CFE-Fraud-Prevention-and-Deterrence Practice Exam Questions and Answers

A.  

Fraud examiners should not relax their skeptical attitudes under any circumstances.

B.  

Professional skepticism involves maintaining a mindset that no fraud has occurred

C.  

Fraud examiners should form the engagement hypothesis without regard to the nature of the assignment

D.  

Professional skepticism can be dispelled only by evidence

A.  

Internal controls; financial reporting model

B.  

Regulatory requirements, risk appetite

C.  

Objectives; resources

D.  

Risk appetite, ability to meet its objectives

A.  

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

B.  

Accepting an assignment to assess red flags of fraud at an organization in which the fraud examiner is a partner, provided the fraud examiner's ownership interest is disclosed

C.  

Undertaking engagements for both sides in a case of an alleged product substitution scheme

D.  

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

A.  

Strong intervention of the government

B.  

Voluntary changes in corporate attitudes and structure

C.  

Consumer action to force change

D.  

Media blacklisting of the organization

A.  

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

B.  

Reporting to regulators regarding the entity's vulnerability to fraud

C.  

Overseeing management's actions to manage fraud risks

D.  

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

A.  

They state that a corporate governance framework should promote transparent and fair markets and the efficient allocation of resources.

B.  

They assert that a corporate governance framework should ensure that the treatment of shareholders differs based on the class of stock they own.

C.  

They are intended to be applicable in emerging markets but not in developed economies.

D.  

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

A.  

True

B.  

False

A.  

A confused organizational structure makes it harder for a fraudster to perpetrate and conceal their misdeeds.

B.  

Effectively documenting and communicating the organizational structure to all employees can help prevent fraud.

C.  

Formally establishing and communicating the proper flow of information in an organization can hinder its fraud prevention initiatives.

D.  

Displaying organizational and departmental hierarchies can help fraudsters select their targets.

A.  

Analytical review of the financial statements is best used to uncover small frauds that might be missed by other detection methods.

B.  

Fraud assessment Questioning techniques are most appropriately used when attempting to determine who might be responsible for a particular fraud scheme.

C.  

Implementing proactive fraud audit procedures demonstrates the organization's intention to aggressively look for possible fraudulent conduct.

D.  

Surprise audit procedures are an effective fraud detection mechanism, but they do not help prevent fraud

A.  

When verifying past employment, management should only ask previous employers to verify the dates the candidate was employed.

B.  

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.

C.  

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

D.  

As part of the screening process, management should contact the references provided by the job candidate.