CFE Fraud Prevention and Deterrence Exam Dumps - Reliable Way to Pass and Get Certified

CFE Fraud Prevention and Deterrence Exam Dumps – Reliable Way to Pass and Get Certified

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June 27, 2023

If you are looking for a reliable and comprehensive way to prepare for your CFE Fraud Prevention and Deterrence certification exam, look no further than CFE Fraud Prevention and Deterrence exam questions. These CFE Fraud Prevention and Deterrence exam dumps questions are designed to help you assess your knowledge, identify your strengths and weaknesses, and improve your chances of passing the exam on the first try. These CFE Fraud Prevention and Deterrence dumps questions cover all the topics and concepts that are essential for the CFE Fraud Prevention and Deterrence exam, so you can be sure that you are fully prepared. Test ACFE CFE Fraud Prevention and Deterrence free dumps below.

Page 1 of 8

1. Gray, an independent Certified Fraud Examiner (CFE), was hired by Green, president of the ABC Corporation, to investigate allegations that one of ABC's employees is taking kickbacks. During the investigation.

Gray teams that Green is involved in an unrelated fraud. Under the ACFE Code of Professional Ethics. Gray should:

Not disclose the information about Green.

Report Green to law enforcement

Tell the company's board of directors about Green.

Resign from the engagement

2. A professional organization's code of conduct serves which of the following purposes?

It functions as a reference and benchmark for ethical guidance.

It offers fewer and less direct solutions to professional ethical dilemmas than might exist under general ethical principles.

It acts as a substitute for legal and regulatory requirements that apply to the profession.

It replaces the need for individuals to consult their own principles.

3. Which of the following is a best practice to ensure a successful fraud reporting program?

The company should communicate that fraud, waste, and abuse are more likely to occur in large organizations than small ones.

The company should require employees with information about potential fraud to report it directly and only to their immediate supervisor.

Employees are held accountable for reporting tips that are not able to be substantiated

Employees should be informed that, to the extent possible, their names will not be disclosed.

4. Which of the following components of the Committee of Sponsoring Organizations of the Treadway Commission’s (COSO) Enterprise Risk Management―Integrating with Strategy and Performance refers to an organization’s ability to continually assess how well its enterprise risk management (ERM) capabilities and practices have increased value over time and how they will continue to drive value for the organization?

Risk tolerance

Governance and culture

Strategy and objective-setting

Review and revision

5. A professional organization's code of conduct serves which of the following purposes?

A code offers fewer and less direct solutions to professional ethical dilemmas than might exist under general ethical principles.

A code acts as a substitute for legal and regulatory requirements that apply to the profession.

A code provides answers to all ethical dilemmas that the organization's members might encounter.

A code facilitates practical enforcement and internal discipline throughout a profession.

6. Pieter, a manager at Solox Corp., oversees the fraud training for the organization's employees. He is reviewing the training for the coming year.

Which of the following actions should Pieter take to ensure that Solox's employee anti-fraud education program is effective?

Include detailed descriptions of the organization's anti-fraud controls.

Include common characteristics that lead individuals to commit fraud.

Restrict training to formal live, in-person sessions required of all full-time, lower-level employees.

Require the training to only be presented by organizational executives or anti-fraud professionals.

7. Daniela, an independent Certified Fraud Examiner (CFE), was hired by Charles, executive director of a nonprofit organization, to investigate a straightforward embezzlement case. During the investigation, Daniela learns that Charles is involved in an unrelated fraud.

Under the ACFE Code of Professional Ethics. Daniela should:

Tell the nonprofit's board of trustees about Charles

Report Charles to law enforcement

Not disclose the information about Charles.

Resign from the engagement.

8. In the context of a fraud examination, integrity requires which of the following?

Prioritization of desires for personal gain over the interests of clients

A well-developed sense of moral philosophy and the ability to distinguish right from wrong

The ability to conceal errors to preserve the reliability of the work performed

Avoidance of differences of opinion on all material matters

9. In the area of criminological theory, deterrence is the theory that tries to prevenl crime by using the threat of criminal sanctions.

