CFE-FRAUD-PREVENTION-AND-DETERRENCE Online Practice Questions and Answers

Independent auditors play a critical role in enhancing the reliability of financial information by financial position and performance in compliance with accepted accounting standards.

A. True

B. False

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. Create an environment in which employees feel safe challenging managements decisions

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

C. Implement two separate sets of ethics policies one for management and one for employees

D. All of the above

International Standard on Auditing (ISA) 240 establishes auditors as being primarily responsible for the prevention and detection of fraud within an organization

A. True

B. False

In identifying the inherent fraud risks that could apply to the organization the fraud risk assessment team should discuss

A. The possibility of management override of controls

B. Risks to the organization's reputation

C. The organization's incentive programs

D. All of the above

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

A. Management links employee performance goals with company performance goals

B. Rewards are given to employees who challenge the status quo

C. Management seeks out diversity in attitudes and perspectives when hiring employees

D. All of the above

The findings of the 2018 Report to the Nations include all of the following EXCEPT:

A. More occupational frauds are committed by women than by men.

B. The majority of employees who commit occupational fraud are first-lime offenders.

C. The median losses caused by executives are higher than those caused by staff-level employees

D. The most commonly reported red flag displayed by fraud perpetrators prior to the detection of their crime is living beyond their means

Which of the following is TRUE regarding the reporting of the fraud risk assessment results7

A. A fraud risk assessment report should reflect the assessment team's subjective perspective regarding the risks identified

B. The fraud risk assessment report should be delivered in a style most suited to the language of the business

C. The fraud risk assessment report should contain a detailed, comprehensive list of every assessment finding

D. All of the above

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

A. Evaluating whether management is actively retaining responsibility for oversight of the fraud risk management program

B. Attesting that the organization s financial statements are free of material misstatements caused by fraud

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

D. Overseeing managements actions to manage fraud risks

In developing a corporate governance framework for an organization, directors and management must consider which of the following?

A. The organization s cultural environment

B. The organization s legal and regulatory environment

C. The organization s ethical environment

D. All of the above

The theory of differential association is used frequently to explain white-collar criminality Which of the following is NOT one of the assertions or principles of differential association?

A. Criminal behavior is learned from other people in a process of communication

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

C. Criminal behavior is acquired through participation with intimate personal groups

D. The process of learning criminal behavior Is the same as pure imitation

Jenny is a highly respected employee at XYZ Corp Her husbands gambling addiction has caused them to have a significant amount of debt Jenny begins stealing money from the company to cover her husbands gambling losses. This situation best illustrates which leg of the Fraud Triangle?

A. Perceived opportunity

B. Rationalization

C. Perceived non-shareable financial need

D. Perceived acquiescence

The generation and use of relevant, quality information to support the functioning of internal control is a principle related to which component of the Committee of Sponsoring Organizations of the Treadway Commissions (COSO) Internal Control--Integrated Framework (the Framework)?

A. Risk assessment

B. Control environment

C. Monitoring

D. Information and communication

Open-door management policies are a fraud prevention mechanism that addresses which leg of the Fraud Triangle?

A. Opportunity

B. Willingness

C. Lack of integrity

D. Pressure

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

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

B. Engaging in behavior that is against the law

C. Drawing conclusions based upon evidence

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

Which of the following is NOT an effective way to help prevent fraud through the organization's performance measurement and management programs?

A. Establishing well-defined job descriptions to facilitate performance evaluations

B. Evaluating employee performance based solely on productivity and profit

C. Tying employee compensation to reasonable organizational performance goals

D. Providing regular training to ensure that all employees are sufficiently prepared to perform their tasks