Pass the ACFE Certified Fraud Examiner CFE-Fraud-Prevention-and-Deterrence Questions and answers with ExamsMirror

COSO Definition of Internal Control:

COSO defines internal control as a process enacted by an entity's board, management, and personnel to provide reasonable assurance regarding objectives in operations, reporting, and compliance.

Analysis of Options:

A. Operational risk assessment:A component of internal control, not the overall process.

C. Fraud risk management:Focuses specifically on fraud risks, a subset of internal control.

D. Financial reporting:A specific objective addressed by internal control.

Conclusion:The correct answer is internal control, as defined by COSO.

 ISO 31000:2018 Guidelines:

This standard emphasizes that a risk management framework should align with the organization’s size, complexity, objectives, and operations to ensure effectiveness and relevance.

 Why A is Correct:

Proportionality ensures that resources are allocated efficiently, addressing risks that directly impact the organization’s goals while avoiding overcomplication.

 References:

ISO 31000:2018 risk management principles​​.

Definition of Organizational Crime:

Organizational crime involves illegal actions conducted by or on behalf of organizations to benefit the organization or its management.

Why D is Correct:

Bid rigging is a classic example of organizational crime, where multiple companies collude to manipulate competitive bidding processes for mutual benefit.

Why Other Options are Incorrect:

A, B, and C:These represent individual crimes for personal gain, not organizational-level misconduct​​.

References for All Questions:

COSO Internal Control–Integrated Framework​​.

Criminological theories and studies on deterrence and organizational crime​​.

Diane Vaughan's research on organizational factors contributing to deviance​​.

Corporate Governance Requirements for Public Corporations:

Publicly traded companies must adhere to the listing standards of the stock exchanges where their shares are traded (e.g., NYSE or NASDAQ).

B. G20/OECD Principles:These are guidelines, not binding requirements.

C. No requirements:Incorrect; corporate governance regulations apply regardless of jurisdiction.

D. Universal Corporate Governance Act:No such act exists globally.

Conclusion:Public corporations must comply with stock exchange-specific listing standards.

Privilege of Fraud Examination Reports:

Reports prepared by fraud examiners are not inherently privileged. Privilege depends on the legal framework, the purpose of the report, and whether the attorney-client privilege or work-product doctrine applies.

Without specific legal protection, reports may be subject to disclosure.

Conclusion:Fraud examination reports are not automatically privileged.

Comprehensive and Detailed in Depth Explanation:

Government auditors typically cannot unilaterally withdraw from an audit engagement, even in cases where fraud is identified. Public-sector audits often follow mandates from higher authorities or statutes that require the auditor to continue and report findings to oversight bodies. Additionally, fraud and abuse (including misconduct and misuse of assets) are relevant to government audits under ISSAIs, contrary to A and B. Option D is incorrect because public-sector audit objectives are often broader, encompassing compliance, performance, and integrity aspects.

Comprehensive and Detailed in Depth Explanation:

The G20/OECD Principles of Corporate Governance advocate for transparent and fair markets and the efficient allocation of resources, making Option A the correct statement. These principles are internationally recognized as a standard for policy makers, investors, corporations, and other stakeholders worldwide. The principles are intended to apply to both developed and emerging markets, not justemerging ones (rejecting Option C), and while influential, they are not legally binding mandates (rejecting Option D). They also support the equitable treatment of shareholders, regardless of share class (rejecting Option B).