The Best Way To Pass CFE Fraud Prevention and Deterrence Exam

test2022-09-05T07:13:47+00:00

If you plan to take CFE Fraud Prevention and Deterrence Certification exam, CFE Fraud Prevention and Deterrence dump is designed to help you prepare for the Certified Fraud Examiner – Fraud Prevention and Deterrence Exam. The CFE Fraud Prevention and Deterrence dump ensures a 100% success rate. You can use the free practice tests to familiarize yourself with our product. Our CFE Fraud Prevention and Deterrence dumps are up to date and feature actual test questions and answers, allowing you to pass your exam quickly.

Test yourself with these free sample questions now!

Page 1 of 4

1. Which of the following is an example of organizational crime?

A salesman offering bribes to secure a contract

An accounting clerk forging company checks to herself

A doctor conspiring with patients to Tile false health care insurance claims

Management of several construction companies engaging In bid rigging

2. 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.

3. Professional auditing standards suggest that auditors incorporate an "element of predictability" in the selection of auditing procedures to be performed so that they ensure the same areas are tested in the same manner during each audit.

True

False

4. During a fraud risk assessment, the assessment team is seeking information on the ethical tone set by upper and middle managers. The team members determine that, for this task, they would like to get candid one-on-one feedback from employees away from their peers .

Which of the following techniques would be most helpful for them to use in gathering this information?

Interviews

Focus groups

Anonymous feedback mechanisms

Surveys

5. 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

6. Which of the following is NOT considered a conflict of interest that is prohibited under the ACFE Code of Professional Ethics?

Accepting an assignment to secretly infiltrate the fraud examiner's employing organization and transmit inside information to another party

Undertaking an engagement that decreases the fraud examiner's ability to perform their duties for their full-time employer

Accepting an assignment to evaluate the anti-fraud controls at an organization in which the fraud examiner is a shareholder, provided the fraud examiner's ownership interest is disclosed

Undertaking engagements for both sides in a case of alleged vendor overbilling

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

Green a CFE, uncovered several material internal control deficiencies unrelated to the financial statement fraud he was investigating. In his final report to management. Green included information about the deficiencies even though they were unrelated to the situation he was hired to investigate.

Stephanie, a CFE, accepted a fraud examination assignment and then instructed a lower-level employee to assess the company's cash records for signs of fraud. She took his word when he said there was no evidence of wrongdoing and ended up failing to uncover a very costly fraud scheme.

Susan, a CFE, was hired by a client to conduct a fraud examination but found nothing amiss A year later, she received a legal order from the local prosecutor's office to provide the client's file. Susan complied with the court order, even though she did not have the client's authorization to do so.

All of the above are violations

8. 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

9. Which of the following Is FALSE regarding a fraud risk assessment?

The assessment team should consider how employees behave as part of Its assessment

The assessment should be used to improve employee fraud awareness.

The designation of an area as being high risk does not conclusively mean that fraud is occurring there.

The objective of the assessment is to provide an estimate of the organization's fraud losses.

10. Which of the following statements about the fraud risk assessment process Is MOST ACCURATE?

The fraud risk assessment can be effectively conducted by people inside or outside of the organization.

To ensure the independence of the team members, a fraud risk assessment must be conducted by a consultant or other external party.

If the individuals conducting the fraud risk assessment truly believe that fraud could not happen at the organization, then the assessment process should reflect that belief.

The fraud risk assessment is most effective when management's influence on the process is limited

Page 2 of 4

11. XYZ, Inc. Is a specialty retailer of high-end ergonomic office furniture. The company receives a very large order from ABC Company, a new customer in a different country that wants to pay on credit .

Which of the following is MOST ACCURATE regarding the due diligence procedures XYZ should perform on ABC before proceeding with this transaction?

XYZ only needs to undertake due diligence procedures if ABC conducts business in countries with known corruption risks.

XYZ does not need to take any specific procedures to verify ABC's identity before accepting the transaction

XYZ should examine ABC's net worth as part of deciding whether to allow the purchase on credit.

XYZ should perform the same level of due diligence as it would for any other customer to avoid claims of discrimination

12. In the area of criminological theory, compliance is the theory that tries to prevent crime by providing economic incentives for voluntary conformity to the laws and using administrative efforts to control violations before they occur.

