ACFE CFE Fraud Prevention and Deterrence Certified Fraud Examiner - Fraud Prevention and Deterrence Exam Online Training

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1. Maria conducted a fraud examination that led to a valid confession of guilt from Rita. In Maria's verbal report to her superiors, she stated that, in her opinion. "Rita is guilty of embezzlement." Maria has just violated the ACFE Code of Professional Ethics.

True

False

2. According to G20/OECD Principles of Corporate Governance (the Principles):

Governments should have in place a corporate governance framework that promotes transparent and fair markets

Companies should disclose all financial information to investors, regardless of the cost burden of the disclosure

A corporate governance framework should focus on the rights of shareholders but does not need to include the rights of other organizational stakeholders

All of the above

3. 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."

Fraud risk management

Corporate compliance

Internal control

Risk assessment

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

doctor conspiring with patients to file false health care insurance claims

A salesman offering bribes to secure a contract

An accounting clerk forging company checks to herself

Management of several construction companies engaging in bid rigging

5. In response to a risk identified during a fraud risk assessment, management decides to purchase fidelity insurance to help protect the company against the associated risk of loss This response is known as:

Mitigating the risk

Assuming the risk

Avoiding the risk

Transferring the risk

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

True

False

7. Which of the following statements regarding white-collar defendants is TRUE?

The lower the offenders' social status, the more likely they are to be imprisoned

They are more likely to be fined than to face prison terms as punishment

They are less likely to insist on a trial than other offenders

All of the above

8. The fact that most groups within groups a society have the same ideas of right and wrong greatly assists in the ability to determine the correct ethical decision in a given situation.

True

False

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

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

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

Guidance regarding appropriate board structures, responsibilities, and procedures

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

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

The assessment team must be perceived as independent and objective by others for the assessment to be effective

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

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

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11. Which of the following is FALSE regarding the fraud risk assessment team?

The team members should have experience in gathering and eliciting information

The team size should be limited to a maximum of three individuals.

The team members might include both internal and external sources

The team should consist of individuals with diverse knowledge, skills, and perspectives.

12. As part of her audit of ABC Corp . Rachel, a CPA. is identifying the risks of material misstatement due to fraud As part of this task, she should evaluate any unexpected relationships that she identified in performing analytical procedures.

True

False

13. 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

Create an environment in which employees feel safe challenging managements decisions

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

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

All of the above

14. Which of the following is FALSE regarding G20/OECD Principles of Corporate Governance (the Principles)?

The Principles state that an entity's corporate governance framework should ensure the equitable treatment of all shareholders

The Principles state that an entity's corporate governance framework should encourage active cooperation between corporationfiand stakeholders in creating wealth.

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

The Principles are intended to be applicable in both developed economies and emerging markets

15. Employee anti-fraud education should:

Include examples of prior employee misconduct and how those situations were handled

Include descriptions of the procedures that management uses to detect fraud.

Be restricted to formal educational mechanisms to reinforce the importance of the message

Be presented by organizational executives or anti-fraud professionals only

16. The Public Interest Oversight Board (PIOB) is the global body responsible for establishing international corporate governance standards.

True

False

17. Which of the following statements is TRUE regarding how fraud examiners should exercise professional skepticism during a fraud examination engagement?

Professional skepticism involves maintaining a mindset that no fraud has occurred

Fraud examiners should not relax their skeptical attitudes even if there are no signs of fraudulent activity.

Fraud examiners should form the engagement hypothesis without regard to the available preliminary information

Professional skepticism means beginning all assignments with the belief that something is amiss

18. In a company with all of the following parties, who should have primary responsibility for the oversight of the organization s compliance program?

The board of directors

General counsel

Internal audit

The chief ethics officer

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

True

False

20. Which of the following statements is FALSE regarding an organization's fraud risk management program1?

A 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 occurrervces

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

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

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21. Which of the following is FALSE regarding corporate governance'

Effective corporate governance practices are most necessary in an organization in which the owners are not also the individuals responsible for setting and executing the business strategy

Effective corporate governance practices are considered to be the foundation of fraud risk management.

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

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

22. Which of the following theories suggests that, when considering the possibility of violating a law. people are likely to ask themselves. "What would my family and friends think if they find out?

Cognitive theory

Social control theory

Behavioral theory

Routine activities theory

23. An effective system of internal controls:

Decreases the perception that fraud will be detected

Focuses more on detective controls than preventive controls

Focuses more on preventive controls than detective controls

Does not completely eliminate the risk of fraud

24. Which of the following is FALSE regarding a fraud risk assessment?

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

The assessment should be used to improve employee fraud awareness

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

25. To be in compliance with the ACFE Code of Professional Ethics, fraud examiners must have:

A Sufficient skill and knowledge to recognize when additional training or expert guidance is required

An expert level of experience for every circumstance that might be encountered in a fraud examination

An expert level of knowledge for every circumstance that might be encountered in a fraud examination

Sufficient resources to obtain the training needed to become an expert on all facets of fraud examinations

26. Which of the following is FALSE regarding corporate governance'

Effective corporate governance practices are most necessary in an organization in which the owners are not also the individuals responsible for setting and executing the business strategy

Effective corporate governance practices are considered to be the foundation of fraud risk management.

Corporate governances primary purpose is to ensure the accuracy of the organizations financial reports

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

27. 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

28. Julia is conducting a formal assessment of XYZ Corporation s ethical culture To which of the five components of the Committee of Sponsoring Organizations of the Treadway Commission's (COSO) Internal Control―Integrated Framework (the Framework) does her assessment pertain?

Control environment

Monitoring

Control activities

Information and communication

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

The possibility of management override of controls

Risks to the organization's reputation

The organization's incentive programs

All of the above

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

Consumer action to force change

Voluntary changes in corporate attitudes and structure

Media blacklisting of the organization

Strong intervention of the government

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31. According to the differential reinforcement theory, behavior is weakened when positive rewards are gained or punishment is avoided

True

False

32. White, 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

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

Management links employee performance goals with company performance goals

Rewards are given to employees who challenge the status quo

Management seeks out diversity in attitudes and perspectives when hiring employees

All of the above

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

More occupational frauds are committed by women than by men.

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

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

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

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

Event avoidance

Compliance

Risk tolerance

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