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CFE-Fraud-Prevention-and-Deterrence
Certified Fraud Examiner - Fraud Prevention and Deterrence Exam Questions and Answers

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Viewing page 8 out of 8 pages

Viewing questions 71-80 out of questions

Questions # 71:

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

Options:

Guidance regarding appropriate board structures, responsibilities, and procedures

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

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

Answer

Explanation

Understanding G20/OECD Principles of Corporate Governance:These principles provide a framework to improve corporate governance worldwide. Key elements include board responsibilities, shareholder rights, equitable treatment, and stakeholder roles.

Analysis of Options:

A. Guidance on board structures:This is included in the principles to ensure effective governance and oversight.

C. Framework for corporate governance:Governments are encouraged to create legal and regulatory frameworks supporting corporate governance.

D. Stakeholder importance:Stakeholders' roles in governance are recognized, acknowledging their contribution to sustainable business practices.

B. Stronger protection for foreign shareholders:The principles advocate for equitable treatment of all shareholders, not preferential treatment for any group.

Conclusion:Option B contradicts the principle of equitable treatment, making it the correct answer.

[References:G20/OECD Principles of Corporate Governance documentation., , , , ]

Questions # 72:

Hart, Inc. hired Kathleen, a risk management expert, to design a risk management program for the organization. Kathleen should focus on balancing which of the following two factors when creating the program?

Options:

Management's risk appetite and the organization's ability to meet its objectives.

The organization's internal controls and its financial reporting model.

Management's risk appetite and relevant regulatory requirements.

The organization's objectives and available resources.

Answer

Questions # 73:

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.

Options:

True

False

Answer

Explanation

 ACFE Code of Professional Ethics:

Fraud examiners must avoid expressing opinions about guilt or innocence. They are tasked with presenting evidence and findings objectively, leaving determinations of guilt to legal or regulatory authorities.

 Why A is Correct:

Maria’s statement that "Rita is guilty" constitutes a violation because it goes beyond the role of a fraud examiner.

 References:

ACFE standards emphasize objectivity and avoidance of subjective judgments in fraud reporting.

Questions # 74:

The Committee of Sponsoring Organizations of the Treadway Commission (COSO) defines internal control as:

Options:

A process implemented to review how well the organization’s risk management capabilities have increased value over time and how they will continue to drive value for the organization

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

A process involving personnel at all levels of the organization that aims to eliminate all uncertainty and risk while also ensuring the achievement of organizational goals

A process aimed at proactively identifying, evaluating, and addressing an organization's vulnerabilities to fraud by both internal and external sources

Answer

Explanation

The COSO definition of internal control is:

“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.”

This is the formal and widely accepted COSO definition.

[Reference:ACFE Fraud Examiners Manual, 2020 International Edition –Fraud Risk Management, COSO IC 2013 Definition., , , ]

Questions # 75:

Which of the following statements is FALSE?

Options:

Controls are not effective in preventing theft and fraud If those at risk do not know of their presence

Most experts agree that it is harder to detect frauds than to prevent them

Educating employees about company hotlines and reporting programs increases their perception of detection

Conducting covert audits is among the most effective fraud prevention methods

Answer

Explanation

 Fraud Prevention Methods:

Prevention strategies often focus on education, awareness, and robust controls rather than covert methods. While covert audits can detect fraud, they are not primarily preventive.

 Why D is False:

Covert audits are reactive and focused on identifying existing fraud, not preventing it.

 Why Other Options are True:

A, B, and C accurately describe key aspects of fraud prevention, such as the importance of perception of detection and the challenges of detecting fraud.

Questions # 76:

According to the results of behavioral studies, such as those conducted by B. F. Skinner, application of punishment to undesired behavior typically results in which of the following?