True

False

13. 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

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

Overseeing the organization's fraud risk management activities

Designing the fraud risk management program

Punishing fraud perpetrators discovered through fraud risk management activities

Implementing the fraud risk management program

15. 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.

16. 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 mandatory independent compensation committee

Shareholder oversight of internal controls

A written charter for management

Adequate audit committee resources and authority

17. 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

18. Having specialized departments within a company often increases the overall risk ot traud by the organization.

True

False

19. 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.

20. Which of the following is a detective anti-fraud control?

Hiring policies and procedures

Independent reconciliations

Separation of duties

Fraud awareness training

Page 3 of 4

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

Obtaining reasonable assurance that the organization's financial statements are free of material misstatements caused by fraud

Overseeing management's actions to manage fraud risks

Evaluating indicators of fraud and deciding whether any further action is necessary or whether an investigation should be recommended

Establishing and maintaining effective anti-fraud controls at a reasonable cost

22. According to the 2020 Report to the Nations.___________schemes ate the MOST COMMON form of occupational fraud, while_________schemes are the MOST COSTLY form of occupational fraud.

Asset misappropriation; corruption

Corruption, asset misappropriation

Financial statement fraud: corruption

Asset misappropriation: financial statement fraud

23. Professional auditing standards require that auditors incorporate an "element of unpredictability" in the selection of auditing procedures to be performed.

True

False

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

Rewards are given to employees who challenge the status quo

Management encourages employee loyalty through social functions

Management separates employee performance goals from company performance goals

All of the above

25. _____________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

26. Which of the following is NOT explicitly prohibited by the ACFE Code of Professional Ethics?

Acting in a way that could be deemed unethical by the industry

Drawing conclusions based upon evidence

Participating in an activity where there is an undisclosed conflict of interest

Engaging in behavior that is against the law

27. 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

28. 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

29. The findings in the 2020 Report to the Nations include which of the following?

The most commonly reported red flag displayed by fraud perpetrators prior to the detection of their crime is complaints about management.

Mote occupational frauds are committed by men than by women

The median losses caused by executives are lower than those caused by staff-level employees

The majority of fraudsters have been previously punished by an employer for a fraud-related offense

30. Patrick is conducting an external audit of a company in a jurisdiction that is subject to International Standards on Auditing (ISAs). While undertaking his audit procedures, he discovers evidence that senior management has been fraudulently manipulating the financial statements .

Which of the following is Patrick's BEST response to these findings?

Patrick should confront management with his audit findings and try to get a confession.

Patrick should immediately report his findings to local law enforcement authorities.

Patrick should not disclose his findings to any other parties due to client confidentiality

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

Page 4 of 4

31. 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 lop are in place

Create an environment in which employees are dissuaded from challenging management's decisions

Visibly adhere to the same set of ethics policies that is required of all employees

All of the above

32. Which of the following Is TRUE regarding an organization's ethics program?

To be most effective, access to the organization's ethics policy should be restricted to employees and other Internal parties only

In designing the ethics program, management should consider whether the organization currently has any ethical leadership Issues

An effective written ethics policy alone is sufficient to communicate management's ethical philosophy and serve as a comprehensive ethics program

All of the above

33. The Committee of Sponsoring Organizations of the Treadway Commission (COSO) defines____________ as "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."

Corporate compliance

Fraud risk management

Risk assessment

Internal control

34. Which of the following is TRUE regarding corporate governance?

Fraud risk management is considered to be the foundation of effective corporate governance

Corporate governance's primary purpose is to ensure the accuracy of the organization's financial reports

Effective corporate governance practices are most necessary in an organization in which the owners are also the individuals responsible for setting the corporate strategy.

An entity's corporate governance structure specifies the distribution of rights and responsibilities among the different participants in the organization

35. An effective system of anti-fraud controls

Fully eliminates the risk of fraud

Focuses more on detective controls than preventive controls

Focuses more on preventive controls than detective controls

Increases the perception that fraud will be detected

36. In response to an employee's failure to meet performance expectations, a manager demotes the employee to a junior-level position. This is an example of what type of behavioral response?

Positive reinforcement

Negative reinforcement

Punishment

None of the above