True

False

10. Which of the following is NOT one of the three general approaches used to control corporate crime?

Withdrawal of financial institution funding

Strong intervention of the government

Consumer action to force change

Voluntary changes in corporate attitudes and structure

Page 2 of 8

11. Which of the following is NOT included in G20/OECD Principles of Corporate Governance (the Principles)?

Guidance regarding appropriate board structures, responsibilities, and procedures

Support for establishing stronger protection for foreign shareholders than for domestic shareholders

A request that governments have in place an appropriate framework to support good corporate governance practices

Recognition of the importance of the role of stakeholders in corporate governance

12. Which of the following statements is FALSE?

Controls are not effective in preventing theft and fraud If those at risk do not know of their presence

Most experts agree that it is harder to detect frauds than to prevent them

Educating employees about company hotlines and reporting programs increases their perception of detection

Conducting covert audits is among the most effective fraud prevention methods

13. While, a Certified Fraud Examiner (CFE). was hired to conduct a fraud examination She did not find fraud, but. In White's opinion, there were several internal control deficiencies that, if not remediated, could facilitate the occurrence of fraud Under the ACFE Code of Professional Ethics. White may include her opinion on the controls in her report to management.

True

False

14. Which of the following is one of the assertions or principles of the theory of differential association?

Criminal behavior is learned using the same mechanisms as other learning.

Criminal behavior is learned through a process that is the same as imitation.

Criminal behavior is explained by an individual's general needs and values.

Criminal behavior is acquired through casual interactions in large groups.

15. According to the Committee of Sponsoring Organizations of the Treadway Commission (COSO), internal control is defined as:

A process aimed at proactively identifying, assessing, and managing an organization's vulnerabilities to fraud by both internal and external sources.

The system enacted to ensure effective oversight of the board of directors, management, and all other parties responsible for an organization's direction, operations, and performance.

The system that is designed and implemented to eliminate all uncertainty and risk while also ensuring the achievement of organizational goals.

A process, effected by an entity's board of directors, management, and other personnel, designed to provide reasonable assurance regarding the achievement of objectives relating to operations, reporting, and compliance.

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

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

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

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

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

17. A government auditor is conducting a financial statement audit of a public-sector entity in accordance with the International Standards of Supreme Audit Institutions (ISSAI).

Which of the following is TRUE regarding the auditor's consideration of fraud during this engagement?

In addition to fraud, the auditor should remain alert to potential occurrences of abuse during the audit.

The auditor has the automatic ability to withdraw from the audit engagement if fraud is found.

The requirements found in International Standard on Auditing (ISA) 240 do not apply to the engagement

The objectives of the audit are likely narrower than those of a private-sector financial statement audit.

18. Formally documenting and communicating organizational hierarchies, including the proper flow of information, can hinder an organization's fraud prevention initiatives.

True

False

19. The Committee of Sponsoring Organizations of the Treadway Commission's (COSO) Enterprise Risk Management―Integrating with Strategy and Performance defines what as ‘the continual iterative process of obtaining information and sharing it throughout the entity’?

Performance

Strategy and objective-setting

Governance and culture

Information, communication, and reporting

20. Jones, an accounting manager for a software company, wants to improve her team's adherence to the company's formal accounting policies and procedures and reduce the number of process exceptions they experience.

According to behaviorist theories, which of the following options would be the most effective way for Jones to condition her staff to follow the company's formal accounting processes?

Demote employees who do not adhere to the expected processes.

Publicly call out and criticize employees who deviate from the formal processes.

Offer a bonus to anyone who experiences no process exceptions for ninety days-

Take away a day of paid time off for each process exception.

Page 3 of 8

21. Which of the following is TRUE regarding the communication of the fraud risk assessment process?

The more personalized the communication, the more effective it will be in encouraging employees to participate

The communication should be made in a format mat is most appropriate for the culture of the organization

The communication should be visibly disseminated throughout the business

All of the above

22. Which of the following is TRUE regarding prosecutions of white-collar criminals?

Only a small percentage of perpetrators are punished when an organization deals with a fraud case internally.

Most fraud cases are only handled internally and are not referred to law enforcement for prosecution

The primary reason organizations decline to prosecute fraud cases is a belief that their internal discipline methods are sufficient

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.

23. Which of the following is TRUE regarding International Standard on Auditing (ISA) 240?

ISA 240 requires auditors to effectively raise awareness about the risk of fraud within the audited organization.

ISA 240 establishes standards regarding the auditor's responsibility to consider fraud in an audit of financial statements.

ISA 240 establishes auditors as being primarily responsible for the prevention and detection of fraud within an organization.

