Practice Free CFE Fraud Prevention and Deterrence Exam Online Questions
Which of the following statements is MOST ACCURATE regarding an effective system of anti-fraud controls?
- A . It reduces the risk of fraud but does not completely eliminate it.
- B . It prioritizes implementing preventive controls over detective controls.
- C . It focuses more on detective controls than preventive controls.
- D . It decreases a potential fraudster’s belief that misbehavior will be detected.
A
Explanation:
The manual states that no system of internal controls can fully eliminate the risk of fraud. Even so, well-designed and effective internal controls can greatly reduce an organization’s vulnerability to fraud by lowering opportunities and increasing the perception of detection. This means an anti-fraud control system is highly valuable, but it is not absolute. The manual does not say that preventive controls should always be prioritized over detective controls or vice versa; rather, both play important and complementary roles. It also specifically says effective controls increase, not decrease, the perception that misconduct will be detected, which is a key deterrent to potential fraudsters. Therefore, the most accurate statement is that an effective system of anti-fraud controls reduces risk but does not completely eliminate it.
Employees should be kept unaware that management is watching for lifestyle and behavior changes In staff members that might indicate fraud.
- A . True
- B . False
Which of the following is FALSE regarding the process of defining the objective of the fraud risk management program?
- 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.
A professional organization’s code of conduct serves which of the following purposes?
- A . A code offers fewer and less direct solutions to professional ethical dilemmas than might exist under general ethical principles.
- B . A code acts as a substitute for legal and regulatory requirements that apply to the profession.
- C . A code provides answers to all ethical dilemmas that the organization’s members might encounter.
- D . A code facilitates practical enforcement and internal discipline throughout a profession.
Reporting known incidents of fraud to law enforcement can be an effective fraud prevention mechanism.
- A . True
- B . False
Blue. Inc. is a specialty retailer of customized shipping containers. The company receives a very large order from Green Company, a new customer from a country that is known to have high corruption risks.
Which of the following is MOST ACCURATE regarding the due diligence procedures Blue should perform on Green before proceeding with this transaction?
- A . Blue should consider Green’s expected purchasing pattern and method of payment in determining whether to accept the transaction.
- B . Blue only needs to undertake due diligence procedures if Green is requesting to pay on credit.
- C . Blue should perform the same level of due diligence as it would for any other customer to avoid claims of discrimination.
- D . Blue does not need to undertake any specific due diligence procedures for this transaction.
Grace, a Certified Fraud Examiner (CFE), has accepted her first fraud examination engagement. Before beginning the investigation, she reviews the ACFE Code of Professional Ethics to ensure that her behavior will comply with the Code.
Which of the following actions is explicitly prohibited by the ACFE Code of Professional Ethics?
- A . Giving opinions regarding technical matters
- B . Participating in an activity with an undisclosed conflict of interest
- C . Engaging in an activity that is legal within her jurisdiction
- D . Providing conclusions based on discovered evidence
Professional auditing standards require that auditors incorporate an "element of unpredictability" in the selection of auditing procedures to be performed.
- A . True
- B . False
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?
- 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
Which of the following is included in the G20/OECD Principles of Corporate Governance?
- 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.