Latest ACFE CFE-Fraud-Prevention-and-Deterrence Actual Free Exam Questions & Community Discussion, Page 1

Question #1

Which of the following statements about the effects of financial crime is MOST ACCURATE?

A. The damage that financial crime causes to an organization's reputation usually results in a measurable direct cost to the organization and its financial well-being.

B. The discovery of financial crime at an organization often leads to increased public confidence in the organization due to its effective detection measures.

C. The occurrence of financial crime at an organization often results in a decrease in employee productivity due to concerns about job security.

D. The existence of financial crime at an organization usually leads to individuals making additional investments in the company due to low stock prices.

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Correct Answer: C Vote an answer

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Question #2

According to Silk and Vogel ' s research, business leaders rationalize legal violations by asserting that compliance with government regulations is too costly and cuts too heavily into company profits.

A. True

B. False

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Correct Answer: A Vote an answer

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Question #3

Iris, a manager at Mega Corp., oversees fraud awareness training for the organization's employees. When reviewing the training for the coming year, Iris should ensure that Mega Corp.'s employee anti-fraud education:

A. Is restricted to informal educational mechanisms such as company-wide newsletters.

B. Is limited to the organization's executives and focuses on their liability for fraud.

C. Includes examples of how fraud hurts Mega Corp. and its employees.

D. Describes the specific internal controls that Mega Corp. uses to detect fraud.

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Correct Answer: C Vote an answer

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Question #4

Gian is a manager at Ram Co. and is tasked with building the company ' s fraud risk management program.
As a starting point, Gian wants to formally define the program ' s objectives. Which of the following is TRUE regarding the process of defining the objectives of the fraud risk management program?

A. Gian must ensure that the company ' s investment in the fraud risk management program outweighs the benefit of those controls.

B. When expressing the organization ' s risk appetite, Gian should do so without regard to the company ' s culture or operations.

C. Gian must assign both a quantitative and qualitative measure to the company ' s risk appetite to accurately measure the program ' s effectiveness.

D. Gian should examine previous fraud occurrences to determine how the ideal fraud risk management program would have prevented them.

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Correct Answer: D Vote an answer

Question #5

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)?

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

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

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

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

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Correct Answer: B Vote an answer

Question #6

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?

A. Negative reinforcement

B. Punishment

C. None of the above

D. Positive reinforcement

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Correct Answer: B Vote an answer

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Question #7

Which of the following is BEST classified as a type of external fraud risk?

A. Reporting revenue in the wrong period

B. Embezzling incoming customer payments

C. Collusion between contractors

D. Adding ghost employees to payroll

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Correct Answer: C Vote an answer

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Question #8

According to ACFE research, which of the following is TRUE regarding the three major categories of occupational fraud?

A. Financial statement fraud schemes are the most common category of occupational fraud.

B. Corruption schemes are the costliest category of occupational fraud.

C. Asset misappropriation schemes are the most common category of occupational fraud.

D. Identity theft is both the most common and costliest category of occupational fraud.

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Correct Answer: C Vote an answer

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Question #9

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 (CEO). Which of the following options is Christopher's BEST response to these findings?

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

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

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

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

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Correct Answer: C Vote an answer

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Question #10

Which of the following is among the board of directors ' primary responsibilities related to fraud risk management?

A. Implementing the fraud risk management program

B. Overseeing the organization ' s fraud risk management activities

C. Designing the fraud risk management program

D. Punishing fraud perpetrators discovered through fraud risk management activities

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Correct Answer: B Vote an answer

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Question #11

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?

A. Shareholder oversight of internal controls

B. Adequate audit committee resources and authority

C. A written charter for management

D. A mandatory independent compensation committee

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Correct Answer: B Vote an answer

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Question #12

Which of the following statements is MOST ACCURATE regarding an organization's fraud risk management program?

A. The punishment for intentional noncompliance should be decided solely based on the perpetrator's specific circumstances.

B. Formal sanctions for intentional noncompliance should be kept private in all circumstances.

C. The program must include systems designed to identify, address, and monitor compliance violations.

D. Staff at all levels of the organization should be responsible for monitoring compliance with the program.

Discussion 0

Correct Answer: C Vote an answer

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Question #13

Which of the following scenarios is a representation of organizational crime?

A. A retail manager works with a friend to commit a scheme involving fraudulent product returns.

B. A senior accountant uses company funds to pay for personal credit card charges.

C. A commercial director agrees with other businesses in the same industry to raise prices.

D. An inventory manager takes home the company's products to sell privately.

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Correct Answer: C Vote an answer

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Question #14

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?

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

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

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

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

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Correct Answer: A Vote an answer

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Question #15

Which of the following statements regarding monitoring employees for warning signs of fraud is MOST ACCURATE?

A. Employees who steal do not commonly display lifestyle or behavioral warning signs of their misdeeds.

B. Managers should be instructed that it is a violation of employee privacy rights to monitor employees for behaviors that are indicative of fraud.

C. An increase in employee wealth is always a sign of fraud that should be investigated.

D. Employees should be made aware that management is watching for unexplained lifestyle and behavioral changes that might indicate fraudulent conduct.

Discussion 0

Correct Answer: D Vote an answer

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