ISA 240 creates requirements for management regarding the establishment of a holistic fraud risk management program.

24. Which of the following Is one of the recommendations made by the National Commission on Fraudulent Financial Reporting (the Treadway Commission) to reduce the probability of fraud in financial reports?

Give shareholders oversight of hotline reporting programs

Have adequate compensation committee resources and authority

Develop a written charter for management

Have a mandatory independent audit committee

25. 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.

True

False

26. Which of the following is NOT a responsibility of the organization's board of directors?

Serving as the intermediaries between shareholders and management

Acting as guardians of the organization's resources and assets

Directing employees to execute business activities

Assessing the strategy and underlying purpose of management's decisions and actions

27. Devon, an employee at Tilly Corp., repeatedly demonstrates a negative attitude when working with other departments. To address this behavior, Devon’s manager tells him that he is no longer allowed to lead cross-departmental projects.

This is an example of what type of behavioral response?

Positive reinforcement

Negative reinforcement

Punishment

None of the above

28. Which of the following statements regarding the objectives of a fraud risk management program is TRUE?

A fraud risk management program should only focus on addressing fraud after it occurs.

A fraud risk management program should incorporate policies and procedures designed to both prevent and detect fraud but should not address fraud responses.

A fraud risk management program should include the formal procedures that management takes in response to a fraud, such as rebuilding stakeholders' confidence in the organization.

A fraud risk management program should prioritize activities that proactively identify and assess fraud risks over activities that detect fraud while it is occurring.

29. Which of the following is TRUE regarding government auditors' responsibilities to report evidence of potential fraud uncovered during an audit of a public-sector organization's financial statements?

All government auditors maintain the same requirements for reporting evidence of potential fraud uncovered during a public-sector financial statement audit.

Government auditors are legally prohibited from reporting evidence of potential fraud to any parties outside the organization being audited.

Government auditors' reporting requirements pertaining to fraud are substantially the same as those for external auditors in the private sector.

The requirements for government auditors to report evidence of potential fraud depend on the jurisdiction and the specific audit mandate.

30. According to Steve Albrecht's research,______is the most common personal characteristic motivating fraudsters, and ________ is the most common organization-environment factor motivating fraudsters.

High personal debt; lack of separation of duties

Revenge: too much trust in key employees

Living beyond their means, too much trust in key employees

Desire for recognition, lack of separation of duties

Page 4 of 8

31. Black a Certified Fraud Examiner (CFE), was hired to conduct a fraud examination He did not find fraud, but in Black's opinion the controls he examined were deficient Under the ACFE Code of Professional Ethics Black is not permitted to express his opinion on the deficient controls.

True

False

32. Stevens, a Certified Fraud Examiner (CFE), was hired to conduct a fraud examination at ABC Company. His examination did not reveal any conclusive evidence that fraud had occurred or was occurring. Consequently, ABC's management asked Stevens to state in his official examination report that the organization is free of fraud as a means of assuring the board of directors that the company's anti-fraud controls were effective. Under the ACFE Code of Professional Ethics. Stevens is permitted to comply with management's request based on the findings of his examination.

True

False

33. During an external audit of an organization's financial statements. Elena, the external auditor, uncovers significant internal control deficiencies at the audit client's organization. She believes these deficiencies could result in a material misstatement of the financial statements.

Which of the following should Elena do with regard to these findings?

Elena should suspend the audit and begin a new audit focused on the internal controls

Elena should report the findings in writing to the appropriate law enforcement agencies.

Elena should provide a written communication about the findings to senior management.

Elena should work independently to correct the underlying internal control deficiency.

34. Which of the following is TRUE regarding the components of the Committee of Sponsoring Organizations of the Treadway Commission's (COSO) Internal Control―Integrated Framework (the Framework)?

Determining the effectiveness of an organization's internal control system involves assessing whether all of the identified components are in place and functioning effectively.

Determining the effectiveness of an organization's internal control system involves assessing whether the identified components meet minimum legal and compliance requirements.

Independent oversight is one of the primary components of internal control identified in the Framework.

The Framework identifies ten components of internal control that must all be in place for the internal control system to be effective.

35. Which of the following Is one of the components of the Committee of Sponsoring Organizations of the Treadway Commission's (COSO) Enterprise Risk Management―Integrating with Strategy and Performance?

Independent monitoring

Operating environment

Risk tolerance

Governance and culture

36. _____________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.

