Practice Free CFE Fraud Prevention and Deterrence Exam Online Questions
Which of the following Is TRUE regarding an organization’s ethics program?
- A . To be most effective, access to the organization’s ethics policy should be restricted to employees and other Internal parties only
- B . In designing the ethics program, management should consider whether the organization currently has any ethical leadership Issues
- C . An effective written ethics policy alone is sufficient to communicate management’s ethical philosophy and serve as a comprehensive ethics program
- D . All of the above
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
D
Explanation:
Jenny is facing financial difficulties due to her husband’s gambling addiction, which is causing significant debt. This creates a perceived non-shareable financial need, which is one leg of the Fraud Triangle. The other two legs are rationalization (justifying the fraudulent behavior) and perceived opportunity (believing that the fraud can be committed without getting caught). In this case, the question does not provide information about how Jenny might rationalize her actions or perceive an opportunity to commit fraud without detection.
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?
- A . Fraud risk governance
- B . Fraud control activities
- C . Fraud risk management monitoring activities
- D . Fraud investigation and corrective action
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.
Reputational damage is an indirect cost of fraud that can be difficult for organizations to calculate.
- A . True
- B . False
Based on research regarding the criminogenic tendencies of organizations, employees are more likely to engage in fraudulent behavior when given a direct order to do so by a superior due to an inherent desire to obey people in positions of authority.
- A . True
- B . False
Which of the following statements regarding monitoring employees for warning signs of fraud is MOST ACCURATE?
- A . Employees should be made aware that management is watching for unexplained lifestyle and behavioral changes that might indicate fraudulent conduct.
- B . An increase in employee wealth is always a sign of fraud that should be investigated.
- C . Employees who steal do not commonly display lifestyle or behavioral warning signs of their misdeeds.
- D . Managers should be instructed that it is a violation of employee privacy rights to monitor employees for behaviors that are indicative of fraud.
Which of the following statements regarding recommended vendor due diligence procedures is MOST ACCURATE?
- A . An organization should subject vendors to an internal audit conducted by the organization’s own auditors before agreeing to do business with them.
- B . An organization should avoid revealing that it is seeking information about potential vendors prior to starting a relationship with them.
- C . An organization should request that new vendors fill out a questionnaire about their background immediately after signing a contract with them.
- D . An organization should include a clause in the contract requiring the vendor to report any misconduct before entering into an agreement with them.
According to the 2020 Report to the Nations, which of the following is the MOST COMMON method by which frauds are detected?
- A . Internal audit
- B . Confession
- C . Tips
- D . External audit
Which of the following statements is TRUE according to rational choice theory?
- A . Crime originates from a rational and conscious decision made by the perpetrator in order to receive an intended benefit.
- B . Crime originates from an instinctual response to external stimuli without any rational or conscious decision by the perpetrator.
- C . Crime can be deterred by increasing the personal benefit to potential perpetrators.
- D . Crime can be deterred by decreasing the personal risk to potential perpetrators.