CFE-Fraud-Prevention-and-Deterrence Practice Questions

A.  

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

B.  

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

C.  

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

D.  

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

A.  

The internal audit function should wait until issues related to fraud occur before communicating with senior management or the board of directors about the topic.

B.  

The internal audit function should not disclose the results of its fraud audits to senior management or the board of directors to maintain independence.

C.  

The internal audit function should avoid communicating with the board of directors about fraud because that is solely the responsibility of the legal function.

D.  

The internal audit function should discuss management’s level of cooperation with the assessment of the organization’s fraud risk management in its report to the board of directors.

A.  

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

B.  

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

C.  

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

D.  

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

A.  

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

B.  

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

C.  

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.

D.  

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

A.  

Management seeks diversity in attitudes and perspectives when hiring employees.

B.  

Management separates employee performance goals from company performance goals.

C.  

Management encourages employee loyalty through social functions.

D.  

Management rewards employees who challenge how the company functions.

A.  

Use a checklist of initiatives to ensure that all the elements of a strong corporate culture are in place.

B.  

Require senior leaders to follow the same ethics policies that are in place for all staff-level employees.

C.  

Discourage employees from questioning their immediate supervisor ' s actions or decisions if they have concerns.

D.  

Discipline any employees who publicly express their frustration regarding organizational policies.

A.  

Collusion.

B.  

Noncompliance.

C.  

Breakdown.

D.  

Error.

A.  

Fraudulent customer payments

B.  

Anti-competitive practices

C.  

Insider trading

D.  

Conflicts of interest

A.  

Tasha should begin the engagement with the belief that fraud has occurred.

B.  

Tasha should form her engagement hypothesis before referring to any preliminary information that is available to maintain objectivity.

C.  

Tasha should maintain her skeptical attitude throughout the entire engagement even if the evidence shows no signs of fraudulent activity.

D.  

Tasha should maintain a mindset that fraud has not occurred until she finds conclusive evidence.