Differential association theory

Routine activities theory

Justification of action theory

Rational choice theory

37. Which of the following is a best practice when assembling a fraud risk assessment team?

Team members should all have similar skills and perspectives.

The size of the team should be limited to four individuals.

The team should include only external sources.

Team members should have experience in eliciting information.

38. According to social control theory, which of the following questions are people MOST LIKELY to ask themselves when considering the possibility of violating the law?

"How can I prevent someone from learning what I did?"

"How likely am I to be punished for this crime?"

"Will I lose my job if my actions are discovered?"

"What will my parents think if they find out?"

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

The program must include mechanisms to address breaches in compliance.

The punishment for intentional noncompliance should be carried out in a consistent and firm manner.

Formal sanctions for intentional noncompliance should be determined and enacted privately

A specific individual or team should be designated as responsible for monitoring compliance with the program

40. 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?

The ACFE Code of Professional Ethics allows Rhys to comply with management's request without limitations.

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.

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.

The ACFE Code of Professional Ethics absolutely prohibits Rhys from complying with management's request.

Page 5 of 8

41. According to the authors of Crimes of the Middle Classes, all of the following factors have contributed to the rising problem of economic crime EXCEPT:

The continued pressures of a culture that rewards affluence and success

The economy's increased reliance on credit

The increased constraints of the regulatory environment for businesses

The increased opportunity for wrongdoing as a result of advancing information technologies

42. Reputational damage is an indirect cost of fraud that can be difficult for organizations to calculate.

True

False

43. According to ACFE research, the most common method for detecting occupational fraud is:

Tips

Internal audit

External audit

Management review

44. Which of the following scenarios is LEAST LIKELY to be considered a conflict of interest that is prohibited under the ACFE Code of Professional Ethics?

Lori accepts an assignment to infiltrate her employer and transmit inside information to a competitor.

Ren undertakes an external engagement that requires him to work outside the normal work hours of his primary employer.

DeVon undertakes engagements for both sides in a case of an alleged fraudulent warranty scheme.

Karen accepts an assignment to search for fraud indicators at an organization in which she is an undisclosed partner.

45. Which of the following is included in the G20/OECD Principles of Corporate Governance?

A requirement for a corporate governance framework that protects the exercise of management’s rights.

Support for the equal treatment of all members of an organization’s governing body.

A request that governments implement effective internal controls to support good corporate governance practices.

An emphasis on the importance of timely, accurate and transparent disclosure mechanisms.

46. Black, a Certified Fraud Examiner (CFE). was hired to conduct a fraud examination. He did not find fraud, but. in Black's opinion, the controls he examined were deficient. Under the ACFE Code of Professional Ethics. Black is not permitted to express his opinion on the deficient controls.

True

False

47. Beezie, a Certified Fraud Examiner (CFE), took an introductory class in computer forensics. When a client thought there might be evidence of a crime on their computer, Beezie decided to conduct a forensic examination of the computer even though she had no experience or advanced training in this area.

Which of the following is TRUE regarding Beezie's conduct?

Beezie's conduct would be a violation of the ACFE Code of Professional Ethics.

Beezie's conduct would not be a violation of the ACFE Code of Professional Ethics.

Beezie's conduct would be a violation of the ACFE Code of Professional Ethics only if she also violated the law.

Beezie's conduct would be a violation of the ACFE Code of Professional Ethics only if she did not find the fraudster.

48. 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?

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

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

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

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

49. Which of the following is TRUE regarding International Standard on Auditing (ISA) 240?

ISA 240 requires auditors to effectively educate the staff about the risk of fraud within the audited organization.

ISA 240 establishes auditors as being primarily responsible for implementing anti-fraud internal controls within an organization.

ISA 240 provides guidance regarding the auditor's responsibility to consider fraud in an audit of financial statements.

ISA 240 creates requirements for the board of directors regarding the establishment of a holistic fraud risk management program.

50. During an external audit, the audit team identifies evidence that management has intentionally omitted some expenses from the company's financial statements in order to conceal an asset misappropriation scheme. 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?

The auditors should assume that all audit evidence collected previously is unreliable and withdraw from the audit engagement

The auditors should assess the need to adjust the nature, timing, and extent of remaining audit procedures based on this evidence.

The auditors can ignore the misstatement because the omitted amount is less than the quantitative materiality threshold and therefore immaterial to the audit.

