Practice Free CFE Fraud Prevention and Deterrence Exam Online Questions
Which of the following is TRUE regarding prosecutions of white-collar criminals?
- A . Only a small percentage of perpetrators are punished when an organization deals with a fraud case internally.
- B . Most fraud cases are only handled internally and are not referred to law enforcement for prosecution
- C . The primary reason organizations decline to prosecute fraud cases is a belief that their internal discipline methods are sufficient
- D . When fraud cases are handled internally, an employee is more likely to be suspended or put on probation than to be terminated for their crime.
B
Explanation:
Many organizations opt to deal with fraud cases internally, often for reasons such as fear of reputational damage, cost of prosecution, or concern about the length and complexity of legal processes. They may prefer to resolve the matter privately, through disciplinary actions like termination, demotion, or reprimand, rather than going through a public legal process. This is why most fraud cases are handled internally and not referred to law enforcement for prosecution.
During a fraud risk assessment, a focus group would be MOST HELPFUL in which of the following situations?
- A . The assessment team would like to provide a means for anonymous employee suggestions or responses to questions posed.
- B . The assessment team would like to observe the interactions of several employees discussing the organization’s current fraud awareness training.
- C . The assessment team would like to obtain individuals’ responses through a formal electronic questionnaire.
- D . The assessment team would like to get candid one-on-one feedback from employees in a private
setting.
Management at ABC Corp. is assessing the company’s ethical tone and how it affects the organization’s fraud risk.
To most effectively reinforce an anti-fraud culture, management should:
- A . Use a checklist of initiatives to make sure all the elements of a strong tone at the top are in place
- B . Create an environment in which employees feel safe challenging management’s decisions
- C . implement two separate sets of ethics policies, one for management and one for employees
- D . All of the above
_____________Is the criminological theory that presents crime as a conscious decision that can be deterred by reducing opportunities for criminal activity and increasing the personal risk to an Individual of being caught and punished.
- A . Differential association theory
- B . Routine activities theory
- C . Justification of action theory
- D . Rational choice theory
According to International Organization for Standardization (ISO) 31000:2018, an effective and efficient risk management program contains all of the following principles EXCEPT:
- A . The program takes human and cultural factors into account.
- B . The program is static and consistent, even during times of organizational change.
- C . The program facilitates continuous improvement.
- D . The program is customized and proportionate to the organization’s operations and objectives.
During an external audit of an organization’s financial statements. Peter, the external auditor, uncovers significant internal control deficiencies at the audit client’s organization. He believes these deficiencies could result in a material misstatement of the financial statements.
Which of the following should Peter do with regard to these findings?
- A . Peter should make a public announcement that he is withdrawing from the audit engagement.
- B . Peter should provide a written communication about the findings to those charged with governance.
- C . Peter should report the findings in writing directly to the appropriate regulatory agencies
- D . Peter should discreetly work with senior management to correct the underlying internal control deficiencies.
Which of the following is a best practice to ensure a successful fraud reporting program?
- A . The company should communicate that fraud, waste, and abuse are more likely to occur in large organizations than small ones.
- B . The company should require employees with information about potential fraud to report it directly and only to their immediate supervisor.
- C . Employees are held accountable for reporting tips that are not able to be substantiated
- D . Employees should be informed that, to the extent possible, their names will not be disclosed.
Rhys, a Certified Fraud Examiner (CFE), was hired to conduct a fraud examination at Marvel Company. His examination did not reveal any conclusive evidence that fraud had occurred or was occurring. Consequently, Marvel’s management asked Rhys to state in his official examination report that the company is free of fraud as a means of assuring the board of directors that the company’s anti-fraud controls were effective.
Which of the following is TRUE regarding the ACFE Code of Professional Ethics in this situation?
- A . The ACFE Code of Professional Ethics allows Rhys to comply with management’s request without limitations.
- B . The ACFE Code of Professional Ethics allows Rhys to comply with management’s request only if he can find another CFE to co-sign his report.
- C . The ACFE Code of Professional Ethics allows Rhys to comply with management’s request only if the company has liability insurance to cover an incorrect assertion.
- D . The ACFE Code of Professional Ethics absolutely prohibits Rhys from complying with management’s request.
The objective of anti-fraud controls is to:
- A . Completely eliminate inherent fraud risk.
- B . Reduce the inherent fraud risk to a level that is significantly smaller than the residual fraud risk.
- C . Completely eliminate residual fraud risk
- D . Reduce the residual fraud risk to a level that is significantly smaller than the inherent fraud risk
Which of the following is TRUE regarding a background check policy for employees?
- A . When verifying past employment, management should only ask previous employers to verify the candidate’s previous position and dates of employment.
- B . If a background check was conducted on an employee at the time of hire, then there is no need for management to conduct additional background checks on that employee during their employment.
- C . As part of the screening process, management should contact the personal and professional references provided by the job candidate only if they are unsure whether the candidate is being honest.
- D . Management should perform a background check on any candidate who will have access to cash, checks, credit card numbers, or other items that are easily stolen.