Free CFE-Fraud-Prevention-and-Deterrence Questions for ACFE CFE-Fraud-Prevention-and-Deterrence Exam

Question #1

Which of the following statements regarding monitoring employees for warning signs of fraud is MOST ACCURATE?

A. An increase in employee wealth is always a sign of fraud that should be investigated.

B. Managers should be instructed to observe employees for any unusual lifestyle improvements, such as an unexplained increase in luxury purchases.

C. Employees who steal do not commonly display lifestyle or behavioral warning signs of their misdeeds.

D. Managers should only observe employees for signs of suspicious behavioral or lifestyle changes if they can do so without the employees ' knowledge.

Discussion 0

Correct Answer: B Vote an answer

Question #2

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

A. Aaron likely does not have the ability to withdraw from the engagement, even if fraud is identified during the audit.

B. Aaron does not need to comply with the requirements found in International Standard on Auditing 240, as they do not apply to the engagement.

C. Aaron should remain alert for fraud but does not need to consider the potential for abuse or other misconduct during the audit engagement.

D. Aaron's audit objectives are likely narrower than those of a private-sector financial statement audit.

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Correct Answer: A Vote an answer

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Question #3

International Standard on Auditing (ISA) 240 establishes auditors as being primarily responsible for the establishment of anti-fraud internal controls within an organization.

A. False

B. True

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Correct Answer: A Vote an answer

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Question #4

(Which of the following factors has contributed to the rising problem of economic crime according to Crimes of the Middle Classes?)

A. The economy's increased reliance on credit

B. The decrease in funds available from government assistance programs

C. Advertising's message that it is okay to settle for second best

D. The increased regulatory constraints on businesses

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Correct Answer: A Vote an answer

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Question #5

Effectively documenting and communicating organizational hierarchies, including the proper flow of information, can be a helpful tool in preventing fraud.

A. False

B. True

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Correct Answer: B Vote an answer

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Question #6

Tasha, a new Certified Fraud Examiner (CFE), has been tasked with her first fraud examination engagement.
What is the MOST ACCURATE statement regarding how Tasha should exercise professional skepticism as she conducts the engagement?

A. Tasha should maintain her skeptical attitude throughout the entire engagement even if the evidence shows no signs of fraudulent activity.

B. Tasha should begin the engagement with the belief that fraud has occurred.

C. Tasha should maintain a mindset that fraud has not occurred until she finds conclusive evidence.

D. Tasha should form her engagement hypothesis before referring to any preliminary information that is available to maintain objectivity.

Discussion 0

Correct Answer: A Vote an answer

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Question #7

Which of the following is TRUE regarding the G20/OECD Principles of Corporate Governance?

A. They are required to be implemented by all corporations in the jurisdictions that have officially adopted them.

B. They state that a corporate governance framework should require disclosure of all financial information to the organization's investors.

C. They are intended to be applicable in developed economies but not in emerging markets.

D. They assert that a corporate governance framework should ensure the equitable treatment of all the organization's shareholders.

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Correct Answer: D Vote an answer

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Question #8

Christopher is conducting an external audit of a company in a jurisdiction that is subject to International Standards on Auditing (ISAs). While conducting his audit procedures, he discovers evidence of a fraud involving Jeffrey, the company's chief executive officer (CEO). Which of the following options is Christopher's BEST response to these findings?

A. Christopher should confront Jeffrey with his audit findings and try to get a confession.

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

C. Christopher should immediately report his findings to the relevant government authority.

D. Christopher should not disclose his findings to any other parties due to legal liability.

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Correct Answer: B Vote an answer

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Question #9

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

A. An examination of the importance of effectively designed and implemented internal control mechanisms within an organization

B. A call to support the equal treatment of all members of an organization's governing body

C. A requirement for corporations to establish a legal, regulatory, and institutional framework to support good governance practices

D. Guidance regarding appropriate board structures, responsibilities, and procedures

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Correct Answer: D Vote an answer

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Question #10

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

A. Formal sanctions for intentional noncompliance should be well-publicized throughout the company

B. The program must include mechanisms to monitor and identify breaches in compliance.

C. There should be measures in place to address failures in the design or operation of anti-fraud controls, as well as fraud occurrences

D. The responsibility of handling suspected incidents of noncompliance should be delegated to someone outside of the company.

Discussion 0

Correct Answer: D Vote an answer

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Question #11

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

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

B. Management should consult legal counsel regarding any necessary legal considerations in developing the anti-fraud policy.

C. One of the most important considerations in developing the anti-fraud policy is to ensure that every allegation is managed uniformly.

D. To avoid legal problems in terminating employees, the anti-fraud policy should include specific examples of fraud.

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Correct Answer: A Vote an answer

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Question #12

In identifying the inherent fraud risks that could apply to the organization, the fraud risk assessment team should discuss:

A. The possibility of management ' s override of controls

B. Risks to the organization ' s reputation

C. The organization ' s incentive programs

D. All of the above

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Correct Answer: D Vote an answer

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Question #13

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.

A. False

B. True

Discussion 0

Correct Answer: A Vote an answer

Question #14

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?

A. Human resources.

B. Fraud examiners.

C. Management.

D. General counsel.

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Correct Answer: C Vote an answer

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Question #15

(Which of the following is TRUE regarding the internal audit function's reporting responsibilities concerning fraud?)

A. 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.

B. The internal audit function should discuss with senior management and the board of directors any significant residual fraud risks.

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

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

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Correct Answer: B Vote an answer

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