The auditors do not need to be concerned with this evidence, as asset misappropriation schemes are not considered relevant or material for external audit purposes.

Page 6 of 8

51. According to International Organization for Standardization (ISO) 31000:2018, an effective and efficient risk management program contains all of the following principles EXCEPT:

The program is structured and comprehensive.

The program is based upon the best available information.

The program is integrated into only high-risk organizational activities.

The program is customized and proportionate to the organization's operations and objectives.

52. Which of the following statements regarding best practices that organizations can take to protect and support whistleblowers is MOST ACCURATE?

Organizations should emphasize that rules regarding whistleblower protections are only intended for lower level employees who might be more vulnerable to retaliation.

Organizations should implement a clear whistleblower policy that lists out every type of misconduct that has ever been reported at the company.

Organizations should publicize their whistleblower procedures internally but should avoid communicating any procedural information to parties outside of the organization.

Organizations should establish formal consequences that are to be imposed upon employees at the company who retaliate against a whistleblower.

53. According to the 2020 Report to the Nations, which of the following is the MOST COMMON method by which frauds are detected?

Internal audit

Confession

Tips

External audit

54. Which of the following is a TRUE statement regarding the role of a well-designed organizational structure within an anti-fraud program?

Flowcharts displaying departmental structures can be a helpful tool in communicating the proper flow of information as part of fraud prevention efforts.

Communicating the proper flow of information to everyone in the organization can increase the organization's vulnerability to fraud.

It is best to avoid formally documenting organizational structures to limit fraudsters' ability to circumvent oversight controls.

A confused organizational structure makes it harder for a fraudster to perpetrate and conceal their misdeeds.

55. Cho, an internal auditor, and Pierre, a sales manager, have had several disagreements about the sales tactics used by Pierre's team. Cho has just been told that she will lead the company's fraud risk assessment. During the fraud risk assessment, Cho should:

Automatically designate the sales function as a high-risk area.

Include her disagreements with Pierre as a factor when assessing the risk of fraud in the sales function.

Confront Pierre about the disagreements and discuss how they increase the company's risk of fraud.

Request that someone else perform the fraud risk assessment work that is related to the sales function's activities.

56. 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:

Use a checklist of initiatives to make sure all the elements of a strong tone at the top are in place

Create an environment in which employees feel safe challenging management's decisions

implement two separate sets of ethics policies, one for management and one for employees

All of the above

57. Which of the following is TRUE regarding an organization's ethics program?

An ethics program should avoid addressing rewards for ethical behavior and sanctions for unethical behavior

In designing the ethics program, management should consider how stakeholders throughout the organization define success

To be most effective, access to the organization’s ethics policy should be restricted to external parties such as vendors and customers

Having a written ethics policy is sufficient to communicate management’s ethical philosophy and serve as a comprehensive ethics program

58. Consistently punishing perpetrators can be an effective fraud prevention mechanism

True

False

59. Charles, the chief executive officer (CEO) of the Baking & Things Corporation, hired Daniela, a Certified Fraud Examiner (CFE), to investigate an embezzlement case. During the investigation, Daniela learns that Charles is involved in an unrelated fraud.

What action should Daniela take based on the ACFE Code of Professional Ethics?

Daniela should immediately resign from the engagement.

Daniela should report Charles to law enforcement.

Daniela should contact the media to report what she found.

Daniela should tell the company's board of directors about Charles.

60. According to ACFE research, which of the following is TRUE?

Frauds committed by staff-level employees cause higher median losses than those committed by owners and executives.

Men and women commit similar amounts of occupational frauds.

Complaints about family problems is the most reported behavioral red flag displayed by fraud perpetrators.

Most employees who commit occupational fraud are first-time offenders.

Page 7 of 8

61. Smith, a retail sales manager, wants to decrease the level of cash register over-and-short discrepancies among his sales team.

According to behaviorist theories, which of the following options would be the MOST EFFECTIVE way for Smith to encourage his team members to keep their cash drawers in balance?

Offer a bonus to anyone whose drawer reconciles perfectly for sixty days.

Publicly call out and criticize employees whose cash drawers are over or short.

Take away an hour of paid time off for each time the drawer is over or short

Demote employees who continue to have reconciliation discrepancies

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

They state that a corporate governance framework should promote transparent and fair markets and the efficient allocation of resources.

