Practice Free CFE Fraud Prevention and Deterrence Exam Online Questions
Aqua Corp.’s board of directors is meeting to discuss fraud risk management within the organization.
Which of the following activities is among the board of directors’ primary responsibilities related to fraud risk management for the company?
- A . Overseeing the organization’s fraud risk management activities.
- B . Monitoring and proactively improving the fraud risk management program.
- C . Performing and regularly updating the fraud risk assessment.
- D . Implementing the fraud risk management program throughout the organization.
Eliece, a Certified Fraud Examiner (CFE), and Jewel are employees at Silver Inc. Jewel informs Eliece that she has knowledge of a potential financial statement fraud but does not feel comfortable sharing this information unless Eliece can promise that she will keep it confidential.
How should Eliece respond?
- A . Eliece should immediately contact management at Silver Inc. to provide information about her conversation with Jewel and her request for confidentiality.
- B . Eliece should promise Jewel that she will keep the information confidential even though she knows that she will likely be unable to keep that promise.
- C . Eliece should encourage Jewel to report the information to law enforcement because she cannot agree to Jewel’s request.
- D . Eliece should tell Jewel that she will try to keep the information as confidential as possible but she might have an ethical obligation to inform their employer.
Which of the following is NOT one of the three elements that have the most influence on crime according to the routine activities theory?
- A . The presence of motivated offenders
- B . The absence of capable guardians
- C . The lack of societal ethics
- D . The availability of suitable targets
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?
- 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.
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
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?
- A . Monitoring
- B . Control environment
- C . Risk assessment
- D . Control activities
Which of the following statements is MOST ACCURATE regarding best practices that organizations can take to protect and support whistleblowers?
- A . Organizations should implement a clear whistleblower policy that lists every type of misconduct that has ever been reported at the company.
- B . Organizations should publicize their whistleblower policies and procedures to individuals both inside and outside of the organization.
- C . Organizations should include in their whistleblower policies the specific penalties that people might encounter for refusing to report known misconduct.
- D . Organizations should emphasize that rules regarding whistleblower protections are only intended for lower-level employees who might be more vulnerable to retaliation.
Which of the following is the MOST EFFECTIVE way for management to respond to incidents of fraud within an organization?
- A . Emphasizing to all employees that the company maintains a policy of zero tolerance for fraud.
- B . Keeping all known incidents of fraud private to protect the identities of parties involved.
- C . Maintaining a policy that allows employees one warning before they are terminated for committing fraud
- D . Punishing frauds only if they have a significant financial impact.
Reputational damage is an indirect cost of fraud that can be difficult for organizations to calculate.
- A . True
- B . False
Jenny is a highly respected employee at XYZ Corp. Her husband’s gambling addiction has caused them to have a significant amount of debt. Jenny begins stealing money from the company to cover her husband’s gambling losses.
This situation best illustrates which leg of the Fraud Triangle?
- A . Rationalization
- B . Perceived opportunity
- C . Perceived acquiescence
- D . Perceived non-shareable financial need