit professional.

  D. The internal auditor must apply the skill and care of a reasonably prudent and competent internal auditor

  Correct Answer: C

• Question 25:

  Which of the following is a detective anti-fraud control?

  A. Separation of duties

  B. Hiring policies and procedures

  C. Independent reconciliations

  D. Fraud awareness training

  Correct Answer: A

• Question 26:

  In the area of criminological theory, compliance is the theory that tries to prevent crime by providing economic incentives for voluntary conformity to the laws and using administrative efforts to control violations before they occur.

  A. True

  B. False

  Correct Answer: A

• Question 27:

  Which of the following best describes the purpose of The National Commission on Fraudulent Financial Reporting (the Treadway Commission)?

  A. Studying the effect of the threat of vicarious liability on the behavior of corporate executives

  B. Designing a model corporate compliance program

  C. Defining the responsibility of the auditor in preventing and detecting fraud

  D. Determining the specific requirements of the Principles of Risk Management

  Correct Answer: C

• Question 28:

  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?

  A. Negative reinforcement

  B. Punishment

  C. Positive reinforcement

  D. None of the above

  Correct Answer: D

• Question 29:

  Effective risk management involves balancing which of the following?

  A. The organization s internal controls and its financial goals

  B. The organization s financial reporting model and its risk tolerance

  C. The organization s regulatory requirements and its available resources

  D. The organization s risk appetite and its ability to meet its objectives

  Correct Answer: C

• Question 30:

  Employees should be kepi unaware that management is watching for lifestyle and behavior changes in staff members that might indicate fraud

  A. True

  B. False

  Correct Answer: A