They assert that a corporate governance framework should ensure that the treatment of shareholders differs based on the class of stock they own.

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

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

63. Which of the following statements is MOST ACCURATE regarding an effective system of anti-fraud controls?

It prioritizes implementing detective controls over preventive controls.

It deters fraudsters by increasing the perception that fraud will be detected.

It fully eliminates the risk of fraud by removing opportunities for misbehavior.

It focuses more on preventive controls than detective controls.

64. 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?

Giving opinions regarding technical matters

Participating in an activity with an undisclosed conflict of interest

Engaging in an activity that is legal within her jurisdiction

Providing conclusions based on discovered evidence

65. Fraud risks related to regulatory and legal misconduct include all of the following EXCEPT:

Fraudulent customer payments

Anti-competitive practices

Insider trading

Conflicts of interest

66. According to Diane Vaughan, which of the following factors increases an organization's inherent inclination toward committing crime?

Management seeks out diversity in attitudes and perspectives when hiring employees

Rewards are given to employees who challenge the status quo

Management links employee performance goals with company performance goals

All of the above

67. According to ACFE research, which of the following is TRUE regarding prosecutions of white-collar criminals?

The most common internal response to a substantiated fraud case is to terminate the employee.

Only a small percentage of perpetrators are punished when an organization handles a fraud case internally.

Most fraud cases are only handled internally and are not referred to law enforcement for prosecution.

The primary reason that organizations decline to prosecute fraud cases is a lack of evidence.

68. According to International Organization for Standardization (ISO) 31000:2018, an organization's risk management program should be proportionate to the organization's specific operations and objectives.

True

False

69. Which of the following is FALSE regarding a background check policy for employees?

When verifying past employment, management should only ask previous employers to verify the dates the candidate was employed.

At a minimum, management should conduct a background check on any candidate who will have constant access to cash, checks, and credit card numbers, or other easily stolen items.

Where permitted by law, management should run a background check on any existing employee who is being promoted to a position that includes access to sensitive or valuable company resources, even if a background check was run on the individual at the time of hire

As part of the screening process, management should contact the references provided by the job candidate.

70. Sycamore Inc. has a simple organizational structure with few specialized departments. The structure of Sycamore Inc. increases the likelihood that fraud will go undetected within the organization.

True

False

Page 8 of 8

71. 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?

Demote employees who continue to have reconciliation discrepancies.

Publicly praise employees every time their cash drawers are balanced.

Deduct an hour's worth of pay for anyone whose cash drawer is not perfectly reconciled each day.

Take away an hour of paid time off from an employee each time their cash drawer is not balanced.

72. Which of the following is included in the G20/OECD Principles of Corporate Governance?

Support for the equal treatment of all members of an organization's governing body.

A requirement for a corporate governance framework that protects the exercise of management's rights.

An emphasis on the importance of timely, accurate, and transparent disclosure mechanisms.

A request that governments implement effective internal controls to support good corporate governance practices.

73. 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.

Which of the following is Christopher’s BEST response to these findings?

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

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

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

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

74. According to ACFE research, which of the following is the MOST COMMON method for detecting occupational fraud?

Internal audit

Document examination

Management review

Tips

75. Which of the following scenarios would MOST LIKELY be considered a violation of the ACFE Code of Professional Ethics?

Grace, a CFE, uncovered internal control deficiencies that were material but unrelated to the financial statement fraud she was investigating. In her final report to management, Grace included information about the deficiencies despite their being unrelated to the situation she was hired to investigate.

Eric, a CFE, accepted a fraud examination assignment and then instructed his employee to assess the company’s accounts receivable for indications of fraud. He accepted the employee’s work that showed no evidence of fraud without conducting his own assessment. However, the employee missed some key information, causing Eric to fail to uncover a costly fraud scheme.

Mae, a CFE, was hired by a client to conduct a fraud examination but found nothing unusual. A year later, she received a legal order from the local prosecutor's office to provide the client’s file. Mae complied with the court order despite not having the client's authorization to provide the file.

All of the above are violations.

76. The internal auditor's fraud-related responsibilities include which of the following?

Evaluating the organization's structures and process for fraud risk governance.

Issuing a report asserting that the organization's financial statements do not contain material misstatements caused by fraud.

Overseeing management's actions to manage fraud risks.

Reporting to regulators regarding the entity's vulnerability to fraud.

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